As pay hikes dry up, more promotions doled out for employee satisfaction

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Data further showed that promotion rate for males stood at 10.2 per cent in 2026 as against 10 per cent in the previous year

By Rohan Das

Updated - October 30, 2026 at 06:54 PM.

As hefty pay hikes of the post pandemic period peter out, companies are turning to internal promotions to retain talent and maintain morale.

Data shared by professional services firm Aon with businessline shows that promotion rates among a surveyed cohort of 1200 companies stood at 11.1 per cent, 70 basis points higher than the 10.4 per cent last year. Promotion rates are calculated as the share of promoted employees as a per cent of a company’s total workforce.

Amit Kumar Otwani, Associate Partner, Talent Solutions, India, Aon suggests that 2026 has seen increased fluidity in the talent market and consequently, the relevance of promotions and career progression opportunities have increased.

However, the promotions are not translating into a jump up in pay.

Tightening Budgets

The compensation bump specifically related to the promotions (over and above the general yearly wage hike) has stabilised at around 12 per cent over the last two years, Aon’s data shows.

“Higher promotion incidence is therefore not translating into materially higher promotional increase percentages,” Otwani said.

The increase comes at a time when a difficult business environment and tightening budgets have led to sober increments. At the same time, a relative increase in attrition have created a need for career growth opportunities.

Flattening Talent

Upasana Raina, Director-Human Resources, GI Group Holding India adds that increasing attrition also means organizations will need to account for the recruitment, onboarding, training, and lost productivity costs associated with replacing employees. “Internal promotions and role expansions can help address these challenges,” she said.

Interestingly, Aon’s data further showed that promotion rate for males stood at 10.2 per cent in 2026 as against 10 per cent in the previous year, while for females the change was wider from 11.2 per cent to 12.4 per cent.

Further, the flattening of talent pyramids due to AI onslaught is also changing the dynamics for old-school internal promotions.

Sachin Alug, CEO, NLB Services said that with fewer managerial positions available, companies are creating alternative growth paths through specialist roles, cross-functional responsibilities and project leadership.

“This shift means that beyond just tenure, promotions place greater emphasis on skills, measurable outcomes and the ability to manage broader responsibilities,” he said.

Published on October 30, 2026

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