At 68.7% of Restaurant and Lodging Employers, Promotions Go on Performance Alone. In Real Estate It Is 48.0%

The Census Bureau asked U.S. employers how they decide who gets promoted and what they do about an employee who is not performing. The answers depend on the trade.

Two questions about running a team

The Annual Business Survey is the Census Bureau’s yearly survey of U.S. employer firms. Its 2023 edition added a set of management questions, and two of them are about people. How were employees promoted? Solely on performance, on performance and other factors, mainly on factors other than performance, or employees are not promoted. And when an under-performing employee was identified, were they reassigned or dismissed? Within six months, after six months, not at all, or no under-performer was identified.

About half of firms answered each question, and among those a large share said it did not apply: 49% for promotion across all sectors. The shares here are of firms that answered and said it applied. The survey published the answers by sector, and this piece shows the 11 sectors where the estimates are tight enough to compare.

Where promotion goes on performance alone

Across all sectors, 62.2% of employers said promotions were based solely on performance. Two trades stood out. In restaurants and lodging it was 68.7% and in construction 68.5%, higher than in health care (60.5%), retail (61.2%), repair and personal services (60.1%), finance and insurance (56.9%) and real estate (48.0%). Professional services, at 60.0%, had too wide a range to be told apart from either.

Real estate sat at the bottom, at 48.0%, below every other trade shown except finance and professional services. It also had the largest share answering that employees are not promoted: 41.4%, against 24.5% across all sectors and 17.5% in restaurants.

In restaurants and construction, two employers in three said performance alone decided who moved up.

Spotting an under-performer, and what happened next

Restaurants and lodging were also the trade most likely to say they had identified an under-performing employee: 60.2%, higher than every other trade shown. In finance and insurance it was 35.2%; across all sectors, 44.6%. Real estate is left out of this question: one of its answers was suppressed by the Census Bureau.

What firms did next varied far less. Of firms that identified an under-performer, 15.9% across all sectors said the employee was not reassigned or dismissed, and in no trade could the survey tell that share apart from any other. The size of the firm is a different story; that cut is in the companion piece linked below.

What to take from this if you run a small one

The trade you are in tells you what your peers say they do. In restaurants and construction about two employers in three promote on performance alone; in real estate, under half. It does not tell you what to do. Either way it is worth deciding, and saying out loud, what gets someone promoted in your business, and what happens when someone is not doing the job. In this survey about half of employers did not answer the question for their own firm.

Three limits worth holding. The survey cannot say why trades answer differently; it is one cross-section, and trades differ in many ways it does not measure. The answers are the firm’s own description of its practice, not an audit of it. And the shares rest on the firms that answered and said the question applied, between 37% and 59% of firms answering the promotion question by trade.

Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com

This article is for educational purposes and is not a substitute for professional financial or legal advice.