Recently, a colleague of mine came out of a meeting with the team leader looking a bit uncertain. They had high hopes of discussing a promotion, but instead, they were offered a chance to move to a different team at a similar level.

The job title and salary would remain almost the same, but the responsibilities and team would change. The company framed this as a lateral move, presenting it as a good opportunity.

That evening, my colleague called me, confused about whether this was a consolation prize instead of a promotion or if it was genuinely a beneficial career move. In fact, such cases are more common in American companies these days than you might think.

To start with some numbers, the average promotion rate planned by U.S. companies for 2025 is 9.3% of all employees. This is an increase from 8% in 2024, but still far below the peak of 14.6% in May 2022.

Since that peak, the promotion rate dropped by 25% to 10.7% by May 2024. The days when positions were readily available right after the pandemic are definitely over.

Younger employees are feeling this trend more acutely. For those aged 25 to 34, the promotion rate is projected to be 14.5% by May 2025, down from 16-17% in 2019.

For those aged 20 to 24, the situation is even worse, with a rate of 17% during the same period, down from 22-23% in 2019. This means that entry-level and junior positions have seen a significant reduction in available promotions.

We also need to look at the trend of internal mobility. Although hiring demand in the first half of 2025 is expected to increase by 6% compared to the previous year, the number of internal hires has actually decreased by 8%. As of June, internal hires made up only 30% of all hiring.

This indicates that while companies are creating positions, they are filling them by moving employees laterally instead of promoting them. Knowing that this situation is not unique to me can be somewhat reassuring.

So why do companies propose lateral moves instead of promotions? The most practical reason is budget constraints. When a position is promoted, the salary band must also increase, and getting budget approval for that is not as easy as it used to be.

On the other hand, lateral moves do not involve a change in title, so the approval process is much shorter from the HR perspective. For companies, this is a fairly efficient way to retain employees while spending less money.

However, this does not mean that it is necessarily a bad proposal. Research published in the management science journal indicates that employees who move laterally tend to get promoted more often and experience greater salary increases later on.

Building new skills or networks in a new team can be a more significant leverage in the long run than staying in one position. While it may seem like a standstill at first, the narrative could change in 2-3 years.

Retention data is also interesting. According to research from MIT Sloan School of Management, having the opportunity to move to another department within the company is twelve times more effective at retaining employees than promotions.

In companies with active internal mobility, employees stay an average of 5.4 years, while those in companies with little mobility only stay for 2.9 years. The difference in whether there is room to breathe within the same company is significant.

However, there are aspects that need to be balanced. Another study found that 55% of employees consider a clear promotion path to be the most important factor in career decisions.

Interest in lateral moves was much lower than that. Theoretically, moving sideways is not a bad option, but in reality, most people still prefer to see a path upward.

Therefore, the first thing to consider when receiving such a proposal is compensation. The salary increase from a lateral move is typically around 5 to 10%, and in reality, it is often closer to 5%.

When compared to the raise one would have received from a promotion, this is definitely a disappointing figure. So, I would advise against accepting this without negotiation.

Just because it's an internal move doesn't mean you can't negotiate your salary. It's appropriate to present numbers based on the scope of the new responsibilities and your past performance.

Don't just focus on salary; also bring bonuses, title changes, and remote work conditions to the table. By conceding one area, you can gain leverage in another, broadening your negotiation options.

The second consideration is whether this is a genuine growth opportunity or just a temporary measure to delay a promotion. Ask about who the new team manager is and the status of that team.

If the team you're moving to has a reduced budget and low visibility, that could be more about job reorganization than growth. Conversely, if it's a new business or a core organization that the company is investing in, the situation changes entirely.

The third point is to get promises in writing rather than verbally. It's wise to request an email confirming that you will be prioritized in the next promotion cycle.

Verbal promises can easily disappear the moment a manager changes. In such situations, I don't think it's excessive to keep a record.

Personally, I see this trend as a signal of the labor market structure. Proposing lateral moves instead of promotions ultimately shifts the burden of labor costs onto individual employees.

So when receiving such proposals, I believe it's essential not to rely solely on the company's goodwill but to clarify the conditions as much as possible. It's only fair that as the company saves, I also take care of myself.

In conclusion, there's no absolute reason to reject or accept such a proposal. If the new role genuinely expands your skills and network and serves as a bridge to your next promotion, it's worth considering.

On the other hand, if it's merely a temporary fix to get through the promotion season, it might be wise to politely question the conditions and buy some time. Personally, I wouldn't sign anything until I confirmed the team, the manager, and the written agreement.