One of the study by Pablo Acosta (2005) found that previous promotions do not imply a higher probability of future promotion, and that new hires seem to have an advantage when competing with incumbents for a higher position. This evidence seems to be consistent with the Peter Principle suggested by Lazear (2004), that workers are usually promoted “to their level of incompetence”. It also seems to agree with behavioral theories related to workers outperforming at their jobs in order to compete for a promotion, and relaxing after achieving the immediate goal. Pablo Acosta (2004) also found that males, whites, and more educated workers have a higher probability of being promoted; and there is no evidence of “fast tracks”: previous promotions do not imply a higher probability of future promotion.
The model of Derek Neal (1999) highlights one insight on job search that to the extent workers use job experience to determine how they match with possible careers as well as how they match with specific firms and postpone job search over firms only if they got a good job match them. Future career change requires employer change also and good job matches always give more wages to young men. Julie L. Hotchkiss and others (2005) found that workers that take a potentially risky chance on joining a fast growing sector do not necessarily get burned in the end. While post-boom earnings were predicted to be lower among workers who left the IT sector, relative to those who stayed in IT, most workers who left fared better than if they had been employed in a non-IT industry during the boom. This suggests that taking a chance yielded an earnings advantage for IT workers. The boom-IT Service workers, who likely possessed more easily transferable skills, were predicted to enjoy a significant post-boom earnings advantage over boom non-IT workers, even when transferring to non-IT industries.
“In general, promotions should be seen as linked with both compensation and performance.
Lazear (1992) found that individuals who change jobs within a firm experience larger growth in wages. Previous promotions do not imply a higher probability of future promotion, and that new hires seem to have an advantage when competing with incumbents for a higher position. This evidence seems to be consistent with the Peter Principle suggested by Lazear (2004), that workers are usually promoted “to their level of incompetence”. It also seems to agree with behavioural theories related to workers outperforming at their jobs in order to compete for a promotion, and relaxing after achieving the immediate goal. What is reflected is that those with a successful history at the firm do not seem to have an advantage when future promotions are made”.
“Of course, promotion decisions could be decided under other criteria or administrative rules different from performance, such as loyalty, influence, favoritism, personal relationships, or by privileging the relationship between coworkers by creating an “equal-opportunity” environment. Some companies may even have a tendency to overvalue unfamiliar candidates and undervalue know ones. Prendergast and Topel (1996) suggest that as firms usually rely on subjective supervisors’ judgments of employees’ performance when selecting the potential candidates. In the absence of verifiability of performance and “principal-agent” contracts, such as output-related compensations also affect promotion decisions.”
Promotions are usually merit-driven changes of positions based on performance, as opposed to lateral transfers or task reorganizations. Seamus McGuinness and Mark Wooden( 2007) suggest that incentives and strategic behaviour seem to play a significant role in determining pre and post promotion performance, while for lateral transfers these forces are absent. The study confirms that the over skilled are much more job mobile than other workers who are in jobs that provide a better skills match. Such findings are usually taken as evidence in support of either matching or career mobility theories or both.
Theories of career mobility (Rosen, 1972; Sicherman and Galor, 1990) predict that workers may deliberately enter their preferred profession at a level lower than would seem commensurate with their qualifications in order to acquire the necessary skills, through on-the-job training and learning, that will enable them to achieve more rapid career progression in the future. But here it can be seen that only fresher’s may enter at lower level jobs to get on-the-job training and for acquiring skills. It may be occur in the case of less experienced or those who are looking a different but almost same job that is suitable for getting promotion or they always expect ‘immediate promotions’. Also they can acquire more skills. We can observe this particular behaviour of individuals in the IT-B.P.O sector in Kerala. Thus the study is concentrated on the B.P.O sector of Kerala. But others may only enter into a job match their qualifications. They may remain in the same job for a long time. Salary improvement without promotion is a good thing for them. Incentives always help the employer to retain such persons. Even there is no promotion; they do not quit the job if there is salary improvement. But there may be situations where the employees do not get a job matching their qualification, they always search a job and find a good job.