Passed Over for Promotion: Evidence from Middle-Level Managers

ABSTRACT

Using data from a large telecom service provider in China between 2014 and 2019, we examine the impact of being passed over for promotion on subsequent performance for middle managers. Specifically, we find that there is a negative association between high promotion probability and post-pass over performance changes. Such negative association is less pronounced when bonus incentives are stronger and when promotions are more predictable. Our research highlights a hidden cost of promotion incentives and strategies organizations can use to mitigate this unintended negative effect for promotion pass over on high performers.

Data Availability: The data used in this study are proprietary. Access to the data may be granted upon request, subject to the approval of the data providers and compliance with confidentiality agreements.

JEL Classifications: M41.