As employees do well we want to reward them. There are lots of ways to do that: a pay raise, a bonus, an award, time off, a bigger office, tickets to a show…you have a lot of options.

One thing you shouldn’t do, though, is promote them.

This is not to say you should not be promoting good employees (the opposite extreme — promoting poor ones — is not a great idea). But when you promote those good people, it should be because you think they will do well in the higher position, NOT simply because they have done well in their current one. We discussed this idea last year, but it’s worth bringing up again.

Let’s say you own web development company and you have a designer who does great work. She’s very talented, she’s professional, clients love her, she markets herself and the firm effectively, and she is responsible for a strong revenue stream. You want to keep her, rather than having another company poach her and take her skills, so what can you do? You might be thinking of promoting her to a managerial position, but there is just one problem: you don’t know if she can lead.

Just because someone is good at doing Job X doesn’t mean they will be good at doing Job Y…and leading people is a different job than being a line employee. The new job may benefit from the skills they developed in the old one, but it will also require something more; that’s why it’s considered a promotion. You need to know they have the skills to do the new job before you put them in it.

How can you do that? Well, one way is by observing their current performance to get an idea of their potential for a particular role. That designer we mentioned…if you see her sharing techniques with other designers, or mentoring new employees, or helping clients with follow-on tips on how to improve their site, then it looks like she’s got some ability and desire to coach others. One way people demonstrate the potential to work in a higher position is by doing things in their current job that would typically be done by someone higher up the chain.

Another option is to require them to go through training before giving them the promotion. That way, if they have trouble meeting the job’s requirements, you will know it before they get into the position and can do real damage. It’s a good way to save everyone some hassle, because if they get in over their heads, they will probably embarrass themselves at least, and possibly even mess up so badly that they get fired. Nobody wins in that scenario.

Though you can never be sure someone will do a good job when you promote them, at least try to have a good idea of what they are capable of doing (and, as we discussed the other day, make sure they want the promotion). Look for potential for the next job, not just great work in the current one. Remember, if you give someone a reward for a job well done, it affects them, but if you promote someone, it affects the rest of the organization.