If you suspect an employee is ready for a promotion, don’t jump right in. Performance in a current role doesn’t always predict performance in a future one. Gather more information by designing an assignment for the employee that mimics the tasks and challenges of the new job. Be transparent and tell him that you are using this experiment to test his ability. Make it short-term, outlining clear success criteria and an evaluation timeline. Be careful not to invisibly promote someone without recognizing his contributions. Permanently providing more responsibility without a change in title or pay can sap motivation.
Adapted from Guide to Giving Effective Feedback.