I worked at a startup that did this, but with one major difference. If you were interested in a promotion, you were given a set of new responsibilities explicit

I worked at a startup that did this, but with one major difference. If you were interested in a promotion, you were given a set of new responsibilities explicitly that you could take on on a trial basis. If, after an evaluation period (typically 3 months) it turned out that you had executed on those responsibilities, you would receive a promotion retroactive for those 3 months, including the pay for those. If you weren't able to execute on those new responsibilities, you were left in your current position. It has some interesting tradeoffs vs promote on a trial basis and then demote. Whether it's a good idea probably depends on how well the responsibilities and evaluation process are laid out (in that company's case, not so well).