Demotion of Employees: Meaning, Types of Demotion

A demotion is a reduction in rank, often accompanied by lower pay and status.

There are many situations in which demotion might occur; any kind of rank systems like a police department or military, for example, uses demotions as a disciplinary tool, while some employees are at risk due to reorganization or substandard work.

Most people view a demotion as a punishment since it implies that the individual was incapable of performing at a higher rank. It is opposite to promotion, an elevation in rank or status

Demotion occurs when an employee moves from one job to another that is lower in pay, responsibility, and status. Demotion seldom holds positive outcomes for the individual.

Usually, they are associated with discipline; the individual is demoted for poor job performance or inappropriate behavior such as excessive absenteeism or incompetence.

Demotion may also be due to organizational factors such as reduction of the workforce, market condition, change of technology and production method, and change of product mix.

What is Demotion?

Demotion is just the opposite of promotion. It refers to the lowering down of the status, salary, and responsibilities of an employee. Demotion is generally used as a punitive measure and is a preliminary step to discharge. The usefulness of demotion as a punitive measure is questioned on many grounds.

Losing pay over a period of time is a long form of constant humiliation.

Moreover, a demoted employee will be always dissatisfied and his dissatisfaction may spread to co-workers affecting adversely morale, productivity, and discipline of the work-force.

Demotion becomes necessary,

  • If a company curtails some of its activities and employees with longer service bump persons in lower jobs with shorter service.
  • It may be used as a disciplinary weapon.

Demotion will serve its purpose if it satisfies the following conditions;

  • A clear and reasonable list of rules should be framed, violation of which would subject an employee demotion.
  • This information should be clearly communicated to employees.
  • There should be a proper investigation of any alleged violation.
  • If violations are found, there should be a consistent and equitable application of the penalty, preferably by the immediate supervisor.
  • There should be a provision of review.

Since demotions produce an adverse effect on employee morale, they are made infrequently.

Types of Demotion

  1. Voluntary Demotion.
  2. Involuntary Demotion.

Voluntary Demotion

A permanent employee may request a voluntary demotion to a vacant position in a class with a lower salary rate, provided that the employee has previously achieved permanent status in that class or, the request for demotion is to a related class in the same job series as defined by the Personnel Commission.

Involuntary Demotion

An involuntary demotion is a disciplinary action and, as such, is subject to the disciplinary procedures in these Rules and Regulations.

Advantages of demotion

Telling an employee that he is being demoted to a different job is rarely a positive experience for a manager.

However, employee demotions are usually intended to benefit the company and may be even the employee.

Good managers weigh the benefits of demoting employees against the possible psychological effects on the worker and the organizational culture.

Frances Burks has pointed out the benefits of demotion, which are listed below:

  • Common benefit employers seek with demotions is getting an employee to quit as opposed to firing him. Some managers use this tactic to avoid the conflict of telling someone he is fired.
  • Another financial benefit of demoting employees is a reduction in salary. Typically, a demotion means the employee works in a lower-paying position. This can save the company a substantial amount. In some cases, a demotion results because the company believes it is overpaying a worker for the production he generates.
  • Employee demotion may involve fewer risks of lawsuits or other grievances than termination.
  • One of the more positive benefits of employee demotions is the opportunity to develop the employee through more training and coaching. Sometimes, employees take a position, they are not adequately prepared to handle. A demotion may prevent burnout or employment separation. If the employee is demoted to a position he is most comfortable with, he can work toward additional training to eventually grow into the position from which he was demoted.
  • A demotion could be the best option for keeping an employee who has potential but needs more training and experience. Sometimes companies grow faster than anticipated, and employees get pushed into roles that they don’t want or aren’t ready to handle. An employee who has the potential to excel in the company may respond more favorably to a demotion if he is provided with an opportunity for additional job training. After all, the employee may realize he’s in over his head and unfit for his current position.
  • Sometimes a company’s structure change and demotions are necessary because departments are phased out and fewer high-level positions are needed. Such changes can be an opportunity for improvement for all involved as people assume new responsibilities to take the company in a different direction. Some people won’t view the changes or demotions as an opportunity and they’ll quit. Yet the people who remain may be a more motivated bunch who is excited about the company’s new direction.

One problem with demotion is that the demoted employee may become de-motivated or worse, openly antagonistic toward those responsible for the demotion decision.

Sometimes, demotions are intended to be kindly alternative to firing an employee who cannot do his present job. Rather than sever the employment relationship, a decision is made to retain the employee, but at a lower level of responsibility.

All rules and regulations are to be clearly laid down in writing which includes a clause that violation of the same may result in demotion.

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