Employees might be demoted for a number of reasons which can be down to either industry issues or staffing problems.
Causes of Demotion
Difficult Business Conditions: Sometimes, due to recession or concerns within a company, a business may need to combine departments and reduce staff roles. If there are layoffs, junior employees may be the first to go and senior members of staff might have to accept lower ranking jobs until the company is in a position to hire again.
Employee Incompetency: There may be times when a staff member is promoted, only for managers to realise that the employee can’t meet the required standards of the role. This happens more often when someone is promoted due to seniority, instead of decision makers looking at the wider picture of who may be more suitable for the role.
Disciplinary Measures: Whilst it’s not advisable, some demotions occur due to misconduct or a violation of company rules. Demotions used for this problem are unlikely to correct the issue, as it may send the wrong message to other employees in the company.
Employee Request: It may be rare, but sometimes employees ask for a demotion at work if they feel they cannot commit the time to the business but still want to be involved in the company. This often happens if an employee has family responsibilities and may need to work part time instead of full time.
Taking Steps towards Demoting an Employee
Business owners should thoroughly consider the effects of a potential demotion and if it will have the desired result. Quite often, demotions not only affect the staff member, but also the whole team and department so it’s important for employers to explore how roles within the team might need to be shifted.
Demotions related to performance issues can be tricky to deal with, as although it may seem logical to simply return the employee to their previous post, a number of changes may have occurred since the promotion, for example, the previous position may have been filled or removed entirely, or if the new position required the employee to have supervisory responsibilities over others, a demotion may mean they are back on the same level as those they previously managed.
Minimizing the ramifications of demoting a staff member should be considered thoroughly with a lot of planning. Below I have included some steps to follow:
Clarify why the demotion is taking place: managers should identify key reasons (such as those above) for demoting the employee. The reason for demoting this person will define what actions should be taken following the demotion.
Communication is key: as with everything in business, communicating with the employee in question is really important. Employers should speak with the staff member in private before moving forward with a decision. If the reason for demotion is due to performance issues, managers should explain why the demotion is taking place and enforce the importance of wanting to keep the employee in the company, rather than terminating their contract. Forwarding steps should be discussed, such as the new position, the plan for transition i.e. last day in the role, first day in the new role etc. If the employee will be taking a pay reduction this should also be discussed. All communication should be documented clearly to prove that the company acted fairly towards the employee should and issues arise.
Allocate important tasks: a demotion can make an employee resentful and feel they aren’t valued in the company, therefore managers should place importance on the fact they are placing the employee in a position that better suited their abilities and offer a certain task or assignment that will make a significant contribution to the company.
Inform the team professionally: as demotion is seen as a step back in business, it is important to ensure the employee in question retains their dignity. A communication plan should be put in place to work out who will be told and when, as well as what reasons are given for the demotion.
Hold follow up meetings: managers should always observe how the employee is reacting to the role and discuss any problems the member of staff may have. The employee may have a negative attitude towards the company and/or the managerial team, which can quickly spread to other employees. Meeting with the employee to discuss any issues will allow managers to respond quickly to any negativity.
Have a plan B: it’s not unusual for demoted employees to have one foot out the door once they are told the news. Whilst some may be grateful to still have a job, others will start looking for new roles and therefore managers should have a contingency plan in place for any projects or tasks assigned to the employee should they walk.
The Demotion Policy
Demotion often affects an employee in such a negative manner that they may think about leaving the company. Moral, job satisfaction and relationships with the employer and other members of staff may become jeopardised. It is imperative that management have a demotion policy in place to ensure that staff knows what could happen should they violate the company rules.
Yoder, Heneman, Turnbull and Stone (1958) suggested a fivefold policy with regard to demotion practice:
- A clear and reasonable list of rules should be framed, violations of which would subject an employee to demotion;
- This information should be clearly communicated to employees;
- There should be a competent investigation of any alleged violation;
- If violations are discovered, there should be a consistent and equitable application of the penalty, preferably by the immediate supervisor;
- There should be a provision for review. (In a unionised case, this will be automatic via the grievance procedure; in a non-unionised case, the employer will need to make other provisions for review).
Employers should always document every stage of the employee’s time in the company and have a contingency plan in place should any issues arise due to demotion, however if done properly, a demotion can result in a win for both the employer and employee as the employer can retain a valued member of staff while the employee can be successful in a previous role with skills and knowledge they already have.
Next week I will be discussing policies and strategies for transfers in the workplace.
The contents of this article are necessarily expressed in broad terms and limited to general information rather than detailed analyses or legal advice. Specialist professional advice should always be obtained to address legal and other issues arising in specific contexts.