written by | May 31, 2022

×

Table of content


Table of content

What is the Demotion of Employees? Meaning and Causes Explained

Demotion brings a lot of effects on the employee, mostly negative. Demoting an employee is equally challenging for the employer as well.

Nobody wants demotion, so there's a strong need for the employer to state valid reasons and explain the policy. Highly visible employees are less likely to be demoted. Increasingly, being visible at work avoids being demoted, but this is not as effective as cultivating good interpersonal relationships.

Demotion decisions depend more on social capital than performance. While age is an important factor in demotions, the quality of social capital has more to do with the risk of being degraded.

This article will explain the definition, causes, policy and steps for demoting an employee most royally and safely possible. The demoted definition is something you need to know before going through the entire blog for a better understanding. Demoted refers to a situation in which an employee's wage rate is equal to, or not more than 20% less than, the employee's wage rate immediately before demotion, or when the employee's job obligations are decreased, or both. This is the most well-known demotion definition in professional ethics.

Did You Know?

Almost 46% of HR professionals witnessed a demotion at their organisation. Also, over 1 worker out of 10 (approximately 14%) has been moved to a lower-level role.

Also Read: Retention Bonuses: Their Features, Benefits, and Implications

What is the Demotion Meaning?

When does an employee get demoted? There are several reasons why an employee might get demoted. A company may have undergone a reorganisation or downsizing or experiencing a performance crisis.

Demotions are sometimes the best option, as they do not necessarily mean the end of career advancement. But you should also remember that they do not have to be the end of your relationship. Here are some tips on how to deal with employee demotions.

  • Before making an employee a demotion, you should consult relevant employees or representatives. Explain the changes you are making and whether they're in the business's best interests. 
  • Consider alternatives to the proposed demotion, such as redeployment or a trial period. 
  • If the employee's job description and responsibilities change, it's important to consider a succession plan. This plan should be based on the employee's attitude and performance and the company's budget.
  • You should also consider the financial reasons for the demotion. Layoffs and loss can be reasons for demotion. 
  • After deciding on the best course of action, you need to plan a transition process and correct any mistakes.

Reasons for Demotion

After we define demote, let’s know the reasons for demotion. The following article covers common reasons for demotion that employees are demoted, including Breach of Discipline, Inadequacy of Knowledge and Unable to Cope With Change.

In addition, it looks at the effects of organisational reorganisation. While these reasons are not always immediately apparent, they all play a role in causing demotion. Understanding these factors is essential to prevent demotion, and you may be surprised by the reasons why you've been demoted.

  • Breach of Discipline

Demotion can occur when an employee violates the rules of an employer's work environment. A lack of discipline can cause an organisation to fail, and punitive measures such as demotion may be taken. 

If an employee does not meet the basic requirements of their job or is incompetent, it may lead to a breach of discipline. If we talk about the demotion of employees, it applies when an employee who fails to comply with workplace rules and regulations can be de-boarded.

When an employer decides to take a demotion, it is important to seek consent from the employee. Sometimes, an employee may accept the move as an alternative to dismissal or a performance improvement process. In other cases, an employee may be offered a less senior position as part of a restructuring or redundancy. 

If a demotion is the only option, the employee may be eligible for redeployment or a trial period. Discipline is essential to running a successful organisation, and demotion may be the only way to keep senior staff motivated.

  • Inadequacy of Knowledge

Inadequacy of knowledge as a cause of demotion is an extremely common excuse for job reduction. Many companies promote highly effective employees to management positions but find that they cannot manage higher-level responsibilities, such as budgeting and leading a team.

 

 

 

 

Whether a person is too old or lacks the proper technical skills, they may not be able to adapt to the new requirements. In these situations, a demotion is the best way to get them to move up. Also, you must have sufficient communication skills to end it all smoothly.

  • Unable to Cope With Change

If you've been demoted, consider the factors that led to your downsizing. Remember, you're still a qualified person, and you are probably qualified for the position you're in now. Think about the reasons for the change in position and performance and what you accomplished in the previous role.

 

Assess your strengths and weaknesses and think about what you'll do differently in the new position. Employees can request a demotion from a leadership position if they're not happy with the new position.

It might be good to provide job shadowing, prior training and an orientation period for employees to ease the transition. In some cases, a person may request a demotion because they're preparing to leave the company or want to take a lower-level position. Other employees may need more flexibility due to changes in their personal lives.

  • Organisational Reorganisation

One of the most common reasons for a demotion is restructuring. Reorganisation often involves changing managerial priorities and re-distributing tasks. This may result in a demotion for an employee who cannot adjust to the new position or is no longer up to par with the company's goals. These decisions often have nothing to do with an individual's performance. 

Also Read: Samples of Employee Termination Letter

Demotion Policy

The demotion can affect employees' morale, satisfaction with work, and relationships with their employer. It can also make the employee into a mental mess. In deciding to demote within the company, the management needs to be cautious not to put itself in a position that is not on its side. Yoder has suggested that a comprehensive demotion policy regarding demotions should include five key points:

  1. A clear and sensible set of rules must be created, any violation of which could cause an employee to be dismissed.
  2. This information must be communicated clearly to employees.
  3. It is essential to conduct a thorough investigation into any suspected violation.
  4. After the violations have been proven to have occurred, it is necessary to ensure an equitable and consistent punishment that the supervisor in charge usually does.
  5. There should be provisions for review.

The process of demoting an employee isn't simple, but it sometimes is necessary to do it. But, the demotion of an employee must be made within the terms of the demotion policy. The employee may not be performing well in the current position, and there's no alternative but to reduce their duties. Even if an employee decides to seek a promotion, you have problems in your role as an employer.

If you have to reduce an employee's job, you must be able to do it quickly, effectively and legally. There are numerous aspects to consider when figuring out how you can legally reduce an employee's rank.

4 Steps for the Demotion of an Employee

Informing an employee that you're demoting them isn't easy. Below are 4 steps you can take to get through an employee's demotion easily.

Step 1: Inform the Employee About the Demotion

If you decide to demote an employee, engage in an intimate talk with the employee. What is a demotion for your employee? It is important to state why you're demoting the employee, particularly in the case of performance-related reasons.

Let them know that you'd like to keep the employee, and this isn't a reason to terminate the employee. Give them valid reasons why you believe the employee will perform more effectively in the demoted job position.

Step 2: Create a Transition Plan

Together with the employee, develop the transition plan. Establish a time when the employee will work entirely in their new position.

If an employee has to give documents or projects to any other employee, you should include this in your plans.

Step 3: Please Explain the New Position

When you have explained why you're degrading the employee, inform your employee about the new job. Outline the responsibilities of the new position and duties.

If the new job is accompanied by less salary, inform the employee immediately.

Step 4: Contact the Necessary People

It may not be appropriate to announce this to all employees. But, certain employees may suffer from the move. For instance, when the demoted employee directly influences other employees, you must let the employees know to who they are reporting.

You must also determine what information you will give employees. Employees don't have to be informed of every aspect of the dismissal.

Conclusion

When you deal with the demotion, several things might go wild in the employee's mind. Now, the highest dominant motion of a human is humiliation. In short, demotions might be cruel to emotions at times. Also, it might return in resignation.

If you want to ensure it won’t take place, managers should be careful in knowing the employee’s emotions while managing demotions. This guide’s steps will help you make a good decision at such times. Sometimes wrong calculations also lead to conflicts between employees. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What Are Some Common Reasons for Demotion?

Ans:

Following are the 4 top-most reasons for employees facing demotion:

  • Poor performance
  • Organisational restructuring
  • The lower success ratio for the newly assigned projects
  • Voluntary demotion

Q: What Is Demotion with Example?

Ans:

Demotion takes place and changes an employee’s salary or lowers the post on which they work. For example, if the manager isn’t getting good results for the company from an employee, they have all rights to demote the positions of the employee responsible for it.

Q: What Are the Types of Demotion?

Ans:

There are basically two types of demotions: Voluntary Demotion & Involuntary Demotion.

Q: What Is the Demotion Definition?

Ans:

If we talk about demotion meaning, it happens when a manager/senior decreases any employee’s salary or job, role or duties from the team. It can be temporary or permanent.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.