What is a Demotion

Demotion is a terminology used in human resource management. It means when an employee is reassigned a position with a salary range that is lower than the salary range of his or her former position. There are certain procedures and policies to perform a demotion.

  • an individual is assigned to a position that requires performing accountabilities of significantly decreased complexity or responsibility ; or 
  • The employee was unable to perform the task satisfactorily in the higher position; or
  • The employee’s request for demotion is approved ; or
  • As a result of re organization that may result in reduction in human capital; or
  • As a result of any disciplinary action against the employee.

Let the process of demotion

  • All demotions must be must be discussed with the human resource department prior to informing the employees.
  • If the demotion is a request from the employee, a written letter of consent from that employee to the position desired should be ensured.
  • When considering a demotion, the department must ensure that there is a valid budget line and/or position that the employee will be occupying.
  • All demotions must be approved by the respective human resource head.
  • Provision for review at a later date.
  • Proper investigation of any alleged violation.

Notwithstanding this the effects of demotion are many. Like there will be dissatisfaction of esteem and actualization needs. The employee may become the center of all discontent in the organization and employee loses confidence in the organization. Finally there will be overall frustration and demoralization.

 There are several other factors also which govern a demotion of an employee. When business conditions are averse, an organization reduces manpower by laying off employees or by offering low grade pays them. Sometimes even the employees are also responsible for their demotion as discussed above. If the labor situation is tight i.e. when jobs are not available an employee may prefer to accept demotion rather than lose his or her job. Staff members who have served less than six months in their current position must have the permission of their supervisor/unit head before applying for a position which represents a voluntary demotion.

Salary Adjustments for Demotions: 

  • If the demotion occurred because the employee was unable to perform satisfactorily in the higher–level position, the result of disciplinary action, or at the employee’s request, the employee’s salary should be decreased to no more than the maximum of the new salary range.
  • If the demotion occurred as a result of a reorganization and not because of the employee’s performance and the employee’s salary is above the maximum of the new salary range, then the employee’s salary should be “Red Circled” until the maximum of the salary range is increased and exceeds the employee’s salary.
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