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What Is a Demotion?

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In a Demotion, an Employee's Job Moves Down the Organizational Chart

In a Demotion, an Employee's Job Moves Down the Organizational Chart

iStockphoto / Tom McNemar
Definition:

A demotion is the compulsory lowering of an employee’s job rank, job title, or status. An organization can provide a demotion at the choice of the organization or voluntarily, at the request of the employee, sometimes called deployment.

Compulsory Demotion

There are a number of reasons why an organization might demote an employee involuntarily.

  • The employee was failing in the job that he or she had been promoted to do. An example is when an employee who is a successful individual contributor takes on a managerial role and can’t address the people issues. In a second example, it becomes painfully obvious to the organization that an employee lacks the ability to think strategically about positioning a department or product.

    In a third example, an employee has been promoted to a level where he has assigned oversight for European sales and operations. He is demoted when a separate director is hired to manage each country and only half of the new directors report to him.

  • The employer is parting ways with an employee and wants to provide a cushion of time to allow the employee to begin a job search. Yet, in the case of a manager, the organization does not want her leading other employees or projects as she transitions out of the organization.

  • The organization eliminated positions in the hierarchy in order to flatten the reporting relationships in the organization. This is frequently the outcome of an effort to empower employees and can include, in the case of a supervisor, doubling or tripling the numbers of reporting staff members.

  • The organization is experiencing financial difficulties and demoting employees, thus reducing the cost of salary, and possibly, benefits, is used as an alternative to laying off employees.

Voluntary Demotion

In the case of a voluntary demotion, the employee is often experiencing work-life balance challenges. Here are several examples of voluntary demotions.

  • The employee may want less responsibility and fewer reporting staff members. The existing position level won’t allow the changes. (Most recently, this request came from a new mother who wanted to lower the stress she experienced as a manager. She decided to become an individual contributor until her children reached school age at which time she intends to pursue a management position once again.)

  • The employee elects to work remotely, pursue flexible hours, or telecommute instead of working onsite 100% of the time. The new flexible arrangement makes a particular role unworkable.

  • The employee may want to change job locations and a position at her current level is unavailable.

  • An employee may want to transition down responsibilities as he approaches retirement.

A demotion is used in a variety of ways by both organizations and employees. In the case of organizations, it is a disciplinary measure short of firing an employee. In a voluntary demotion, the employee frequently adjusts his job to match the current needs of his life.

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