Dos, don’ts of demotion

Taurai Musakaruka HR Issues
Demotion is defined as a reduction of dignity, importance, responsibility, power or status of an employee even if his or her salary and benefits and rank are retained.

This often happens when an employee escapes dismissal and employer opts to punish the employee by giving them a position that is lower to the one they held.

However, before an employer can demote and employee they are obliged to follow a fair procedure.

This means a demotion cannot be effected unilaterally by an employer without consulting the employee.

Should an employer demote an employee without affording him or her right to be heard, it could amount to an unfair labour practice.

The courts have on occasion ordered reinstatement of employees, to their former positions, in instances where a fair procedure was not followed before demoting an employee.

There are many situations in which a demotion might occur; any kind of ranked system like a police department or military, for example, uses demotions as a disciplinary tool, while some employees are at risk of demotion due to reorganisation 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 and the opposite of a demotion is a promotion, an elevation in rank or status, including pay.

Employers often raise the question: “We have an employee who is not doing the job properly. His/her performance is below standard. Can we demote him and reduce his salary?” The answer generally is one of those “yes and no” scenarios. The employer shouldn’t lose sight of the fact that they have a contract of employment with the employee and the contract usually stipulates the position that the employee is employed in and also the salary.

These conditions cannot be altered unilaterally. No employee can be demoted unless the employer first follows a fair procedure, if the demotion is the only option available to rectify the problem. In the case of poorly performing employees, the procedure for addressing issues of poor work performance must be followed first.

No employer can be excused for not following these procedures. It should be remembered that a unilateral demotion would amount to a breach of the employee’s employment contract.

In other words, the employer would be seen as having repudiated the contract, which is not permissible in common law.

A demotion would be fair if it were for a reason to address issues of poor work performance where, for example, the employee may be able to perform satisfactorily in a lower position, or if it was offered as an alternative to retrenchment for operational requirements or an alternative to dismissal in instances of misconduct or poor work performance.

Most commonly, a demotion occurs when someone fails to perform as expected. This failure may not be severe enough to be punished with dismissal, but it does require a rethinking of the employee’s job responsibilities and functions.

When someone is demoted, he or she may be demoted within a department or outside it, depending on organisational needs.

Being demoted in a department can be awkward, as the employee’s co-workers will be well aware of his or her fall from grace.

It should also be noted that in other cases, the victim of a demotion may be purely innocent. Some employees may be demoted because this manager simply wants to settle personal scores or simply “flexing muscles”, to instil fear for no apparent reason.

However, this usually backfires and tends to be very costly to organisations. Some companies are forced to demote employees when they downsize or reorganise.

This is common with mergers, when staff suddenly become redundant due to the nature of the merger.

In this case, the company may want to retain the employee because he or she is valuable, but the organisation has to move the employee to another department.

In most cases, the company tries to keep the move temporary and it will often endeavour to keep the rate of pay the same as well.

Employees who are at risk of demotion due to poor performance usually have ample warning.

Poor performance may be indicated in employment reviews, for example, with employers clearly enumerating the employee’s faults and the ways in which he or she may improve, usually called performance improvement plans.

Numerous reprimands and warnings are issued and employees are often reminded that enforcement of workplace policy may include demotion, in cases where it is warranted. Sometimes an employee may work his or her way back up after a demotion. This is more common when an employee demonstrates an ability and desire to improve, especially if he or she is willing to work on major issues. In other instances, the demotion is considered permanent and it may in some cases be used to force an employee who cannot be legally fired into quitting.

This tactic is common with lacklustre employees who do not violate workplace policy outright, but they rather skirt the line of mediocrity, weighing down the productivity of their employers. They are hard to pin down, they play it smart but very counter-productive.

How to do it: First; let’s look at why you’re demoting the person? Is it truly a business reason that’s beyond the individual’s control? Is it really more of a performance issue?

Has he or she been previously promoted beyond the appropriate level-promoting one to their levels of incompetence?

Is it an attitude problem? Depending on your intentions, each of these will require a different type of corrective action and transitioning.

Simply demoting someone does not correct performance or attitude issues. What are your intentions?

Are you trying to retain the individual or are you trying to drive him or her out? Do you want the person on the team when business rebounds?

Is the person most valuable to the team in a lower role or do you plan to promote the person back to his or her previous job when business allows?

You have to do it not just tactfully, but properly, reasonably, justifiably and within the boundaries of the law, that is legally.

If you fail to observe the above this could produce a disruptive, ineffective, disgruntled employee who could cause all sorts of problems after being demoted, including; being grumpy and unproductive, slowing down the team (driving the car with handbrake on), demoralising co-workers and perhaps driving out your top performers, quitting just after becoming productive again, which means you just paid for the person’s job search and worst case, actively sabotaging the work or taking legal action.

Demoted employees should always be viewed as having one foot out of the door. If you hand them a key project when you demote them, you should have a contingency plan in place in the event the demoted employees suddenly walk out on you.

Think carefully about whether you really want to retain the employees, if that is the best solution for the organisation.

Then, if that’s what you believe is best, invest considerable time and energy in a retention programme.

If at all possible, communicate with them before you pull the trigger. This will help them get over the shock.

Be thorough about your communication with them when you demote them and continue the communication after the demotion.

Make sure they receive attention from senior management and give them meaningful work. Establish a bonus program for them to stick around.

This should be considered only if the demotion is truly based on external circumstances and finally provide regular public recognition of their value in the new role.

You may be wiser to lay them off or fire them rather than demote them. Depending on how fluid and flexible your organisational structure is, their future may be very limited after accepting a demotion.

Their career aspirations and ego may be tied to their current rank, so you may need to offer them the option of leaving.

No matter how thoroughly you plan your strategy, expect surprises. In most cases, I predicted fairly well how people would handle their demotions.

However, some of the reactions surprised me, so you should expect them to surprise you too.

Preparation and communication with senior management, HR and then the person in question are critical.

The best surprise is always no surprise, so if you keep the communication lines open, you’ll be able to handle whatever comes your way and position your part of the organization for even better performance.

All in all demotion has to be procedural, justifiable and legal or else you should be prepared to part with shareholder value in case of litigations.

Therefore do not kick out for the sake of kicking out. Be rationale and fair, or else you may end up regretting the move.

Disclaimer: I do not accept any liability for any damages or losses suffered as a result of actions taken based on information contained herein. The information contained herein does not serve as alternative to legal advice. The views contained in this article are personal.