What Does It Mean When You Receive a Demotion?

Voluntary and involuntary reasons exist for why an employee is demoted.

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Demotions, the compulsory lowering of an employee’s job rank, job title, or status, are used in a variety of ways by both organizations and employees. In the case of organizations, it can be is a disciplinary measure short of firing an employee. In a voluntary demotion, the employee adjusts his job to match the current needs of his life. 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 compel an employee to take on a lower role.

Not Management Material  - Failing at the job to which the individual was promoted, like when a successful individual contributor takes on a managerial role and can’t address the people issues, is just one scenario.

Transitioning from Company -  The employer may be parting ways with an employee and wants to provide a cushion of time to allow the employee to begin a job search. However, if a member of management staff will be leaving, the organization does not want them leading other employees or projects as they transition out of the organization.

In the case of a regular employee, the employer will allow this detaching relationship to continue as long as the employee behaves like a professional. If the employer decides that the situation is distracting to other employees, interfering with the accomplishment of work, or hurting workplace morale and employee engagement, the employer will wind down the relationship quickly.

 

Restructuring - 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.

In one organization, the step between the senior manager and vice president was eliminated. This entire layer of management was laid off or demoted. This makes for tough times in an organization.

The promotion funnel narrows the higher an individual goes, and this decision gave an entire generation of senior managers no promotional opportunities. The result? Heavy turnover.

Financial Challenges - The organization is experiencing financial difficulties and demoting employees, thus reducing the cost of salary and benefits can be used as an alternative to laying off employees.

Voluntary Demotion

Work-Life Balance - The employee may want less responsibility and fewer reporting staff members. The existing position level won’t allow the changes. A new mother who wants to lower the stress she experienced as a manager decides to become an individual contributor until her children reached school age at which time she intends to pursue a management position once again.

Flex-work - Employees may elect to work remotely, pursue flexible hours, or telecommute instead of working onsite 100% of the time and the new flexible arrangement makes a particular former role unworkable. The employee wants to stay employed by his current employer so accepts a demotion which is the only available position.

These changes are often location- or family-driven and a position at the current level may not work for the organizatoin. In many cases, employees would rather accept a demotion than leave the company.

Retirement - Ramping down responsibilities as retirement may make sense depending on the situation.