What Does It Mean When You Receive a Demotion?

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

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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.

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.

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 general workplace morale and employee engagement, the employer will wind down the relationship quickly. 

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.

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. 

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.)

It is possible that 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 former role unworkable. The employee wants to stay employed by his current employer so accepts a demotion which is the only available position.

It's possible that the reason may be related to location. Perhaps they may want to change job locations for family reasons and a position at her current level is unavailable. In many cases, employees will accept a demotion rather than leave the company.

Additionally, 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.