Is a Demotion Ever the Right Choice?

I was recently asked if demotions could ever be successful. That's hard to answer since demotions typically make either the employee or the company look bad. How do you let go of your pride to make a demotion a win-win? That's exactly what you do – but first, you need to assess the reasoning for a demotion.

When Considering a Demotion

If you're considering the choice of demoting an employee, ask yourself the following questions:

1. Are you considering an employee demotion with plans to fire them?

A demotion should never be used as a step just prior to firing an employee or pursued with hope that it will encourage an employee to quit. If the employee's lack of performance or poor behavior merits termination, don't delay terminating the employee and risk morale issues (or worse) by retaining them.

2. Does the employee know disciplinary action for workplace misconduct is coming?

Demotion can be used as a disciplinary measure for poor performance but should never come as a surprise. If employees aren't meeting performance goals, such as repeatedly missing key performance indicators (KPIs) or falling short of performance expectations, they should be well aware that a demotion may be considered.

Be sure you document the process, provide notice such as a written warning, and follow a consistent process along the way to reduce the risk of a claim that someone was unfairly demoted.

3. Does the manager have any fault for the employee's poor performance?

This question requires honest introspection on behalf of you, the manager. Ask yourself the following questions:

• Did you promote an employee who didn't deserve it, or perhaps hire an under-qualified person for the job?
• Should you have widened your candidate pool or opened up the position and done a better job at conducting your due diligence for the right fit?
• Did you provide any developmental training to help the employee be successful in their new role?

If you feel called out, you need to empathetically take responsibility for the premature promotion and talk to the employee one-on-one. Admit the promotion happened too swiftly, explain that the company should have provided more development and training to help them be successful, and create a transition plan. Perhaps you could create a new role and job title that would be equivalent to a lateral move in the same rank as their previous position to prevent any negative feelings from the demotion.

Delicately communicate this change with the team to preserve morale and prevent rumors. Be sure to contact your certified HR expert for guidance.

4. Does the company have any fault for the employee's poor performance?

There may be extenuating circumstances from a business perspective that led to a demotion in the form of a lower-level role, such as company restructuring, budget cuts, or other business needs.

When this happens, lead out with empathy and explain the business need rather than there being performance issues. Validate the employee's contributions, explain you want to retain them, and provide a letter outlining the structural changes. The employee may need time to review the offer prior to making any final decisions.

To ensure you are abiding within the law and are not at risk of the demotion being seen as unfair, be sure to get legal counsel and/or contact your certified HR expert. Potential litigation might include constructive dismissal claims, retaliation, adverse action, or discrimination – especially when there is failure to follow the company's processes.

When You Are the Demoted Employee

A demotion may be temporary, or it may be permanent; it may be an involuntary or a voluntary demotion. If you're the one being involuntarily demoted, you have three options:

1. Stay and rededicate your attitude and performance to make the move successful;
2. Stay and be bitter about the demotion; or
3. Leave the company to find a job elsewhere.

Demotions oftentimes involve a reduction in authority with fewer responsibilities, including lower pay, and may create concern for future employment prospects. Before making a rash decision to leave, focus on understanding the reasoning behind the demotion, request clarity for performance standards, and learn if there is a path forward to a higher-level role in the future (if desired).

If you choose to stay, don't be half in and half out. The company has decided to retain you, which means they still value your expertise and skillset. How you handle this setback will become key to your future. Although you might feel uncomfortable taking direction from former peers or subordinates or adjusting from a manager-to-individual-contributor, your approach may be a determining factor for a coworker or supervisor to someday refer you to a future role.

What if the demotion was unfair?

If you feel like you were unfairly demoted, remain calm, document what happened, and get expert advice, especially if the new-role transition seems unworkable. When employers demote someone to a lower position, there are usually common reasons such as business need or disciplinary issues. Speak with the company's HR rep for clarification.

Considering a Demotion? Talk with Your HR Professionals

Demotions can be successful when handled delicately, recognizing that there’s a person with feelings behind the move. But they typically bring emotional, professional, and financial consequences, may increase turnover, and some employees will struggle to stay motivated in the new role. In certain circumstances, a demotion might impact family obligations due to a change in compensation and/or benefits.

With so much on the table, it's important to explore alternative ideas to a demotion before determining that as the only option.

For guidance on what to do in your scenario, please contact your certified Stratus HR expert or book a consultation today.

Sources:
shrm.org
shrm.org