Demotion: dealing with the elephant in the room

Your employer has a lot of power. The power to give you a job, but also the power to make changes to your position while you're employed.

In an ideal world, demotion is something we'd never have to deal with. In reality, though, it's an unfortunate job alteration many are faced with. 

What is a demotion?

A demotion, in its simplest form, is a loss of position, rank or status.

In a business capacity, it’s the lowering of an employee down the organisations’ hierarchy.

It can lead to a great many things: the pride of the employee being damaged, a loss of privilege, depreciation in salary, loss of salary extras, embarrassment, legal allegations, none of which are particularly enlightening. This is why a demotion should only be applied sparingly.

Demotion can be a sensitive and degrading topic. However, there are ways to handle it with dignity and care. We’re going to outline them here, but they should also be outlined in your dignity at work policy.

When and why would a demotion occur?

Demotions are generally enforced when a business wants to keep a particular employee, but not in the position they're in. Unlike a promotion though, a demotion reduces their responsibility responsibility - and not in a good way.

Demotions shouldn’t be thrown around willy-nilly. Their sensitive nature and potential legal requirements mean they should only be used when completely necessary.

There are two main reasons why a person would be demoted in a business:

• Insufficient performance

This is when the employee isn’t quite filling the entirety of the role's boots nor acting to their best ability. This can also be if they’re breaching certain rules of conduct, such as extreme and/or excessive lateness. In some cases, they may not be responding well to a performance improvement plan. 

• Restructuring 

If a business is going through a re-jig, perhaps because of new management or financial difficulties, an employee (or several) may be given a new ‘umbrella’ job title with different duties. Or, they could be moved to a completely different department because they’re scrapping the one they’re currently in.

This option is the lesser of two evils and tends to be more easily accepted by the employee. It’s nothing personal to do with them, but rather a business decision as a whole.

The Goldilocks of punitive business action

In the grand scheme of disciplinary severity, a demotion typically falls in the middle somewhere.

Demotion is in between the ‘quite bad, but pretty minor’ violations, which result in a warning or suspension, and the ‘extremely severe’ violations, like embezzlement, stealing or sabotage, which result in being fired or filing criminal charges.

How does a demotion affect the employee and the employer?

A demotion affects both parties in different ways. Suffice to say, it’s not pleasant for anyone. Let’s look at both sides:

The employer

You might not think so, but a demotion can be just as hard on the demoter as it is on the demotee. This is especially prevalent if the decrease in rank has come as the result of a promotion not working out.

If an employer is giving a promotion, it's never a snapshot decision. They will have thought hard about whether the employee is the right fit, scrutinising their skills and surveying the areas in which they excel.

If the promotion fails, the promoter will have a lot of explaining to do - considering they were the ones who made the decision.  This can undermine the employers value as a leader, and could even strip them of their right to make hiring decisions in the future.

The employee

Of course, a demotion is usually much tougher on the person being taken down a peg. For starters, it can seriously hurt their ego, but it can also damage their ability to do their new role by demoralising them. 

Even if the employee has taken a step down of their own accord, maybe due to personal or health reasons, a demotion is still degrading.

Despite demotions being handled with the utmost discretion, the procedure is still an office politics nightmare, with gossip spreading like wildfire and some members not knowing how to deal with such a change.

Read next: 9 signs that your employees are disengaged (& how to re-energise them)

How to handle demotion... a step-by-step guide

If the unlucky job of demoting has fallen into your hands, this handy walkthrough might further equip you to ease the blow of the recipient.

Preparation

Before the demotion begins, an employer should look at whether this is the most appropriate or fairest thing to do for the company and for the employee.

If the final decision is yes, then the employee’s contract should be checked over to ensure the circumstantial demotion is not in breach of any contractual clauses.

Conversation Checklist

The hardest and most crucial part of the demotion will be the conversation between management and the team member. We have set out a 3-step plan as to how an employer could best lead this conversation to maintain professional and respectful decorum, while adequately informing the employee of the demotion with complete legality.

1. Tell them about the demotion It goes without saying that this discussion should obviously be conducted in private, either one-to-one, if it’s particularly sensitive, or with another person as a witness, if the demotion could potentially lead to the employee pursuing legal action.

2. Clearly state the reasons for the demotion. These will vary and will affect the following stages, depending on whether the demotion was out of the employee’s control or whether it was their own doing.

Whatever the circumstances, express the fact that they are a valued member of the team and relay the management’s desire to keep them on as a team member.

If handled correctly, the employee shouldn’t be too shocked about the demotion. This is because the downgrade shouldn’t be the first port of call, especially if the employee has been struggling for a while or employees have been made aware of any company hardship through regular business updates or the media.

3. State the new position that they’ll be undertaking, along with the new tasks and responsibilities they’ll be expected to carry out. If any training needs to be carried out, let them know that this has been booked in and will take place in due course.

This reassures the employee that they’re secure in their new role and it’s being taken seriously, with new opportunities to learn.

Note: Don’t forget to document the discussion, not only to let the employee know that their plights were heard, but to note that you acted fairly and accordingly if ever asked to reveal proof in future.

Transitional plan

Make the changeover from their old role to their new one efficient and seamless by assigning meaningful work straight away.This could be heading up a solo project or a venture that will allow them to make their mark in their new team.

Follow up

This step could be a part of the latter, but make sure to put regular 1-1 meetings in place during the first few weeks that follow the demotion to ensure that the employee is happy and settled within their new role.

Discuss any issues or queries that might have arisen about the demotion in that time and go through any problems the employee might be having. This is a good chance to also catch up with the employee’s new team members to see if their report is correlating.

The pride of some demoted employees might prevent them from relaying how they’re truly feeling.

Tell relevant people

Discuss this with the employee beforehand and let them know who in the office you will be telling and what you will be telling them. Not everyone in the building has to know, especially if the demotion causes were unfavourable. 

A certain level of detail may not be appropriate, therefore keep the information linear and neutral.

Have a contingency plan

While some will be grateful to be given a second chance over being let go, some may become bitter and will be straight on the blower to recruitment agencies to look for a new role.

In the case of the latter, you should have a plan in place before the demotion, so that if the employee hands in their notice tout de suite, you’ll have a backup.

A second chance

Hopefully, if these steps are followed, the employee will take the news on the chin and try to see the positives in the situation and no further legal action will be taken.

In an ideal world, the employee will see this as a new career prospect, one to prove themselves in another field, excel in a lower position or work twice as hard to come back and have another go.