What is demotion, Reason and principle of demotion

Demotion is the reassignment of a lower level job to an employee with delegation of responsibilities and authority required to perform that lower level jobs and normally with lower level pay.

Organisations use demotions less frequently as it affects the employee’s career prospects and morale.

The Remaining type of internal mobility is demotion. It is the opposite of promotion.

Reasons of Demotion

Demotions are necessary for the following reasons:-

  • Unsuitability of the employee to higher levels jobs.
  • Adverse Business Conditions
  • New technology and new methods of operation
  • Demoted on disciplinary grounds.

Reason 1: Unsuitability of the employee to higher levels jobs.

Employees are promoted based on seniority and past performance. But some of the employees promoted on these two bases may not meet the job requirements of the higher jobs.

In most cases, employees are promoted to the level of their incompetence. Some employees selected for higher level jobs may prove to be incompetent in doing that job.

Such employees may be demoted to the lower level jobs where their skills, knowledge and aptitude suit the job requirements.

Reason 2: Adverse Business Conditions

Generally adverse business conditions force the organisation to reduce quality of production, withdrawal of some lines of products, closure of certain departments or plants.

In addition, organisation resort to economy drives. Consequently, organisations minimize the number of employees. Junior employees will be retrenched and senior employees will be demoted under such conditions.

Reason 3: New technology and new methods of operation

New technology and new methods of operation demand new and higher level skills. If the existing employees do not develop themselves to meet these new requirements, organisations demote them to the lower level jobs where they are suitable.

Reason 4: Demoted on disciplinary grounds.

Employees are demoted on disciplinary grounds. This is one of the extreme steps and as such organisations rarely use this measure.

Though the demotion seems to be simple, it adversely effects the employee’s morale, job satisfaction etc.,

It reduces employees status not only in the organisation but also in the society in addition to reduction in responsibility, authority and pay.

Principles of Demotions

Organisations should clearly specify the demotion policy. Otherwise, the superiors demote the employees according to their whims and fancies.

A systematic demotion policy should contain following items.-

  • Specification of circumstances under which an employee will be demoted like reduction in operations, in disciplinary cases.
  • Specification of a superior who is authorized and responsible to initiate a demotion.
  • Jobs from and to which demotions will be made and specifications of lines or ladders of demotion.
  • Specification of basis for demotion like length of service, merit or both.
  • It should provide for an open policy rather than a closed policy.
  • It should contain clear cut norms for judging merit and length of service.
  • Specification of provisions regarding placing the demoted employees in their original places if the normal conditions are restored.
  • Specification of nature of demotion i.e., whether it is permanent or temporary if it is as a disciplinary action.
  • It should also specify the guidelines for determining the seniority of such demoted employees.


Demotion is just like punishment for an employee. Employees are demoted causes of lack of quality their work or Without discipline and wrong behavior in an organisation and demotion is demotivate the employee.

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