5 Tips To Handle Staff Demotions Professionally By Professor Sophie Hennekam

In times of economic uncertainty, many companies are forced to restructure their activities, lay-off or demote staff if they want to remain in business. Demotion is often viewed as more favourable alternative to redundancy but has many ramifications for those concerned and beyond.

There are two types of demotions, voluntary and involuntary. Voluntary demotion occurs when employees decide to reduce their responsibilities or work part-time to accommodate their personal circumstances. However, when the company initiates a demotion, it is called involuntary demotion. A demotion can manifest as a reduction in rank, responsibility, span of control, job title, pay (including benefits) or a mix of these.

I have found in my research that undergoing an involuntary demotion has mostly negative consequences for an employee, including having a reduced sense of identification with one’s job, fewer developmental opportunities and perceiving less organisational support. Involuntary demotion also can feel unfair, leading to bitterness and causing the employee to become less engaged in the organisation.

Involuntary demotion is a challenging process. Since financial, psychological, and emotional factors come into the equation, it is vital for organisations and HR teams to handle demotions very carefully to retain their human capital, talent pool and reputation. So here are five tips for HR to consider when dealing with employee demotion processes.

Show consideration

Demotion affects demoted individuals in several ways and may not only result in financial loss. When a demotion involves a change of position that requires a narrower range of cognitive and/or technical skills, demoted employees often lose opportunities to use and develop higher levels of skills that might be critical to enable them to seek employment elsewhere.

Individuals who are demoted from prestigious senior positions also tend to believe that a downward move amounts to a setback in their career with the loss of perks, job title and prestige, and is regarded as a personal failure. This is something that HR departments should be aware of and show consideration for.

Be clear

The reaction of demoted employees can have negative consequences for organisations, particularly when the demotion is perceived as unfair. Therefore, HR professionals need to play a proactive role in alleviating possible negative employee reactions to demotion and be especially careful in the way the news is communicated. As demotion is a sensitive issue, the employee being considered for demotion can benefit if the reasons behind the decisions are clearly and transparently articulated. Explaining the rationale behind the demotion is most likely to be appreciated.

Provide emotional support

A common employee reaction after demotion is grief. HR managers should be aware of the various stages of grief and help demoted workers regain their feelings of self-worth. It is better to engage in, rather than avoid, conversations about the current position and the future professional prospects of the demoted employee.

Show them a path forward

It is important to help demoted staff come up with an action plan. They may feel angry and upset, which might lead them to want to resign on the spot. They may also feel lost of anxious about their future. Therefore, it is a good idea to help them visualise a path forward and explore what the next steps might be. You can offer some practical help, for instance, about what do they need to do or change to stay and progress in the company. Is there a way to be reinstated in their previous position in the future, or should they take another direction within the organisation?

Demonstrate commitment

HR professionals need to be aware that demotion can lead to feelings of injustice. HR managers need to minimise any negative employee reactions that can have a viral effect and lead to negative organisational outcomes. This can be done by demonstrating commitment towards demoted employees, allowing them to succeed in their new role and enabling the appropriate utilisation of their knowledge, skills, and other attributes they may have. Demoted employees need to be treated as valued members of the organisation.