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Employee Demotion- Meaning, Causes, Decision, How to Handle

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An employee's professional career passes through a lot of phases. It means there will be many ups and downs along the way. However, it is essential to note that each of these experiences teaches your employees valuable lessons. While the "ups" fill one with happiness, the "down' bestows valuable lessons. In this regard, the latter seems more fruitful in the long run. It is because while joy is temporary, lessons are permanent. Therefore, employees must handle their "downs" well. One, in particular, being employee demotion.

What Is Employee Demotion?

Employee demotion is the reverse of employee promotion. It is the act of downgrading an individual's rank and status as a result of disciplinary action. This can be because of an employee's work, behavior, violation of rules, etc.

Demotion is one of the most dreadful situations an employee can suffer. It harms employee motivation, morale, and peace of mind. What's even worse is that there are countless reasons why a worker might face this dilemma. This brings us to our next matter.

Causes Of Employee Demotion

Of the many causes for demotion of an employee, the most common of these are:

These are common examples of the situations in which an employee can be under demotion.

The Decision For Employee Demotion

In the current day and age, demotion is quite normal. Considering certain reasons, the demotion of an employee is justified in most cases as well. Nonetheless, it is an act of repercussion that can shatter one's confidence level. Therefore, you must be sure of your decision.

For instance, a demotion may not work if you demote an employee solely based on the work. However, proper employee training and development will solve this performace issue much better.

If you are demoting an employee to cut costs or encourage favouritism in the workplace, that won't work either. It will only result in employee turnover. So, you must be sure in such cases of your decision.

After much discussion, if you still think a demotion is right, then here is how you can handle it better.

How Managers Can Handle Employee Demotion Better

1. Meeting

The news of a demotion will surely come as a shock for your employees. Therefore, it is vital not to spring this upon them suddenly. Here, it will be better to start things in a private session.

Conduct a one on one meeting for discussion on the reasons, implications, and future steps.

2. Be respectful

In this meeting, be respectful. Don't start with the reasons for demotion right away. Instead, after the news, give a few seconds for the employee to process the information. Also, make the employee understand the company's wish to keep him/her on board rather than just firing them.

Demoting an individual also means that a company believes in one's potential but not in its current designation. Make them understand that it's a chance to take a step back and learn from their mistakes. It will help prepare them better for their future.

3. Address the Issues

After you have explained the importance of an individual and how he/she can learn from their mistakes, move to the underlying issues. This means addressing the reasons for the demotion of the employee.

It is essential to be clear without brutally grilling the employee. Once the employee gets to know the reasons behind his/her downgrade, they can work on them sensibly. It will help them evolve and emerge better from their demotion.

4. Be open to questions.

Employee demotion being such a sensitive issue will undoubtedly raise questions about the decision. Here, it is crucial to answering these questions with effective feedback. Avoiding these questions will rob the workers of their closure, which can harm their experience even more.

Avoiding these questions will rob the workers of their closure, which can harm their experience even more.

Some of these common questions may be:

  • Is there a possibility of more time for the individual to prove himself/herself at the job?
  • Is there a possibility for a change of department/location/position instead of a demotion?
  • Can the employee have a few days to think about the new role?
  • What would be the repercussions if the employee doesn't agree to the new role?

5. Be prepared for a mixed response.

Sometimes, demotion can get a bit ugly as well. This means an employee could have an aggressive response or get overly emotional. In times like this, you must be prepared to handle the situation well.

You can consider having employee counseling at this point to help employees cope better with the news.

6. Don't announce the demotion.

Demotion is often a humiliating experience for the employees. Understanding this, you must keep things as private as possible. Everyone at the office need not know about the demotion of an employee. Instead, keep it strictly on a need-to-know basis.

This means only informing the ones directly working with the individual about the change. There need not be an announcement for the same. When an employee feels comfortable, then he/she will tell it to the individuals concerned.

These are the steps that a manager must be careful with while dealing with the demotion of an employee.


While dealing with a demotion, there can be many things running wild in the employee's mind. Here, the most dominant human emotion is humiliation. As a result, demotion can be a grueling emotion at times. Sometimes, it may also result in resignation, thereby adding to employee attrition.

Therefore, to make sure that this doesn't happen, managers must be careful in handling demotions. Following the steps above will ease the process a bit and help you make a smoother transition.

This article is written by Jyoti Prakash Barman. He is an in-house Content Marketer at Vantage Circle with interests in music and automobiles. For any related queries, contact editor@vantagecircle.com

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