Demotion: Necessity and Causes of Demotion of an Employee!

Demotion is just the opposite of promotion. It is a downward movement of an employee in the organisational hierarchy with lower status and lower salary. It is a downgrading process and is insulting to an employee. Demotion is a punishment for incompetence or mistakes of serious nature on the part of an employee.

It is a serious type of penalty or punishment and should be given rarely and only under exceptional circumstances and also tactfully.


Demotions may be necessary under the following situations:

(a)When the company curtails some of its activities, officers occupying certain posts are demoted.

(b)Errors in the promotions already given are corrected through demotions.

(c) It may be necessary to use demotion as a tool of disciplinary action against erring employees.


Demoting an employee is not an easy matter and calls for tact and diplomacy. Perhaps it is easy to dismiss than to demote. In both the cases the person’s interests and pride will be hurt, but in the latter case, since the person still continues his association with the organisation he may avenge by hurting the interests of the organisation.

Causes of demotion:

Demotion may be caused because of the following factors:

(a) In the process of re-organisation, some departments may be combined resulting in the elimination of some jobs. Here, employees may be required to accept lower positions. Such demotions are not considered black spots against the employees who are demoted.

(b) Demotions may be used as a disciplinary measure against the employees who commit serious blunders at their job. Sometimes, objectionable behaviour of employees with their supervisors and top management may result in demotion of them.


(c) When an employee realises that he cannot handle the additional responsibilities thrust upon him consequent upon his promotion, he will be demoted. That is to say, when an individual fails to meet the job requirements and standards, he would be automatically demoted to the position which he was holding earlier.

(d) Sometimes, ill-health, changes in technology, difference in methods and practices, etc., tend to make experienced heads unproductive resulting in re-definition of their duties and responsibilities. The redefinition may result in demotion.