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What Demotions at Work Mean for Employees and Managers

If an employee is producing low-quality work or your organization is experiencing unexpected changes, employee demotions may be a possible solution. Carefully consider your options and reasons before deciding to demote an employee. Learn more about what a demotion is, why companies demote employees and the pros and cons of demoting an employee.

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Demoted definition: what is a demotion?

A demotion occurs when a manager reduces an employee’s job title, role or duties. How you define demoted depends on the situation. A demotion can either be temporary or permanent and is often used as an alternative to letting an employee go. Managers may demote employees based on factors like job or company performance.

Reasons why an employer might demote an employee

Employers may decide to promote employees if the company is undergoing financial or structural changes or if an employee is performing effectively in their role. Similarly, there are reasons managers may demote employees, such as:

  • Low work performance:A manager may notice an employee performing ineffectively in their role and communicate this to them. If an employee still finds it challenging to meet the performance goals set by the employer, they may receive a demotion with fewer tasks or less complex responsibilities.
  • Problems following company policy:If an employee is continuously struggling to follow company policy and is issued warnings for workplace misconduct, they may receive a demotion as a final warning before being dismissed.
  • Unexpected budget cuts:An organization may experience an unexpected financial loss, causing them to lower some employees’ pay and responsibilities. This demotion may be temporary until the company has a larger influx of revenue again.
  • Company restructuring: As a business grows, it may restructure goals and change strategies. This can call for hiring more experienced professionals to cover higher-level roles, leading the organization to demote employees by redistributing and reorganizing their tasks.
  • Employee needs additional skills or training:An employer may realize they gave an employee a promotion they weren’t prepared for. This may require giving the employee a demotion and offering additional training or skills until they’re ready to perform in the role again.
  • Employee’s desire for fewer responsibilities:An employee may request a voluntary demotion if they feel their responsibilities or quotas are too difficult to meet.

Related:Chronic Complainers: Positive Steps for Managers to Take

Pros and cons of demoting employees

There are advantages and disadvantages to demoting your employees. These include:

Pros

  • Keeps the company financially stable without letting employees go:If your company is experiencing a significant and unexpected financial loss, demoting employees and giving them less pay is often more beneficial than laying them off, especially if you anticipate that your organization will become financially stable again soon.
  • Gives the employee more training:If an employee isn’t performing well, it’s best to temporarily demote them and help them improve in the role rather than letting them go and providing no training or assistance.
  • Allows more time for the employee to focus on work-life balance:An employee may request a voluntary demotion because they feel their tasks are overwhelming and interfere with their personal life. Giving them a demotion with fewer tasks or responsibilities helps them maintain a healthier work-life balance.
  • Helps restructure the company and reevaluate tasks:Your organization may demote some employees due to a company restructuring. Temporary demotions help you better understand which employees have certain responsibilities. This allows you to redistribute tasks to other departments and possibly give employees new responsibilities that better match their specific interests or skills.

Cons

  • Decreases employee morale and motivation:If an employee has fewer tasks or responsibilities to complete, they may feel less motivated to finish them. A few employees feeling less motivated may cause others to feel the same way, which can lead to an overall decrease in office morale.
  • Causes employees to feel inadequate and unimportant:When receiving a demotion, employees may feel like their work isn’t good enough or appreciated. This can make their productivity continue to decline, and their self-esteem may fall as well.
  • Results in potential employee departures:Demotions at work can make employees feel upset and unhappy with the company’s decisions. This often results in employees looking for work elsewhere in hopes of receiving more responsibilities, pay or appreciation. Multiple demotions could then result in a high turnover rate at your company.
  • Makes employees feel uncomfortable completing new tasks:Some employees may feel embarrassed or uncomfortable completing work they feel doesn’t match their skill level or expertise. For example, if a marketing manager is demoted to a marketing coordinator role, they may feel uncomfortable completing more mundane tasks and working with a team they were once in charge of.

Tips for demoting an employee

Being demoted at work is never easy for an employee, but by following these tips, you can help to make the transition as smooth as possible:

  • Don’t demote out of the blue: An employee who believes they’ve been performing well will feel blindsided by a demotion at work. Before demoting an employee, address performance issues when they arise, and explain that if improvements don’t occur, a demotion may be the only solution. When you believe that demotions may be likely due to restructuring, give employees advance notice of the changes and alert them that job titles and duties may be modified as a result.
  • Clearly define demotion for an employee: Explain how their role will change and why demotion is necessary. Frame things in a positive light as much as possible by pointing out how a demotion may benefit them. For instance, you might stress that the alternative is termination, but you believe in the employee’s ability to improve so would prefer to demote them and give them a chance to turn things around.
  • Give them time to process: Even with some forewarning, an employee will likely feel stunned after receiving a demotion. Allowing them to leave for the day after the meeting or scheduling it toward the close of business to give them time to process the news. Schedule a follow-up meeting to discuss the situation in greater detail after the employee has had time to adjust.
  • Commit to helping them succeed: Assure the employee that you’re committed to seeing them succeed and emphasize that you’re demoting them because you value them. Explain what support they’ll receive going forward. You may offer weekly coaching sessions to improve their performance or identify additional training you can provide or arrange for them.
  • Strengthen the lines of communication: If you want the employee to remain on your team, good communication is key. Let them know it’s okay to ask for guidance or to come to you with concerns, and check in with them regularly.
  • Keep your emotions in check: Receiving a demotion at work is naturally upsetting, and the employee may have an emotional response as a result. While you can’t control their anger, hurt or sadness, you can decide how you respond to it. Remain calm and while it’s okay to show empathy, don’t say things like “it’s for the best” or “things will be alright.” This type of language may seem patronizing or send mixed messages to the employee. If you feel uncomfortable, take a deep breath and remind yourself to keep your emotions in check.
  • Document everything: Make a record of all communications regarding employee performance issues and the demotion. Doing so will help ensure that you have proof of problems if the employee accuses your organization of wrongful demotion.

Demotion at work FAQs

Can you legally demote an employee?

Laws surrounding whether you can legally demote an employee are complex. Generally, you may have grounds to demote an employee due to misconduct or changes in their qualifications. However, federal, state and local labor laws may dictate when and how you can give someone a demotion at work.Consulting an experienced labor attorney can help ensure that you comply fully with the applicable laws.

Related: 6 Lawyer Interview Questions and Answers

What is an unfair demotion?

An unfair demotion is one that seems unjust or unwarranted in the eyes of the employee for one or more reasons. Wrongful demotion is a legal term that refers to a demotion that’s unlawful or can be proved in a court of law to be unwarranted or in retaliation for a complaint. You may face penalties for a wrongful demotion.

Related: Non Retaliation Policies for Your Business: Do’s and Don’ts

Can an employee refuse to be demoted at work?

An employee can refuse to accept a demotion, but in most cases, this would involve resigning from their position. Before you approach an employee about a demotion at work, prepare for the possibility of a refusal and decide how you would handle the situation.

Related: Termination Policy: Letter of Separation (With 2 Samples)

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