Promotion and Demotion: An Introduction

Promotion

A promotion may be defined as “an upward advancement of an employee in an organisation to another job, which commands better pay / wages, better status / prestige and higher opportunities challenges and re-sponsibility a better working environment, hours of work and facilities etc.”

Promotion has powerful motivational value. It forces an employee to use his skills, knowledge and abilities to have the vertical growth. It inspires employees to compete and get ahead of others.

Bases of Promotion

• Merit-based promotion
• Seniority-based promotion

Bases of Promotion

Seniority-based promotion

Seniority means length of recognized service in an organization. If it is adopted as a basis for promotion, promotion will be done as a matter of routine. Trade unions generally insist that years of service or seniority should be the main criteria for making promotions.

Seniority is considered to contribute to the employee’s ability on the assumption that the longer a person does a job, the more he learns about it. However, this assumption also has the reverse effect that after a certain time span learning diminishes – a phenomenon referred to as – “trained incapacity”.

Merit-based Promotion

Employees are promoted after a thorough assessment of their abilities for a higher level job involving greater responsibilities and status. There is no doubt that promotion on the basis of merit encourages initiative and if the policy is consistent and fair, it would lead to efficiency and higher productivity.

Promotion involves the following ingredients:

(i) Improves job, status and prestige.

(ii) Gives more responsibility.

(iii) Brings increase in pay and perks.

Types of Promotion

• Horizontal Promotion
• Vertical Promotion
• Dry Promotion
• Open vs. Closed Promotion

Purpose of Promotion

The following are the purposes or objectives of the promotion:

1. Promotion is a reward for recognition of efficiency of an employee and his performance.
2. Promotion prevents an employee from leaving the job through resignation.
3. Promotion motivates the employees because they feel secured and worry free that their efficiency will be rewarded with promotion to a higher position.
4. Granting promotions aim at increasing organisational effectiveness.
5. It increases sense of belonging to the organisation among the employees.
6. It aims at promoting job satisfaction among employees.
7. It promotes loyalty to the organisation.
8. To create an impression upon others that better opportunities are available to them in this organisation and their career is safe and has a upward movement.
9. It aims at reducing labour turnover, discontent and labour unrest.

Demotion

Demotion is the downward movement of an employee in the organizational hierarchy with lower status and pay. It is a downgrading process where the employee suffers considerable emotional and financial loss in the form of lower rank, power and status, lower pay and poor working conditions.

A demotion is a reduction in an employee's rank or job title within the organizational hierarchy of a company, public service department, or other body, unless there is no reduction in pay. (Wikipedia)

A demotion refers to a permanent reassignment to a lower position than the employee had worked previously. The position will generally have a lower level of responsibility or required skill, and a lower pay grade than the previous position.

Demotions can be either voluntary or involuntary and can occur due to poor employee performance, position elimination, disciplinary actions or organizational restructuring. A demotion can allow a company to retain an employee it deems valuable by returning him or her to the previous position.

Reasons of Demotion

There are several factors responsible for the demotions:

• A candidate is unable to meet the challenges posed by the job.
• Due to adverse business conditions, organizations may decide to lay-off some and downgrade other jobs.
• Demotion may be used as disciplinary tools against the errant employees.
• Due to changes in technology, methods and practices, old hands are unable to adjust or when employees due to ill health or personal reasons, cannot do their job properly.