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Are demotions on the rise?

Demotions might be becoming more common, but they shouldn’t be used in place of an employee’s development, or as a stall for firing someone.

Are demotions on the rise?
[Photo: Verne Ho/Unsplash]

Demotions have traditionally been considered extreme, rare, and a last resort before dismissal, but new research suggests they may actually be somewhat common, and even on the rise.

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According to a recent study by staffing firm OfficeTeam, 14% of workers have been asked to take a lower role, and 46% of HR managers witnessed a demotion at their organization.

Of those HR professionals that had witnessed a demotion, 39% said it was a result of poor performance, and 38% indicated that the employee was not succeeding in a new role after being promoted. Another 16% said the demotion was a result of organizational restructuring, while 6% of demotions were voluntary.

“Demoting anyone does pose a risk, and my recommendation would be to think through it completely,” says Jennifer Zweig, a regional vice president for OfficeTeam. “A demotion should never come as a surprise if it’s based on poor performance; they should be aware of what their goals were and how they haven’t met them, so that meeting shouldn’t be a shock.”

While this is the first study OfficeTeam has conducted on demotions, there is some evidence to suggest they are on the rise. Demotions are most common among those aged 18 to 34, 22% of whom have had their role downgraded during their career, compared with only 10% of those aged 35 to 54 and 3% of workers aged 55 and older.

[Image: OfficeTeam]
Zweig suggests that younger workers are more likely to have experienced a demotion in spite of having spent less time in the workforce because of generational differences, particularly when it comes to career priorities.

“For example, if you’re more focused on job advancement and promotions versus stability and staying the course, demotions can unfortunately also be something that happen along the way,” she says.

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The increasing mobility of younger workers may ultimately result in taking on roles and responsibilities they are unqualified for or unable to manage, but author, speaker, and retired professor of management Todd Dewett suggests employers are equally at fault for the higher proportion of demotions among younger professionals.

“People like to say [younger workers] are less loyal, but of course the exact same is true on the organizational side,” he says. “Organizations are much more quick to merge, to divest, to right-size, to downsize, to sell off divisions; they make changes much more quickly than they used to.”

Last resort, not delayed dismissal

With lower degrees of loyalty on both sides of the employment equation, Dewett is concerned that demotions are too often pursued in place of an investment in the employee’s development, or a full dismissal. “I suspect it’s used too often, I suspect it’s used too bluntly, and I don’t believe decision makers fully appreciate the negative possible outcomes associated with this quick fix,” he says.

Dewett explains that demotions are often necessary and ultimately for the benefit of the organization, but he’s concerned with the 39% that the study found to be a result of poor performance. “Those are people who should be coached, developed, improved, or let go,” he said. “You don’t take someone who is a problem and demote them and expect great behavior.”

[Image: OfficeTeam]
According to the OfficeTeam study, 52% of those who are demoted quit their jobs soon after. Dewett, however, believes the negative impact of a performance-related demotion can be even more significant, should the employee remain.

“If [the employer] makes decisions of this type because they’re being shortsighted about financial savings or they’re simply avoiding conflict, people will notice,” he said. “How do you think that makes everyone who witnessed this scenario feel about the organization? I would contend they’re actually harming morale.”

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Not all demotions are made the same

Dewett explains that when it comes to demotions, the medium is the message. How an organization delivers the news can play a significant role in how the employee views the decision, and whether they should feel welcome to stay.

“If you want someone to feel like you want them to continue working for you, you’ve got to spell that out in so many words,” he says. “‘This is why it happened, and more importantly, this is where you might go moving forward.'”

If a demotion is accompanied by mentorship and training, clear expectations, and a path toward future advancement, the employee should ultimately feel like they still have a future at that organization, says Dewitt.

“The more old school organizations–especially if they’re dealing with a real problem as opposed to a quality asset that just wasn’t ready–will very often be lacking in transparency,” he says. “[They might say,] ‘This has happened, you’ve been judged this way, the role ends here, the new role starts here, here’s the responsibilities, here’s the pay, do you accept?’ Those are two existing extremes that are out there.”

Though the news may sting at first, Dewett emphasizes the importance of the employee analyzing how it is delivered when deciding whether to remain with the company. Companies similarly need to choose their words carefully if they hope to retain a demoted employee.

“The messaging has to be really carefully crafted in order to be in that 48% where you are able to retain that person,” explains author and executive coach Karen Elizaga, who similarly believes transparency and communication are key. “You want to know concretely what you can do moving forward to avoid this pitfall, and I would explain what support is available to the employee so they can meet or exceed the expectations of the employer.”

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How a demotion could ultimately be a good thing

According to the OfficeTeam study, 47% of those who were demoted felt upset and disinterested in their jobs, but Elizaga believes that in some cases, a demotion could be a net positive to an employee’s long-term career.

“Of course it’s demoralizing to be demoted, but if you pull yourself back up by your bootstraps and really dig in and really think about what you can do to improve, that’s a really positive sign to your employer,” she says. “It’s a total growth opportunity, because it can show how you handle adversity.”

Difficult as it may be in the moment, Elizaga believes that demotions provide a “sink-or-swim” opportunity, and those that rise to the occasion could ultimately succeed in ways that wouldn’t be possible if they continued to struggle in their previous role.

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About the author

Jared Lindzon is a freelance journalist born, raised and residing in Toronto, covering technology, entrepreneurship, entertainment and more for a wide variety of publications in Canada, the United States and around the world. When he's not playing with gadgets, interviewing entrepreneurs or traveling to music festivals and tech conferences you can usually find him diligently practicing his third-person bio writing skills.

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