There’s an old saying in football: When you put the ball in the air, three things can happen, and two of them are bad. Those odds are actually better than the odds of a demotion successfully solving the problem it was intended to address. More often than not, a demotion merely delays the inevitable and can cause more problems before that unavoidable termination occurs.

On occasion, a demotion can be at an employee’s request. Perhaps they stepped up before they were ready or a personal issue has become a priority. In these cases, both the employer and the employee have the greatest chance of success, but these situations are a minority. Most of the time, the suggestion of a demotion comes from the supervisor, not the employee, and are a response to poor performance, disciplinary actions, position elimination, and organizational restructuring.

Demotions are not common, so it’s important to thoroughly examine if a demotion can truly achieve the desired outcome. Will the employee be successful in the demoted role? How will the demotion affect the morale of the employee, team, or department? If the demotion is for performance-related issues, have all other performance-improvement options been explored? Will the demoted employee become a peer of employees they used to supervise? Will the demotion result in a pay reduction?

Demotions that are implemented as a response to misconduct or issues of ethics can be very risky and could make it difficult to justify other terminations for similar actions. More importantly, this action could send the wrong message to other employees that the employer does not take issues of misconduct and ethics seriously.

Once the company has thoroughly reviewed the reasons for the decision and determined that a demotion is appropriate, the following steps can help facilitate a positive transition.

Be respectful during the discussion, clearly and honestly communicating performance-related issues. Explaining that this could have been a termination can help make a positive transition possible.

Clearly outline the new position and the transition plan (e.g., last date in the old role, to whom they will report).

If a pay reduction will occur, address it in a straightforward manner—don’t be vague.

Be ready to respond to:
• “Can I have a little more time in the position to improve?”
• “Is there any way to keep my current pay rate?”
• “Can I move to a different position/department/location?”
• “Can I have a few days to think about it?”
• “What if I don’t want to take the position?”

Your firm responses to each question should be scripted before the meeting. Wavering could make future actions even more difficult.

Be prepared for an emotional or negative response and have a plan should the employee need a break before the conversation is finished. If you have concerns that violence is a real possibility, you probably should instead be discussing termination.

Before the demotion is communicated to staff, customers, etc., engage the employee in formulating a communication plan that ensures the employee retains their dignity. This will exponentially increase the likelihood of a successful transition.

The legal risks of demoting an employee can be similar to those of a termination. Be prepared for questions of fairness, consistency with company policy, and even discrimination. Consistent application of the company’s policies will help an employer combat such claims.

After the demotion has taken effect, a negative attitude toward the company or “management” can spread quickly. While it’s important to maintain the employee’s dignity, it is equally important to protect the company and others in the work environment. Don’t make excuses for the employee—respond to any negativity that is being spread quickly and firmly.

Demotions may provide an employer with the opportunity to retain a valuable employee while allowing the employee to remain employed. Effectively preparing for all contingencies and managing the risks can result in a win for both parties.

Lauren Yost is NRPA’s Vice President of Operations.