There’s nothing better than seeing employees thrive, but setbacks and slips in performance do happen. One way to address performance problems is a demotion. Sometimes, it’s necessary to take a step back before you can take two steps forward.
When is a Demotion Necessary?
In an ideal world, there wouldn’t be demotions. They are a sign something’s wrong: it could be that an employee has failed to respond to a performance improvement plan or they could just be disengaged.
A demotion is the last stop before termination. If you believe the person has potential and is worth investing in, then a demotion might be the best way forward. Demotions are risky, though. You could end up with an employee who is even less engaged than before, or worse case, a toxic employee.
It’s Not All Bad News
Downsizing responsibility isn’t always a bad thing. Being constantly ‘on’ can wear even top performers down, especially after a pandemic (and the various knock-on effects) took a big toll on employees’ mental health, particularly remote workers.
There are also different times in a person’s career where a step back can make sense. They might have been over-promoted and now spend all their time managing instead of doing the sorts of tasks which first attracted them to their career in the first place. Great businesses rely on great managers, and some otherwise talented employees just aren’t cut out for it. Or, for senior team members, after a long time at the top, a reduction in responsibility can be the first step towards winding down a career.
Staying Compliant With Employment Laws
When demotions are involuntary (i.e., an employee hasn’t requested to downshift), your first priority should be to show that it’s merited. It should come as the result of a thorough performance plan or disciplinary process, with paperwork to prove it. This is important for compliance, but it’s also necessary to show an employee the reasoning behind the decision.
An employee might not even realize they are underperforming and a demotion out of the blue could come as a shock—they might believe they are being targeted for other reasons. Following proper procedures ensures that by the time an employee is officially demoted, they’ve been given enough time to up their game, and can’t claim that it’s coming as a surprise.
How to Write a Demotion Letter
Once you’ve decided to demote an employee, you’ll want to let them know in person (choose the time and place with care) and supplement this with written confirmation. A letter isn’t just important for due process, it lets an employee process the news in their own time. Be specific listing the reason for the demotion. While you shouldn’t criticize the employee, you do need to ensure you aren’t leaving room for the hope that the decision will be reversed in the short-term.
The letter should also state from when the demotion will be in effect and the consequences for the employee’s role, responsibilities and salary.
Get a Demotion Letter Template
When demoting an employee, it’s essential to communicate clearly. To help businesses, Paycor is offering a free demotion letter template. Once downloaded, this can be customized to the specific needs of your organization.
Get a Demotion Letter Template
Buyer's Guide To HCM And Payroll Technology
An HCM platform is the foundation of your business, and choosing the technology is one of the most important decisions you'll make.Get Expertise
Stay Up to Date
Sign up to receive our latest research and expert advice.
Check your inbox for an email confirming your subscription. Enjoy!