Promotions, Demotions


The employees are given the promotions to higher posts and positions as and when vacancies are available or when new posts are created at the higher levels. It is quite common in all types of organizations. It is the product of internal mobility of the employees due to change in organizational processes, structure etc. It is better ten direct recruitment which satisfy many human resources problems of the organization and helps in achieving organizational objectives. Promotion means higher position to an employee who carries higher status, more responsibilities and higher salary. The higher status and salary is the two most important ingredient of any promotion. It is an advancement of employee to a higher post with greater responsibilities and higher salary, better service conditions and thus higher status.

Purpose of Promotion

  • To motivate employees to higher productivity.
  • To attract and retain the services of qualified and competent people to recognize and reward the efficiency of an employee.
  • To increase the effectiveness of the employee and the organization.
  • To fill up higher vacancies from the within the organization.
  • To built loyalty, morale and the sense of belongingness in the employee.
  • To impress upon others that opportunities are available to them too in the organization, if they perform well.

Promotion Policy

We have seen policy is the guideline for action. Policy varies with organization. So the promotion is very sensitive to employees, it is very essential. The promotion policy should clearly stated, widely circulated, and fully explained to their employees. The promotion policy which influences the number of factor of the organization such as, morale, motivation, turnover of the personnel in the organization. The personnel department of the organization must develop an effective promotion policy. This should be in written, flexible subject to situations. In order to make the promotion policy successful, it is necessary that the employees’ assessment and confidential reporting system should be objective as far as possible so that every employee has faith in promotion policy and hence induced for better performance to get promotion.

The promotion policy should consider merit, potential and seniority of the employees. The merit factor requires a good procedure for evaluating the performance of the employee. The performance of the each employee should be appraised periodically and should form the part of personal record.

Principles of Promotion

Promotion is a double edged weapon. If handled carefully, promotion is a double edged weapon. If handled carefully, it contributes to employee satisfaction and motivation. If it is mishandled, it leads to discontentment, frustration, skepticism, bickering among the employees and culminates in a high rate of employee turn over, HR department has taken the responsibility of designing, implementing the total promotion policy in an organization. The policy of promotion should be clear in the following matters:

  • The management must take it clear where to fill-up higher positions by internal promotions or recruit people from outsides. Generally speaking, top positions by external recruitment. The lower positions should however, are filled up by promotions from within.
  • When it has been decided to fill-up higher positions with promotions, further decisions on determining the basis of promotion should be made by the management. The basis of promotion may be seniority or merit or both.

The merit’s are:

  • It is easy to administer.
  • There is less scope for subjectivity or arbitrariness in fixing seniority.
  • Labor Unions welcome seniority based promotions.
  • Seniority and experience go hand in hand; therefore, it is right and proper to make promotions on this basis.
  • Subordinates are willing to work under an older boss who are given many years of service to the company.
  • Loyalty is rewarded.

Demerits are:

  • Seniority is no indication of competence.
  • In spite of judicial pronouncement, there are no single criteria for fixing the seniority of an employee.
  • Young and competent people get frustrated and might leave the organization.

If the competency is the basis for promotion, an employee whose performance is the best, as revealed by performance appraisal, is promoted. He or She beats all others by his or her merit is rewarded.

The merits of promotion by competency:

  • Efficiency is encouraged, recognized and rewarded.
  • Competent people are retained because better prospects are open to them.
  • Productivity increases.

The disadvantages of promotion by merit are:

  • Discontentment among senior employees.
  • Scope for favouritism.
  • Loyalty and length of service are not rewarded.
  • Opposition from union leaders.


Demotion is the opposite of promotion. It is a downward movement of employees in the organizational hierarchy with lower status and lower salary. It is the downwarding process and is insulating to an employee. Demotion is the punishment for incompetence or mistake of serious nature on the part of the employee. It is serious types of the penalty or punishment and should be given rarely and only under exceptional circumstances and tactfully. Demotions may be necessary under the following conditions:

  • When the organization reduces activities, officer occupying certain posts are demoted.
  • Errors in the promotions already made are corrected through demotions.
  • It may be necessary to use demotions as a tool of disciplinary action against erring employees.

The tool of demotion should be used only when it is absolutely necessary. However, there should not be any injustice to any of employees in this regard. Demotions should be made for genuine reasons. Promotions are easily as they affect their status, career and position. Demotion usually treated as an insult and naturally resented by the employees in one way or the other. It is, therefore, desirable to avoid demotions as far as possible. Demotions should be an exception but not the normal rule of the organization.

Demotion Policy

Demotion is very harmful for the employee’s morale. It is an extremely painful action, impairing the relationships between people permanently. While effecting the demotions, managers should extremely careful not to place himself on the wrong side of the fence. It is therefore, very necessary to formulate a demotion policy so that there may be no grievances on the part of the unions and the employee concerned.

Demotions should have serious impact on need fulfillment. Needs for esteem and belongingness are get frustrate leading to a defensive behaviour on the part of the person demoted. There may be complaints, emotional turmoil, inefficiency or resignations. Hence, demotions are very rarely resorted to by managers. Manager prefers to discharge the employees rather than face the problems arising from the demotions.

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