“I’ve exceeded my performance targets year after year and finally found myself getting demoted without having asked to do a step back. It does make you wonder how this came about, all I know that it has nothing to do with my performance at work.”
Demotion, a downwards career move with a mainly negative connotation, is more common than one might think. One reason why we know very little about it is the tendency to refer to it using terms such as ‘delayering’, ‘downward shifting’ and other euphemisms. The popular press often writes about demotion as a possible tool to improve work-life balance or to manage the ageing workforce. Conversely, organisations, HR practitioners and, at least outside of critical management studies, many academics shy away from viewing it as a deliberate HR practice to cut labour costs.
Demotion, whether it is voluntary or involuntary, has significant consequences for both employers and employees, hence we need to know how and why it is used. In order to shed light on this increasingly common phenomenon, we interviewed 23 individuals who had each been demoted. We also interviewed their colleagues, two co-workers for each demoted person, to explore whether the perceptions of those who have been demoted aligns with those of their colleagues.
While we know a great deal about how organisation systems and processes might be used to advance employees’ careers, much less is known about how those same systems and processes might result in a career demotion. A ‘common sense’ perspective suggests that individuals who are least valuable for an organisation are more likely to be demoted than their more productive counterparts. However, we found that demotion decisions have less to do with performance than might be expected. Instead, unexpectedly, our study suggested that social capital (professional and personal networks) and the quality of that capital in terms of relationship strength have a far greater impact on the likelihood of being demoted.
First, we found evidence for the centrality of the employee-employer relationship and specifically the relationship between the employee and their immediate manager. ‘Positive’ relationships and particularly friendships were perceived to offer a form of ‘protection’ against demotion, while ‘negative’ or ‘neutral’ relationships did not provide the same level of ‘protection’.
Second, the ability to socialise and the extent to which employees can connect on an interpersonal level with management was a further important impact influence on the likelihood of being demoted. Participants spoke about the ability to engage in positive daily interactions with other organisational members and engage in ‘organisational politics’.
Third, the theme of ‘visibility’: in which decisions about who gets demoted were perceived as being based on which employees were most or least visible. Clearly, ‘being noticed’ is an important part of managing performance at work. However, participants also said that even high performers can be demoted. Both demotees and co-workers believed that effective interpersonal behaviour was a more significant influence on demotion decisions. Moreover, several personal characteristics such as personality type, social background and linguistic ability emerged as important factors that hindered or facilitated the ability of employees to build positive relationships with important others, which, in turn, affected the likelihood of being demoted.
While we know that having more social capital is positively related to career success, income and performance, our study suggested that a paucity of social capital can have a detrimental effect on one’s career by increasing the likelihood of being demoted. More precisely, when an individual does not possess certain types of social capital, such as a positive relationship with their manager, or the ability to socialise effectively in an organisational context, it may lead to demotion.
So, what does this mean for organisations, employees and HR managers? Employees should be aware that their performance at work does not protect them from demotion. Rather, their relationships at work, their visibility to important decision-makers and their capacity to socialise, seem to be more accurate predictors. Does this mean everyone should engage in organisational politics? Does ‘style’ take precedence over ‘content’ or ‘substance’? We would argue not, although it is important to be aware of the significance of the relational dynamics of organisational life. As demotion decisions are perceived as being subjective and political, both by demoted workers and their co-workers, organisations and HR managers in particular need to consider the importance of equity more seriously. We argue that HR can do so through open communication in which the reason for the demotion and the criteria used to determine who gets demoted are communicated in a respectful and transparent manner. As demotion becomes more widespread, it is critical for HR managers and organisations to ‘get it right’ for the welfare of all concerned.
- This blog post is based on the authors’ paper Perceptions of demotion decisions: A social capital perspective, in European Management Journal, in press.
- The post gives the views of its author, not the position of LSE Business Review or the London School of Economics.
- Featured image by Robert-Owen-Wahl, under a Pixabay licence
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Sophie Hennekam is an associate professor in organisational behaviour at Audencia School of Business (Nantes, France). With a background in psychology and human resource management, she’s specialised in diversity management. Her research interest are identity transition, diversity policies, gender inequality, older workers and the creative industries. She has published in top academic journals.
Steve McKenna is an associate professor of human resource management at Curtin Business School (Perth, Western Australia). His research interests include global mobility and networks; human resource management and ethics; and postcolonial approaches to management and organisation studies. He has published on these topics in leading academic journals.
Julia Richardson is professor of human resources management at Curtin Business School (Perth, Western Australia). Her main areas of research interest are issues affecting contemporary careers such as international mobility and advances in workplace technology, with a focus on flexible work practices. Julia is a former chair of the careers division in the Academy of Management and has published articles in top-tier academic journals.
Subramaniam Ananthram is an associate professor in international business. His research interest include strategic management, frugal innovation, ethical decision-making and international human resource management. He has published in leading academic journals.