Demotion refers to assigning an employee to a job with lower rank, status, and pay in the organizational hierarchy. It should only be used tactfully when absolutely necessary to avoid negatively impacting employee job satisfaction and morale. Common factors for demoting an employee include adverse economic conditions reducing jobs, employees failing to meet requirements for higher level roles after being promoted, and inability to adjust to technological changes. While demotion can be used as a disciplinary measure, it should not be used as a penalty for issues like poor attendance alone. Any demotion policy should clearly specify allowable circumstances, have consistent and equitable application following a fair investigation, and include nature, basis, and appeal review process for transparency.

1. Demotion The assignment of an employee to a job of lower rank with lower pay. It refers to downward movement of an employee in the organizational hierarchy with lower status and lower salary. It should be used tactfully and only when it is absolutely necessary. If uses imprudently can affects job satisfaction & morale of employees.

2. Factors of Demotion: Adverse conditions Due to recession & other crises, an enterprise may have to combine departments & eliminate jobs

3. Factors of Demotion Incompetence Some of the employees promoted on the basis of seniority & past performance may fail to met the requirements of higher level jobs. Thus, Demotions help to correct errors in promotion

4. Factors of Demotion Technological changes On account of changes in technology & work methods, some employees may be unable to handle their jobs or adjust to new technology. These employees may have to be demoted

5. Factors of Demotion Disciplinary measures It may be used as a tool of disciplinary action against erring employees . It should not be used as a penalty for poor attendance record, violation of rules of conduct b/c such action produces defensive behavior without any improvement in behavior or performance.

6. Demotion policy The circumstances under which employees can be demoted (reduction in operations, serious indiscipline etc.) should be clearly specified and made known to employees. Any violation of established rules & regulations should be competently investigated. Once violations are proved there should be consistent & equitable application of the policy.

7. Demotion policy The policy should be fair & impartial. The lines of demotion should be specified. In case of demotions caused by adverse economic conditions & technological changes, the basis for demotion (seniority or merit) should be specified

8. Demotion policy Nature of demotion (Permanent or Temporary) should be formulated. A promotion should be made for appeal & review of every demotion. It should be an open rather than a closed policy.