Promotions and Demotions of an Employee’s

Promotions and Demotions of an Employee’s

In organisations every employee must get promotion or demotion by their work. It is important for organization to analyse the productivity of employee’s and take decisions according to their performance. Manager do performance appraisal of an individual  employee so that know the productivity of an employee.


According to Pulapa Subba Rao “promotion is reassignment of a higher level job to an internal employee (which is supposed to be assigned exclusively to internal employees) with delegation of responsibilities and authority required to perform that higher job and normally with higher pay”.

The main purpose of Promotion made in order to recognise employee’s performance and commitment and  to motivate them towards better performance. This will develop competitive spirit among employees for acquiring more knowledge and skills for higher level jobs.

Promotion means handling more responsibility in terms of pay and status, also personal development of the employee. It defined as giving higher position which carries high status with more responsibilities.

There are three types of promotion made:

Horizontal Promotion:  When an employee is promoted or shifted in the same category it is known as Horizontal Promotion. This type of promotion involves in change in position, pay and increase in responsibilities. For example, A lower division clerk is promoted as an upper division clerk.

Vertical Promotion:  When an employee is promoted to a greater managerial authority where they receive greater prestige, responsibilities and pay together with a change in the nature of the job.For example, the vice president for operations may receive a vertical promotion to company president.

Dry Promotions:   When an employee get promotion without increase in salary is known as dry promotion. For example, a lower level manager is promoted to senior level manager without increase in salary or pay. Such promotion is made either there is resource/ fund crunch in the organisation. this type promotions are  have the value of work , status and authority than money.


The main purpose of demotion  is reassignment to the employee’s of a lower level job with delegation of authorities and responsibilities required to perform at lower level job with lower pay.

Very less frequent, Organisations use demotions  as it affects the employee’s career and change the values and morale. Some Other reasons for Demotions are ineptness of the employee to higher level jobs: Unfavourable business condition, Advance technologies and new methods of operation demand  and required higher level skills. Organisation follows some principles when they do demotion of an employee, Organisations should clearly specify the demotion policy. A systematic demotion policy should contain following terms:

  • Specification of a superior
  • Specifications of line or ladders of demotion
  • Specification of basis for demotion
  • It should provide for an open policy
  • Contain clear cut norms.

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