Enterprise Software

How to handle an ego-bruising demotion

Job demotions used to be tied to job performance only, but now they are being used as budgeting tools as well. Here's how to best manage a debilitating demotion--and how to tell when it's time to move on.

After years of technical training, vast quantities of overtime hours, and learning the ins and outs of company politics, Mike T. had worked his way to a high-level IT managerial slot at a prestigious Wall Street firm. Life was good. But one day, during a companywide conference call, Mike learned he would soon be moving back to his old cubicle—and his former position—thanks to corporate "reclassification." In simpler terms, he had been demoted.

"Getting demoted was one of the most debilitating experiences of my career," Mike said, reflecting on the corporate restructure five months ago that eliminated his senior IT director role and put him back in the programming slot he had actually started at. His paycheck followed suit—he was given a 15-percent pay cut. "But what could I do? At least I had a job. I didn't get my head lopped off like some others in the group," he said.

Demotion now a tool in staffing reductions
As demotions are becoming more commonplace in the IT workspace, what happened to Mike is now happening to many IT managers. It's all tied to smaller IT budgets and a move to cut payroll. Demotions—traditionally used to penalize bad performers—are becoming a de facto methodology used by corporations looking to stop the bleeding in their bottom lines.

Most companies, however, aren't using the word "demote" to describe the action. They use more business-related terms instead.

"It's now called 'reassignment,' 'reclassification,' or 'reorganization,'" explained Joan Lloyd, founder of Joan Lloyd & Associates, a Milwaukee, WI-based management consulting and training firm. "The bottom line is that to you, it still feels like a demotion," Lloyd said.

"Over the past year, [demoting employees] has become much more frequent," said Susan Jackson, who specializes in corporate psychology as an analyst at RHR International in Wood Dale, IL.

Many companies are demoting employees in reaction to business economics and restructuring to avoid layoffs. Companies are also using them to handle personnel fallout from mergers and acquisition activity.

For Mike, as with most, company restructuring was responsible.

"With the economy being what it is, we all knew for a long time things weren't going great; sales were down, and not many new clients were signing up," he said. This translated to what he described as a "penny-pinching mentality" that came from the top down.

Managing the demotion process
While getting demoted was difficult enough to deal with, Mike said the process of how it was done was even worse. There had been layoff rumors running around the building, increasing paranoia about job stability, and overall employee malaise, when corporate leaders decided to make a companywide mandatory conference call.

"I couldn't believe it. I found out I was going back to programming grunt work when the CEO read my name from a list in front of all my peers [during the call]. I was furious. They should've called me in privately at least, and talked me through it. The whole thing was very badly handled," said Mike.

And the scenario is exactly the opposite of how Jackson believes companies should go about the process of demoting employees.

"Management should support you in the message they're sending out to the rest of the company [about your demotion], so you want it to be positive, not negative."

Lloyd agreed. "Talk with the employee about how to sell the demotion internally, and work on the announcement together," said Lloyd. "Make it sound like, 'Charlie's putting his managerial job on hold to take this lateral or downward move, in order to help the organization.'"

Further, Lloyd said IT managers need to be upfront and honest with the staff personnel they're planning on demoting.

"This is not a time for sugarcoated feedback; it's a time for straightforward talk."

Take the high road
So, what should you do if a demotion happens to you? For starters, Lloyd said IT managers should focus on three points:
  • Deal with the bruised ego and give yourself some time to come to grips with the role change.
  • Be careful not to burn bridges with angry words or actions following the announcement.
  • Be careful of how you verbally respond to the news.

"If you sound bitter or angry, it could make the situation worse. Not only will it give people more to gossip about, it will put you in a weaker political position if you decide to stay," said Lloyd.

On a happier note, Jackson said there could be beneficial outcomes for certain employees who get demoted.

"Say a company has promoted an individual and it doesn't work out. When he or she goes back to his or her original job—that could be a good thing," she explained.

Lloyd said demoted employees should take time to consider if they really want the scaled-back job being offered. "If you're better suited for it, it could actually be more satisfying and less stressful." She added, "Some IT managers, frankly, are going to be a lot happier doing the technical work they love, as opposed to managing."

When the signs say move on
The worst-case scenario is one where a demoted employee believes his or her career has been permanently damaged due to the demotion.

In that case, Lloyd has some clear-cut advice.

"There is always some career damage [in a demotion], but it's all how you handle the damage," she said. Managers who believe their career at the company has ended with the demotion should quietly take steps to leave, and get their resumes on the street.

Mike T. is doing just that. His professional performance has suffered since news of the demotion and he's looking to move on.

"Since the day they demoted me, my work has been substandard to my standards, and I make sure to send out at least one resume a day. It's only a matter of time until I'm outta here."

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