Imagine: Your boss calls you into his or her office and tells you that you’ve been “reclassified.” It sounds a little odd, and you wonder to yourself if this means you’ll be getting a promotion and a raise.

If that’s your train of thought, you would be sadly mistaken. “Reclassification” means you’ve been knocked down a peg—you’ve been demoted. It usually also results in a pay cut after you’ve been “reassigned” to a lesser job.

This brand-new word in the endless business-speak lexicon has become increasingly popular in Silicon Valley, where layoffs and salary cutbacks are a daily occurrence. But in the wider world, it’s still so new that many employers aren’t even using the term yet. Is “reclassification” a kinder word than “demotion”? I doubt it. I’ll never understand our aversion to plain English. The word “reclassification” is just more spin from human resources folks in an effort to combat lowered morale in the corporate ranks. In the present business environment, however, where Corporate America can coin doublespeak terms like “selected out,” “placed out,” “dehired,” and “nonrenewed” to replace being fired, the kinder “reclassification” fits right in.

So what should you do if you’ve been reclassified? In this article, we’ll talk about what it means, the reasons behind it, and what you can learn from reclassification.

Why would a company reclassify an employee?
A cooling economy, plunging stock market, and toppling dot coms have taught employers priceless lessons, according to Vivian Golub, principal of Silicon Valley human-resources consulting company Ariel Consulting.

At the height of the seller’s market, employers frantic to throw bodies at jobs placed people in positions for which they were only 50 percent qualified, says Golub. But the uncertain economy has now forced employers to hire more prudently. “It’s still a seller’s market, but now it’s more balanced in the employer’s favor,” she says. According to Golub, companies are striving to “optimize talent and put people in jobs for which they’re 100 percent qualified. That’s why companies, especially technology companies, are reclassifying employees.”

Golub adds that reclassification doesn’t always mean an immediate salary cut. Often, the salary remains the same, but salary raises cease.

Stepping down may be preferable
If the demotion process is done properly, it doesn’t have to be demoralizing, adds Jeff Durocher, a spokesperson for RHR International, a psychological consulting company in Wood Dale, IL. RHR manages demotions for its corporate clients to help employees make successful adjustments to their new jobs.

Durocher admits that “demotion” is a harsh word, yet often, it’s an unavoidable strategy. “Most people mistakenly think it’s solely a management tactic to increase productivity and save money,” he says. “But [reclassified] employees [can also] wind up happier and ultimately more productive because they’re moved into slots more suited to their skills and temperament.”

Don’t assume everyone wants the top jobs. “We’ve created a fiercely competitive success-driven culture that trains people to constantly better themselves,” Durocher observes. “Everyone doesn’t want to be a top gun, yet employees still feel they should jump at every promotion offered. But when the job doesn’t work out and they’re moved into a lower position, they welcome it, even though it means a salary cut. In some respects, it lifts an enormous burden off their shoulders. They may not want so much responsibility, long hours, and constant travel, for example. They may want a better quality of life and more time with their families.”

Reclassification could open new career doors
Durocher has witnessed a number of sensitively managed demotions that have worked out to employees’ advantage. But, of course, not all companies manage demotions well. Suddenly being thrust into a lesser job in which you’re stripped of power and responsibilities can be an embarrassing and humiliating turn of events—a signal to bail out and find another company that appreciates you.

Sharon Keys Seal, president of Coaching Concepts, an executive coaching company in Baltimore, advises employees facing demotion to do some self-assessment to find out whether it’s a smart move. Ask yourself: How much visibility will I have? What are the paths out of it? Will the demotion put me on a new, different track (which can be a good thing)? Will I be exposed to new technologies or new career options? In short, can it enhance my career?

“Once you get over the initial hurt of being demoted, look at what it ultimately means,” Keys Seal adds. “If nothing else, give it a try. It could open new career doors.”