Demotion and ageing: to what extent can demotion be a strategic HR-tool

to avoid an early exit of older workers

from the labour market?

Tanja Verheyen – VUB – Belgium - 18/10/2012 tanja.verheyen@vub.ac.be

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Demotion is….

  According to

• Psychologists: a transition• Sociologists: a loss of status• Economists: a lowering in function• Organisational scientists: a downward change in the

content of the function

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Pag.10-04-23Demotion

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Purpose

  - an employment plan for over-45s —› demotion

  - economic crisis —› demotion for cost-effectiveness

  - little empirical research (Borghans, 2007, Sargent, 2003)

  - existing research limited to consequences for employee (Carson

& Carson, 2007, Eby & DeMatteo, 2000, Josten & Schalk, 2009)

  - different kinds of demotion: “a temporary step down, a

downward promotion, a lateral demotion with or without

reduced salary …” (a.i. Hall & Isabella, 1985)

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Theoretical framework of job mobility (Ng, Sorensen, Eby & Feldman, 2007)

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Meso?Consequences?

Imposed?

Voluntary?

demotion

Inter & intraorganisational

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Research questions

  General research question:

  “What are the typology, reasons and consequences of

demotion from an employer’s perspective?”

  3 sub research questions:  What is the typology of demotion?  What are the reasons for a demotion from an employer point of

view?  What are the consequences of a demotion from an employer

point of view?

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Design/methodology

• Limesurvey: online tool for questionnaires

• Towards HR-managers of big organisations in Belgium

• Anonymous, but possibility to leave mailaddress for follow

up

• Through HR service companies and headhunters and HR

network organisations, … —› >1000 contacts

• Very little response: n= 68, completed questionnaires, 101

uncompleted

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Design/methodology

• 33 questions:

1. Demographic data of the manager2. Structural features of the company3. Features on “downward transitions” according to

1. the organisation filosofy2. to the employer 3. to the employee

4. Causes/sources of downward transitions5. Effects on organisational level of downward transitions6. Application of demotion, if not applied: why not?7. Follow up research

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Analysis

• SPSS

• A lot of analysis wasn’t possible yet, as a result of

too small data files

• Survey is still ongoing (see further research)

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Preliminary results

  1. Features of demotion:  “to what extent do the following statements suit with your

company's philosophy on demotion?” Demotion is…

  - a free choice of the employee or an imposed measure of the employer (median: 3-3)

  - intra-organisational or inter-organisational (median: 3-2)

  - just like promotion or lateral moves, a method to develop talent (45%: never)

  - a means to encourage employees to develop their expertise and maintain their value for the company (30% sometimes, 40% always)

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Preliminary results

  1. Features of demotion:  “indicate to what extent these features typically are associated

with demotion”

  1. lowering the function level  2. lowering the responsibility towards decision making on the

policies of the organization, towards managing people and budget

  3. lowering of bonuses (note: not lowering of salary)

  +/- lowering the budget of the company car

  demotion is not about lowering meal vouchers, group

insurance, laptop or mobile phone

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Preliminary results

  1. Features of demotion:  “what do you think an EMPLOYEE typically associates with

demotion?”

  1. lower job esteem and lower decision involvement

  2. loss of status

  3. loss of salary and lowering of bonuses

  Note: work life balance and demotion as a failure

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Preliminary results

  2. Reasons for demotion  “When would you use demotion to benefit the company?”

  1. in case of a reorganisation, a merger  2. in case of slimming of the company  3. To garantee job security

  Note: to persue cost efficiency

  “When would you use demotion to benefit the employee?”  1. when the employee himself wants it  2. in case of the Peter Principle  3. in case the employee isn’t sufficiently productive  (<-> cost efficiency?)

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Preliminary results

  3. The effect of a demotion  When demotion is applied, is the situation with this demotee

positively or negatively evolved?

  - career focus: negative

  - organisational comittment: negative

  - conflicts with colleagues, superiors: stable

  - employee turnover: stable

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Preliminary results

  4. Do you apply demotion?

  - 20% no answer  - 65% yes  - 35% no

  - applied within a year: median 1-2  - applied within the last 5 years: median 2-3

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Preliminary results

  5. What about NOT demoting?   What keeps employers from applying demotion in regard to the

employee?

  - work motivation  - employee satisfaction  - work and organisational involvement  Note: job insecurity

  What keeps employers from applying demotion in regard to the company?

  - legal agreements  Note: absenteeism and turnover

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What about demotion and ageing?

  - demotion is a means to encourage employees to develop their expertise and maintain their value for the company (30% sometimes, 40% always)

  - almost 80% of the employers say they would use demotion if that would result in keeping over 45s at work in their company

  - the application of demotion in relation to age:-> a slight increase at “50 or older”

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Further research

  - from explorative to conclusive research:  n=68 —› n= 150

  - follow up research: 12 focusgroup interviews with 4 HR-managers: insights in motives and critics on the use of demotion in an organisational context

  - comparing results of demotion from an employer point of view with that of the employee’s point of view

  - comparing results with theory and practice of older workers on the labour market

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