A demotion refers to a permanent reassignment to a lower position than the employee had worked previously. The position will generally have a lower level of responsibility or required skill, and a lower pay grade than the previous position.
Demotions can be either voluntary or involuntary and can occur due to poor employee performance, position elimination, disciplinary actions or organizational restructuring. A demotion can allow a company to retain an employee it deems valuable by returning him or her to the previous position. However, it is also possible that the employee will not respond well to the demotion, and if the demotion is a result of employee misconduct, it can send the message to other employees that the company is lax about disciplinary action.
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