Chapter 11
Staff promotion and transfer
Definition
According to Edwin .B. Flippo “A promotion involves a change from one job to another that is better in
terms of status and responsibilities.
Promotion may be defined as the advancement of an employee to a higher job carrying higher salary, greater
status and more responsibilities.
Objectives of promotion
To provide the employee an incentive to increase his performance, efficiency and effectiveness.
To recognize a staff members performance and reward him for his work.
To attract the capable staff for different positions.
To provide an opportunity by recognizing his services, essential for job satisfaction.
To enhance the morale and loyalty of staff members
To offer an opportunity to staff to excel
To reduce discontentment and unrest of staff members
Benefits of promotion
Possibility of promotion serves as a powerful incentive for employees. Ambitious and
hard-working employees are stimulated to move ahead. Promotion serves as a reward to
better work perofrmnce. People work harder and try to learn new skills and gain
promotion .In this way promotion helps to improve the motivation of employees.
Insiders are intimately familiar with the structure, policies and rules and regulations of the
organization. Therefore, the costs of orientation and training on them are low.
Promotion keeps the job satisfaction and morale of the employees high. By providing for
carrier advancement it promotes positive attitude among employees. They remain loyal and
dedicated to the organization in the hope of promotion .This will lead reduction in labour
turnover.
Limitations of promotions
Persons promoted from inside may not possess the required knowledge and skills.
More talented outsiders may not be employed.
Mobility of labour is stopped as a person will stick to the organization which he joins.
Promotion decision may involve favouritism in the absence of clear cut criteria
S.No Basis of difference Open promotion Closed promotion
1. Coverage All the employees are All the employees are not
considered as the candidates considered as the candidates.
for promotion
Vacancies are not announced
2. Announcement
Vacancies at higher posts for to employees.
filling through promotion are
announced to employees.
The expansion and growth of enterprise is restricted by the limited talents of existing staff.
Diff
erences between Open and closed promotion
Dry promotion and upgrading
Dry promotion means assigning a higher level job to an employee without increase in his pay, and
benefits
For example, when a university professor is made Head of the department, his responsibilities increase But
There is no increase in his pay and benefits.
Upgrading means implies movement of an employee to a higher pay scale without change of job.
S.No Basic differences Dry promotion Upgrading
1 Meaning It means movement It means movement
from one lower level from one lower pay
to higher level job. scale to higher pay
2 Changes in salary No increase salary Increase in salary
3 Change status Increase in status and No change in status
responsibility
and responsibility
Demotion
Demotion implies the assignment of an employee to a job of lower rank with lower pay .It refers to
downward. Movement of an employee in the organizational hierarchy with lower status and salary.
Demotion becomes necessary due to following reasons:
Adverse business condition: Due to recession and other crisis, an enterprise may have to combine
departments and eliminate jobs .Consequently, junior level employees may be retrenched and senior
employees may be required to accept lower level position until normalcy is restored.
Incompetence: Some of the employees promoted on the basis of seniority and past performance my
fail to meet the requirements of higher level jobs .Such employees may be demoted to jobs suitable
to their knowledge and skill.
Technological change: On the account of change in technology and work methods , some
employees may be unable to handle their jobs or adjust new technology .These employees may have
to be demoted.
Disciplinary measures: Demotions may be used as a tool of disciplinary action against erring
employees.
Requirements of sound promotion policy
A sound promotion policy should satisfy the following conditions:
(i) The Percentage of higher level vacancies to be filled through promotion should be clearly
specified
(ii) The lines of promotion should be clearly defined for each and every job.
(iii) The basis of promotion (seniority or merit) and relative weight to be given to merit and seniority
should be made clear.
(iv) The qualification and experience required to earn promotion to a particular position should be
prescribed.
(v) A sound performance appraisal system must be developed to assess merit.
(vi) The promotion policy should be reviewed and updated from time to time.
Basis of promotion
There are three alternative bases for promotion
(1) Seniority
(2) Merit
(3) Combination of both
Seniority implies length of service while merit means the ability of an employee .There are advantages and
disadvantages.
Benefits
If seniority is adopted as the basis, promotion decision can be easily be taken. There will be little
chance of favoritism or dispute among employees and every employee will know his place in the
promotion list.
Length of service put in by an employee indicates experience.
When promotions based on seniority, employees stick to the organization to gain seniority.
Employees and trade union prefer seniority as it does not differentiate between efficient and in
efficient persons.
