UNIT- VII: Internal Mobility

1. Promotion: a) Concept b) Objectives c) Importance

Definition:
Promotion is vertical movement of an employee within the organisation. In other words,
promotion refers to the upward movement of an employee from one job to another higher
one, with increase in salary, status and responsibilities. Promotion may be temporary or
permanent, depending upon the needs of the organisation.

There can be ‘dry promotion’ also where an employee is assigned to a higher level job
without increase in pay. An example of ‘dry promotion’ is a University Professor made Head
of the Department with no increase in salary.

Promotion has an in-built motivational value as it elevates the authority, power and status of
an employee within an organisation. It is considered good personnel policy to fill vacancies
in a higher job through promotions from within because such promotions provide an
inducement and motivation to the employees and also remove feelings of stagnation-and
frustration.

Types of Promotion:
Promotion given to employees in an organisation can be classified into three types:
1. Horizontal promotion:
When an employee is shifted in the same category, it is called ‘horizontal promotion’. A
junior clerk promoted to senior clerk is such an example. It is important to note that such
promotion may take place when an employee shifts within the same department, from one
department to other or from one plant to another plant.

2. Vertical Promotion:
This is the kind of promotion when an employee is promoted from a lower category to lower
category involving increase in salary, status, authority and responsibility. Generally,
promotion means ‘vertical promotion’.

3. Dry Promotion:
When promotion is made without increase in salary, it is called ‘dry promotion’. For example,
a lower level manager is promoted to senior level manager without increase in salary or pay.
Such promotion is made either there is resource/fund crunch in the organisation or some
employees hanker more for status or authority than money.

Purposes:
The following are the purposes or objectives of promotion:
1. To recognize an employee’s skill and knowledge and utilize it to improve the
organisational effectiveness.

2. To reward and motivate employees to higher productivity.

3. To develop competitive spirit and inculcate the zeal in the employees to acquire skill,
knowledge etc.

4. To promote employees satisfaction and boost their morale.

5. To build loyalty among the employees toward organisation.

6. To promote good human relations.

7. To increase sense of belongingness.

8. To retain skilled and talented people.

9. To attract trained, competent and hard working people.

10. To impress the other employees that opportunities are available to them too if they also
perform well.

According to Dale Yoder, “Promotion provides incentive to initiative, enterprise and ambition;
minimizes discontent and unrest; attracts capable individuals; necessitates logical training
for advancement; and forms an effective reward for loyalty and cooperation, long service,
etc.”

Promotion benefits both employees and the employer. However, it needs to be made with a
great caution because wrong promotion may invite implications of one type or other for the
organisation. So to say, promotion is like a double-edged weapon. Hence, every
organisation needs to evolve and implement a suitable promotion policy for its employees.
The following section deals with the same.

Policy:
The following characteristics make a promotion policy as sound and good policy:
1. It must provide equal opportunities for promotion across the jobs, departments, and
regions.

2. It must be applied uniformly to all employees irrespective of their background.

3. It must be fair and impartial.

4. The basis of promotion must be clearly specified and made known to the employees.

5. It must be correlated with career planning. Both quick (bunching) and delayed promotions
must be avoided as these ultimately adversely affect the organisational effectiveness.

6. Appropriate authority must be entrusted with the task of making final decision.

7. Promotion must be made on trial basis. The progress of the employee must be monitored.
In case, the promoted employee does not make the required progress, provision must be
there in the promotion policy to revert him/her to the former post.

8. The policy must be good blending of promotions made from both inside and outside the
organisation.

Promotion can be made on various bases. Following are the major ones:
1. Seniority i.e., length of service

2. Merit, i .e., performance

3. Educational and technical qualification

4. Potential for better performance

5. Career and succession plan

6. Vacancies based on organisational chart

7. Motivational strategies like job enlargement.

8. Training

As a matter of fact, no single basis of promotion is acceptable and applicable to all

organisations. Every basis has its strengths and weaknesses. For example, while promotion
on the basis of seniority gives satisfaction to the senior employees, it causes frustration to
the talented ones.

Similarly, promotion based on merit motivates competent employees to work hard while
trade unions oppose it on the justification of its subjectivity. In India, promotion in the
government departments is made on the basis of seniority of the employees. In case of
private organisations, merit is generally used as a basis for promoting employees. Here, the
promotion policy is to promote the best one available.

Purpose and Advantages of Promotion

Promotion stimulates self-development and creates interest in the job. According

to Yoder, “promotion provides incentive to initiative, enterprise and ambition; minimizes
discontent and unrest; attracts capable individuals; necessitates logical training for
advancement and forms an effective reward for loyalty and cooperation, long service etc.”
The purposes and advantages of promotions are to: 

 recognize employee’s performance and commitment and motivate him towards better
performance;
 develop competitive spirit among employees for acquiring knowledge and skills for
higher level jobs;
 retain skilled and talented employees;
 reduce discontent and unrest;
 To fill up job's vacant position that is created due to retirement, resignation or demise
of an employee.In this case next senior employee will be promoted to the vacant job.
 utilize more effectively the knowledge and skills of employees; and
 attract suitable and competent employees.
 2. Demotions: a) Concept b) Objectives c) Importance

Definition:
Demotion is just the opposite of promotion. It is the downward movement of an employee in
the organisational hierarchy with lower rank/status and pay. According to D.S. Beach
“Demotion is the assignment of an individual to a job of lower rank and pay usually involving
lower level of difficulty and responsibility”.

Demotion refers to the lowering down of the status, salary and responsibilites of an employee.
Demotion is used as a disciplinary measure in an organization. The habitual patterns of
behaviour such as violation of the rules and conduct, poor attendance record, insubordination
where the individuals are demoted.

Demotion affects the status, pride, career and income of the employee. Research studies
report that an employee who is demoted suffers from more severe jolt than it does when a
junior employee supersedes him/her.

It is used as a punitive measure in case of serious breaches of duty on the part of an

employee. It is often a preliminary to a dismissal. Since demotion causes an insult and
emotional jolts, it should be, therefore, used very tactfully and only in case of absolute
necessity.

Causes:
Demotion may be caused by several factors which may be beyond an employee’s control.

Following are the important ones:

1. Incompetence:
When a promotee is found unable to meet the challenges posed by the new higher job, he
may be demoted to jobs suitable to him to correct errors in promotion. It often happens in
organisations that employees promoted on the basis of seniority and past experience are
unable to adjust and cope with changes in technology, methods and practices. In other
words, such promotes cannot meet the raised expectations substantially.

2. Adverse Business Conditions:

At times, circumstances and conditions like recession and other crisis may necessitate a
business to combine departments and eliminate jobs. In fact, this feature is very much in
sight and is on increasing also. In case of lay-offs and bumping process junior employees
may be retrenched and senior employees may be required to accept lower level jobs, until
normalcy is restored. However, such a demotion is not a black mark against an employee.

3. Disciplinary Measures:
Demotion is also used as a disciplinary measure against erring employees. It is a penalty
imposed on employee for violation of company rules of conduct. Since demotion affects
employee job satisfaction and morale, it should be used with a pinch of care and concern
and that too when it is absolutely necessary. In order to use demotion properly, there must
be an appropriate demotion policy.

Policy:
Demotion affects employee’s morale, job satisfaction and relationship with the employer. It
may also turn the employee into mental wrecks. While effecting demotion in the
organisation, therefore, the management should be extremely careful not to place itself on
the wrong side of the fence. Yoder have suggested that a systematic policy on demotion
should contain the following five points:

1. A clear and reasonable list of rules should be framed, violation of which would subject an
employee to demotion.

2. This information should be clearly communicated to employees.

3. There should be a competent investigation of any alleged violation.

4. Once violations are proved, there should be a consistent and equitable application of the
penalty, preferably by the immediate supervisor.

5. There should be provision for review.

 3. Transfer: a) Concept b) Objectives c) Importance

A transfer is a horizontal or lateral movement of an employee from one job, section,

department, shift, plant or position to another at the same or another place where his salary,
status and responsibility are the same. 

Yoder and others (1958) define transfer as “a lateral shift causing movement of individuals
from one position to another usually without involving marked change in duties,
responsibilities, skills needed or compensation”. Transfer may be initiated either by the
company or the employee. It also can be temporary or permanent. 

Transfers are generally affected to build up a more satisfactory work team and to achieve
the following purposes; 

1. To increase the effectiveness of the organization.

2. To increase versatility and competence of key positions.
3. To deal with fluctuations in work requirement
4. To correct incompatibilities in employee relations.
5. To correct erroneous placement.
6. To relieve monotony.
7. To adjust workforce.
8. To punish employees. (Generally in government organisations, employees who
commits mistakes or malfeasance will be treated with transfer to other place where
he cannot act according to his wish or misuse his job position. 

Reasons for employee transfers: 

1. To avoid favouritism and nepotism. 

2. To avoid gaining capacity of influencing and egocentrism. 
3. To avoid monotony in the work of an employee. 
4. Makes an employee accountable to his seat, so as not to find mistake by his
successor. 
5. So as to avoid excess dependency on particular employee, otherwise may affect the
purpose of hierarchy and lose control over subordinates. 
6. To create transparency among the employees and their work. 
7. It limits taking advantage and sole control over the seat or section. 
8. To avoid unnecessary influence on others for their own advantage. 
9. To make conversant of different seats work. 
10. To maintain healthy relationship in between all the staff members to retain
harmonious environment to avoid unnecessary disputes.

Importance of employee transfers

Transfer of employees is must and essential in an organisation for the purpose of

minimising politics between employees, to ensure cordial relationship between
employees, to increase transparency in work, to obviate syndicate of employees for
unethical purpose and to obviate nepotism in organisation.

Employee transfers is considerable, as most essential when a position of employee is a

top-level in hierarchy. Especially in the governmental organisations employees holding
 top-level positions are affected with frequent transfers for the reason, to obviate
nepotism into increase transparency in the work. Organisations having no transfers for
their employees may create their own informal groups for their common interest and their
own benefit. Subsequently, this may leads to secrecy in the flow of work, eventually, no
transparency in work. Employee transfers less organisation may definitely see
organisational politics among employees, that which leads to fall in coordination in
between employees, eventually may lead to drop in overall organisational performance.

Types of Transfers 
Employee transfers may be classified as below. 

a) Production transfers: Such transfers are made to meet the company requirements. The
surplus employees in one department/section who are efficient might be absorbed in other
place where there is a requirement. Such transfers help to stabilise employment. 

b) Replacement transfers: This takes place to replace a new employee who has been in
the organization for a long time and thereby giving some relief to an old employee from the
heavy pressure of work. 

c) Versatility transfers: It is also known as rotation. It is made to develop all round

employees by moving them from one job to another. It also helps to reduce boredom and
monotony. 

d) Personnel or remedial transfers: Such a transfer is made to rectify mistakes in selection

and placement. As a follow up, the wrongly placed employee is transferred to a more
suitable job. 

e) Shift transfers: This is pretty common where there is more than one shift and when there
is regularised rotation. 
 4. Separation: a) Concept b) Objectives c) Importance

Separation of an employee exists when the service of an employee comes to an end

because of one reason or other. Separation arises due to resignation; lay off, dismissal and
retirement.The termination of employees from membership of the organization is referred as
employee separation. The rate at which employees leave the organization is measured by
the rate of employee separation.

Types of separation:

i)                    Resignation: when the employee himself initiates the separation then it is

termed as separation. There are some resignation which are avoidable and others which are
unavoidable. It is the responsibility of the management to look out the real reason of the
resignation. In such a cases the exit interview is better to conduct to find out the reason of
resignation.

ii)                   Lay off: lay off is generally done to reduce the financial burden of the
organization by temporary removing the surplus employees. This is done due to inability of
the employee to recruit them due to shortage of sufficient resources. Lay off results in a
great loss to the organization as they had to suffer all the expenses of selection, placement
and training.

iii)                 Dismissal: dismissal or discharge means separating the employee from the

payroll due to unsatisfactory performance where the employee fails to perform his duties well
and he is not properly skilled to perform his job or due to violation of organizational rules it
means indiscipline, dishonesty. What ever is the cause of dismissal but it should be done at
the last stage.

iv)                 Retirement: number of separation in the organization happen due to

retirement. There must be clear rules of retirement there may be compulsory retirement
where an employee has to retire after attaining a particular age. Forced retirement means
when a person is found guilty in the court of law or breaks any service agreement then has
to retire forcibly irrespective of his age. Premature retirement means that the employee
becomes disable to perform the job in that case he may be given the option to take
retirement before his retirement age.

The Costs of Employee Separation

The employee separation is always resulted in some costs. The intensity of the incurring
costs varies on the basis of the decision of the management that either the empty position of
separated employee is replaced by a new employee or the position may be eliminated
permanently. Following are the costs that are linked with the employee separation.

 Recruitment Costs
 Selection Costs
 Training Costs
 Separation Costs
 Objectives of Employee Separation

On one hand there are costs attached with the employee separation, but on the other hand
there are some resulting benefits too. Following are some of the Employee Benefits that are
associated with the employee separation.

 The labor cost is reduced

 The employees who perform poorly, are replaced
 The innovation is increased in the organization
 The diversity is enhanced in the organization

Types of Employee Separation

There are two main types of employee separations on the basis of the initiation of the
employment relationship termination. These two types of employee separations are as
follow.

1. Voluntary Separation:

When an employee terminates the employment relationship, then this form of employee
separation is known as voluntary separation. Voluntary separation is further divided into two
categories.

 Quits
 Retirements

2. Involuntary Separation:

When employer of an organization ends the employment relationship with any employee,
then this employee separation is called involuntary separation. There may be a number of
reasons for involuntary separations like the employee does not fit with the requirements of a
particular job or due to economic necessity. Involuntary separation is further divided into the
following categories.

1. Discharges
2. Layoffs
3. Rightsizing or downsizing

Managing Early Retirements

When an organization decides to downsize its operating scale on the basis of certain
circumstances, then its first activity is to find different alternative options of the lay-offs. For
this purpose early retirement is the popular option.

Characteristics of Policies of Early Retirement:

There are two main features or characteristics of early retirements and which are as follows.

01- Early retirement is associated with some attractive package of financial incentives for
those senior employees to be retired before their estimated time.
02- The duration of the offering additional financial incentives for early retirement is short, so
that senior employees make quick decision & these incentives are no longer valid after the
specified period of time
 5. Disciplinary Actions

Though there is no rigid and specific procedure for talking a disciplinary action, disciplinary
procedure followed in industries usually consists of the following steps:

1. Framing a charge and issuing a letter:When an employee commits an act of

misconduct that requires disciplinary action, the employee concerned should be issued a
charge sheet. Charges of misconduct or indiscipline should be clearly and precisely stated in
the charge sheet. The charge sheet should also ask for an explanation for the said
delinquent act and the employee should be given sufficient time in answering this.
2. Consideration of explanation: On getting the answer for the letter of charge served, the
explanation furnished is considered and if it is not satisfactory then disciplinary action need
be taken. On the contrary when the management is satisfied with the employee’s
explanation there is no need for serving a show cause notice.

3. Issuing show cause notice: Show cause notice is issued by the manager when he is
convinced that there is sufficient prima facie evidence of employee’s misconduct. However,
this gives the employee another chance to account for his misconduct vis-à-vis. The charges
made against him. Inquiry should also be initiated by first serving him a notice of inquiry
indicating clearly the name of the inquiring officer, time, date and place o inquiry, etc.
4. Making a full-fledged inquiry: In conformity with the principle of natural justice, the
employee concerned must be given an opportunity of being heard. When the process of
inquiry is over and the findings of the same are recorded, the Inquiry Officer should suggest
the nature of disciplinary action to be taken.
5. Passing the final order of punishment: Disciplinary action is to be taken when he
misconduct of the employee is proved. While deciding the nature of disciplinary action, the
employee’s previous record, precedents, effects of disciplinary action on other employees,
etc., have to be considered.
When the employee feels that the inquiry conducted was not proper and the action taken is
unjustified, he must be given a chance to make an appeal.
6. Follow up: After taking the disciplinary action, a proper follow up action has to be taken
and the consequences of the implementation of disciplinary action should be noted and
taken care of.