CHAPTER NINE:

PROMOTIONS TRANSFERS AND SEPARATION

INTRODUCTION

Internal mobility is the process of movement of employees which takes place between the jobs in sections,
departments or divisions of the organization. Internal Mobility is necessary to match the employee’s skill
and requirements with the requirements of the job and those of the organization continuously.

The purpose is to achieve optimum utilization of a staff member’s skills and talents by agreement to employ
the person in a more advantageous work situation through promotion, transfer, or demotion; and to enhance
career advancement of staff members.

PROMOTION

o The movement of a staff member from a position in one job class to a position in another job class of
increased responsibility or complexity of duties and in a higher salary range.

o Promotion is an upward movement of employee in the organization to another job, higher in

organization’s hierarchy. In the new job, the employee finds a change in salary, status, responsibility
and grade of job or designation. The higher status and salary is the two most important ingredient of
any promotion.

o It is an advancement of employee to a higher post with greater responsibilities and higher salary,
better service conditions and thus higher status.

Some definitions given by authorities on the term promotion:

According to Scott and Clothier, “A promotion is the transfer of an employee to a job which pays more
money or one that carries some preferred status.”

According to Prof Mamoria, “Promotion is a term which covers a change and calls for greater
responsibilities, and usually involves higher pay and better terms and conditions of service and, therefore, a
higher status or rank.”
According to Arun Monappa and Saiyadain, “Promotion is the upward reassignment of an individual in
an organization’s hierarchy, accompanied by increased responsibilities, enhanced status, and usually with
increased income, though not always so.”

From the above definitions, we can say that promotion usually implies several things to the person
concerned—higher status, both at work and in the community outside, more pay and fringe benefits, perhaps
greater job security and a more senior position from which a person renders better service to his
organization. Employees expect to be informed about ladders of promotion, how they can prepare
themselves.

 Promotion is a double edged weapon.

 If handled carefully, it contributes to employee satisfaction and motivation.
 If it is mishandled, it leads to discontentment, frustration, skepticism, bickering among the
employees and culminates in a high rate of employee turnover; HR department has taken the
responsibility of designing, implementing the total promotion policy in an organization.

The policy of promotion should be clear in the following matters:

 The management must take it clear where to fill-up higher positions by internal promotions or recruit
people from outsides. Generally speaking, lower positions by external recruitment. The top positions
should however, are filled up by promotions from within.
 When it has been decided to fill-up higher positions with promotions, further decisions on
determining the basis of promotion should be made by the management. The basis of promotion may
be seniority or merit or both.

TYPES OF PROMOTION

I. Limited Promotion

Limited promotion is also known as upgrading. When the salary of an employee is increased without a
corresponding change in the job-grade, it is known as ‘upgrading’. Thus, upgrading means an increase of
pay on the same job or moving to a higher scale without changing the job.

II. Dry Promotion

When promotion does not result in change in pay, it is called ‘dry promotion’. A promotion as a result of
which there is no increase in the employee’s pay. It is usually made decorative by giving a new and longer
title to the employee.

PURPOSE OF PROMOTION

Promotion in the workplace has a number of purposes. Some of these are given below.

 To motivate employees to higher productivity.

 To attract and retain the services of qualified and competent people
 To recognize and reward the efficiency of an employee.
 To increase the effectiveness of the employee and the organization.
 To fill up higher vacancies from the within the organization.
  To build loyalty, morale and the sense of belongingness in the employee.
 To impress upon others that opportunities are available to them too in the organization, if they
perform well.

BASES OF PROMOTION

Organizations adopt different bases of promotion depending on their nature, size, managerial policy etc.

i. Seniority based promotion

Seniority based promotion systems are based on the length of service of an employee in an organization. If
seniority is the bases for promotion, an employee with the longest period of service will get promoted,
irrespective of whether he is competent or not. It put a premium on length of service and job experience. In
the case of promotion based on seniority, the employees are promoted to higher positions purely based on
their length of service irrespective of their qualifications, performance and track record. If the seniority
principle is adopted, capable young men will look for better prospects elsewhere. Normally, this method of
promotion policy is seen in Government organization. Unless the official has a very poor and bad work
record, he is automatically promoted to higher position based on his service seniority.

Advantages

 It is easy to administer.

 It is easy to measure the length of service and judge the seniority.

 With the base of seniority there is no scope for favoritism, discrimination and subjective judgment.

 By seniority everyone is sure of getting promotion one day.

 Subordinates are more willing to work under an older boss who has given many years of service to
the company.

Disadvantages

 The learning capabilities of senior (older) employees may diminish.

 It de-motivates the younger and more competent employees and it results in more employee
turnover.

 The organization is deprived of external talent which is very necessary due to technological
advancements and multi-culture organization.

 Judging the seniority is highly difficult as the problems like job seniority, company seniority,
regional seniority, service in different organizations, trainee experience, research experience etc.,
will crop up.

ii. Merit or competence based promotion

Merit based promotion occur when an employee is promoted because of superior performance in the current
job or when an employees are promoted to higher positions purely on their performance and work record.
Merit means an individual’s knowledge, skills, abilities as measured from his educational qualifications,
training, past employment record and capability.

The service seniority of the employee would not be considered for promotion. In principle, it is felt that
promotion should be based on merit. However, the use of merit as a basis for promotion can cause problems
because what management regards as merit, employees may see as favoritism. Therefore, as far as possible,
merit rating should be based on operating facts. Promotion by merit method is normally followed in
majority of commercial and industrial enterprises where the main consideration for assessment is efficiency
and work performance. The argument in favor of using merit or ability as a criterion for promotion is that it
enhances organizational efficiency, and maximizes utilization of talent, since only deserving employees are
promoted after a thorough assessment of their abilities for the next job of higher responsibility and status.

Advantages

 Promotion by merit is a reward to encourage those employees who make a successful effort to
increase their knowledge or skill and who maintain a high level of productivity.

 Efficiency is encouraged, recognized and rewarded.

 It helps the employer to focus on talented employees recognize their talent and reward their
contributions.

 Competent people are retained as better prospects are open to them.

 It inspires other employees to improve their standards of performance through active participation in
all activities and putting in more efforts.

Disadvantages

 It is not easy to measure merit. Personal prejudices, biases, and union pressures may come in the
way of promoting the best performer.

 When young employees get ahead of senior employees in the organization this creates frustration
among seniors. They feel insecure and may also quit the organization.

 The past performance may not guarantee future success of an employee.

 Loyalty and length of service is not properly rewarded

iii. Merit cum Seniority Promotion

Promotion based on “Merit cum Seniority” would have a blend of the advantages of both the systems
discussed above. Both the service seniority and work efficiency will be taken into account in promoting an
employee. These two possibly conflicting factors – seniority and merit - frequently pose problems in
considering employees for promotion. From the point of view of organizational efficiency, merit seems to
be the logical basis of promotion and therefore, management would like it to be the only factor. Trade
unions want seniority to be considered as the basis for promotion since it is an objective and impartial
method of judging employees for promotion. A sound management will pursue a policy of properly
balancing these two factors i.e., seniority and merit. An employee who has service seniority with the desired
level of merit and efficiency would be given priority in promotion to the next cadre as compared to others
having only one of them. This method has been considered as the best method of promotion as it gives due
weightage to the skill efficiency and better service record of the employee.

iv. Promotion by Selection

Promotion by selection is a process through which employees are promoted after undergoing rigorous test
and screening. The service records of all the employees due for promotion are screened and scrutinized by a
committee appointed for that purpose. The Committee will scrutinize the past records, merit, qualification
and experience of the employees due for promotion to a cadre. Under this system employees with service
seniority or better qualifications and experience need not be promoted automatically. The employees are put
to various tests and interviews before a final selection is made and some employees are promoted.

v. Time Bound Promotion Scheme

Under this method, employees would be promoted according to standards of time set for promotions to
higher cadre subject to the condition that they possess the minimum qualifications required for entry into a
higher position. Neither seniority nor merit will be considered here. The employees may have to pass some
departmental examinations or tests for being considered for such a promotion.

vi. Temporary Promotion Scheme

Also known as officiating promotion scheme, under this scheme, officials are promoted temporarily to
higher positions in case there are vacancies and if they are due for promotion. Such temporary promotion is
no guarantee for a permanent promotion, though normally temporary promotions are automatically made
permanent if the service of the employee during the officiating period is satisfactory. It is like keeping

DEMOTION

Demotion is the downward movement of an employee in hierarchy with lower status, salary and decreased
responsibilities. It is a downgrading process and is insulting to an employee. It is a downgrading process
where the employees suffer considerable emotional and financial loss.

Demotion is a punishment for incompetence or mistakes of serious nature on the part of an employee a
preliminary step to dismissal. It is a serious type of penalty or punishment and should be given rarely and
only under exceptional circumstances and also tactfully.

CAUSES FOR DEMOTION

 The employee may be unable to meet the challenges posed by a new job.

 The employee may have low administrative skills.

 Due to poor business conditions & continuous losses, a firm may decide to layoff some & to
downgrade others.
  It is sometimes used as a disciplinary tool against offending employees.

TRANSFER

One of the internal mobility of the employee is transfer. It is lateral movement of employee in an
organization by the employee. “A transfer involves the shifting of an employee from one job to another
without changing the responsibilities or compensation”.

According to B. Flippo “Transfer is a change in job where the new job is substantially equal to the old in
terms of pay, status and responsibilities.”

Temporary transfers may be due to

 temporary absenteeism

 shifts in the workload

 vacations

Permanent transfers may be due to

 shifts in the workload

 vacancies requiring the special skill of the transferred employee

 ill-health of the employee

Transfers may be either organization-initiated or employee initiated.

Organization-initiated

An organization may initiate a transfer to place employees in positions where they are likely to be more
effective or where they are better able to meet work schedules of the organization.

Transfers made to place employees in positions where they are likely to be more effective

Employee initiated transfers

Also known as “personnel transfers” may be initiated for several reasons. These could range from wanting a
change of boss or a change of location or to avoid interpersonal conflicts with their present colleagues or to
join their friends and relatives.

The employee May transfer to where they are likely to get greater job satisfaction.

THE PURPOSES OF TRANSFER

The transfer are generally affected to build up a more satisfactory work team & to achieve the following
purposes:

 To meet the organizational requirements:

Organizations may have to transfer employees due to changes in technology, changes in volume of
production, production schedule, product line, quality of products, changes in the job pattern caused by
change in organizational structure, fluctuations in the market conditions like demands fluctuations,
introduction of new lines and/or dropping of existing lines. All these changes demand the shift in job
assignments with a view to place the right man on the right job.

 To satisfy the employee needs:

Employees may need transfers in order to satisfy their desire to work under a friendly superior, in a
department/region where opportunities for advancement are bright, in or near their native place or place of
interest, doing a job where the work itself is challenging, etc.

 To utilize employees better:

An employee may be transferred because management feels that his skills, experience and job knowledge
could be put to better use elsewhere.

 To make the employee more versatile:

Employees may be rolled over different jobs to expand their capabilities. Job rotation may prepare the
employee for more challenging assignments in future.

 To adjust the workforce:

Transfer employees from a plant where there is less work to a plant where there is more work.

 To provide relief:

Transfers may be made to give relief to employees who are overburdened or doing hazardous work for long
periods.

 To reduce conflicts:

Where employees find it difficult to get along with colleagues in a particular section, department or location
– they could be shifted to another place to reduce conflicts.

 To punish employees: A disciplinary measure by shift employees to remote, far flung areas

TYPES OF TRANSFERS
Most of the transfers generally carried out four types of transfers which are discussed below:

i. Production Transfer:

When there is excessive number of employees at a place then an employee may be transferred from one
department to another department when there is less number of employees to avoid layoff.

ii. Replacement Transfers:

An employee with long service may be transferred to some other department to replace a person with a
shorter service thereby giving some relief to an old employee from the heavy pressure of work.
iii. Shift transfer: from morning to evening shift

iv. Remedial Transfers:

As the name suggest, these transfers are made to rectify the situation caused by faulty selection and
placement procedures. Such transfers are made to rectify mistakes in placement and recruitments. If the
initial placement of an individual is faulty or has not adjusted to work/job, his transfer to a more appropriate
job is desirable. Remedial transfers provide management with a procedure whereby an unsatisfactory
placement can be corrected. Initial placement might be faulty or the type of job might not suit his health. In
such cases the worker would benefit by transfer to a different kind of work.

iii. Versatility Transfer (Rotation):

An employee is trained on different jobs so as to adjust him on a different job when there is no work at his
seat or job.

Benefits of transfers

 Improve employee skills

 Remedy faulty placement decisions

 Prepare the employee for challenging future

 Improve employee satisfaction

 Improve employee-employer relations.

Problems with transfers

 Inconvenient to employees.

 Employees may or may not fit in the new location

 Shifting of experienced hands may affect productivity

 Discriminatory transfer may affect employee satisfaction.

Reasons for Transfer

 Surpluses or shortage of personnel

 To remove conflict & incompatibility between workers or the supervisor

 Correction of faulty initial placement of an employee

 Change in interests and capabilities of an employee

 To train employees

 As per policy
  On request – health ground, family circumstances etc.

EMPLOYEE SEPARATION

Employee separation occurs when employees cease to be a member of an organization. Agreement between
employer & employee comes to an end. Employees decide to leave the organization or organization ask
employee to leave.

Reasons for employee separations are voluntary or involuntary. In the former initiation for separation is
taken by employee himself or herself. Where the employer initiates to separate an employee it becomes
involuntary separation.

TYPES OR CAUSES OF SEPARATION

a. Resignation:

A resignation refers to the termination of employment at the instance of the employee in that case it is
voluntary but if forced by the employer for not putting his duty well ,or for some serious charge against him
than it becomes involuntary.

An employee may resign when he or she gets a good job elsewhere, or due to ill health, maladjustment with
company policy and affairs or may resign due to some personal problems.

If a resignation is voluntary, the personnel department should investigate the real reasons behind such
resignations. A study of exit interviews over a period of time may disclose a fiscal pattern suggesting
improvements in the personnel management functions.

b. 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. According to this definition, a lay off refers to an indefinite separation of
the employee from the pay roll due to factors beyond the control of the employer. The employee is expected
to be called back in the foreseeable future. The laid-off employee is not a discharged employee and is still
carried on the roll as an employee. Layoff is resorted to by the employer for factors beyond his control.
Such factors could be:

 Fluctuations in the market resulting in loss of sales.

 Shortage of raw materials or power.

 Accumulation of stock.

 Breakdown of machinery.
  Production delays.

c. Discharge or Dismissal:

A dismissal is the termination of the services of an employee by way of punishment for some misconduct,
or for prolonged absence from duty. A dismissal is a drastic step. 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. Whatever is the cause of dismissal but it should be done at the last stage.

d. Retirement:

A number of separations in the organization happen due to retirement. In Ethiopia, the retirement age is 60
or 63 years. Some employers may extend the age upward or downward from this base. There must be clear
rules of retirement there may be compulsory retirement where an employee has to retire after attaining a
particular 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.

e. Retrenchment

Retrenchment is termination of service due to redundancy. It is a permanent termination of the services of

an employee for economic reasons in a going concern. Retrenchment occurs on account of surplus staff,
poor demand for products, general economic slowdown, etc. The term retrenchment is applied to continuing
operations where a part of the workforce is found to be superfluous. Retrenchment has many unstabilising
effects. It influences the attitudes and contributions of other employees who become disturbed by rumors,
gossips, resentment and a sense of insecurity about their own fate. When vacancies arise after retrenchment,
the organization gives an opportunity to the retrenched workers to offer themselves for re-employment; and
they are given preference.

f. Rightsizing

It means reducing the size of workforce or increasing to maintain the employee strength at the most desired
level.

In reality, rightsizing means downsizing the employee strength through planned elimination of jobs.