Chapter 10

CHANGES IN PERSONNEL STATUS

The Rationale of Personnel Movement

A change in employment is affected by a personnel action generated by the Human Resources Department
upon receipt of a written request from an authorized representative of a department telling of the intended
change in an employee's status.
• Such forms or memoranda should include the old and new information, and the date on which such
changes should become effective.

Promotion
Promotion means advancement within an organization. It is an upward movement of an employee from
current job to another that is higher in pay, responsibility, status and organizational level.

Examples of promotion:
 HR Assistant receives a promotion to HR Generalist
 HR Generalist receives a promotion to a dual role of HR Generalist and Employee Development
Coordinator
 HR Generalist is given a promotion to HR Manager
 HR Manager is given a promotion to Manager of Human Resources and Administration
 HR Manager is promoted to HR Director

The basic elements of promotion

 Transfer of an employee to some higher job having more prestige, better Status, more benefits and
privileges.
 Reassignment of an employee to a position having increased responsibilities.
 Higher job grade.

Basis or Criteria Used for Promotion

Organizations adopt different bases of promotion depending upon their nature, size, management etc.
The well-established bases of promotion are
 Seniority bases
 Merit bases
 Seniority-cum-merit basis

Seniority – length of service.

If seniority as a basis of promotion, the senior most person in a lower grade shell be promoted as and when
there is an opening in a higher position. The logic behind considering the seniority as a basis of promotion
is that there is a positive correlation between the length of service in the same job and the amount of
knowledge and the level of skill acquired by an employee in an organization

o Straight seniority – the length of service of an employee is the sole basis for determining who
gets the promotion.
o Qualified seniority – the more competent employee as compared to another employee with
longer service will be the one promoted.

Merit- means ability to work.

o It denotes an individual employee’s skill, knowledge, ability, efficiency and aptitude as measured
from educational, training and past employment record.
o Management personnel generally prefer merit as the basis of promotion. Merit may be determined
by job performance and by analysis of employee potential for development through written or oral
examinations or personal interviews or other record of performance.

Seniority-cum-merit- Management mostly prefer merit as a basis of promotion as they are interested in
enriching organizational effectiveness by enriching its human resources.
o Trade unions favor seniority as the sole basis of promotion with a view to satisfy the interests of
majority of their members.
o The combination of both seniority and merit may be considered as a sound basis for promotion

Unofficial Promotion Criteria

o Personal Characteristics
o Nepotism – showing of favoritism or patronage to relatives
o Social Factors
o Friendship

Types of Promotion:
 Open promotions: An organization or a company considers all individuals within it as a potential
candidate and announces it to various aspirants internally.
 Closed promotions: An organization or company in which the candidate for higher position
opening or vacancies is restricted and not open for all the individuals within the organization and
also does not announce the vacancies internally. Frequently companies follow a combination of
both the systems.
 Multiple Chain promotions: Which provides for a systematic linkage of each position to several
others. Such promotions identify multi-promotional opportunities through clearly defined avenues of
approach.
 Dry promotions: Dry promotions are those that are given in lieu of increase in compensation.
 Horizontal promotion: Promotions have similar kind of work.
Ex – lower grade to higher grade without any change in work content.
 Vertical promotion: Those which change the nature of the work.
 Ex – Supervisor to Manager.

Rationale for Employee Promotion

The main reasons for promoting the employees are as follows:

Properly administered, transfers and promotion improve morale, stimulate efficiency and provide opportunity for
advancement to loyal employees. Generally, the following reasons for promoting employees are advanced:

(1) Promotion is the stepping up of an employee to a position in which he can render greater service to the company.

(2) Promotions from within the company are not so apt to be mistaken as are selections from without.

(3) The knowledge that deserved promotions are being made, increases the interest of other employees in the
company and the desire to serve the interests of the company.

(4) Such knowledge causes other employees to believe that their turn will come and so they remain with the
company and reduce the labor turnover.

(5) It creates a feeling of contentment with the present conditions and encourages ambition to succeed within the
company.

(6) It increases interest in training and in self-development as necessary preparation for promotion.

Promotion from within fosters are inbreeding. It creates an inside market of talent and experience which is sheltered
from competition and readily available as a resource to the company. However, selection of staff from inside
candidate is not always good. If internal candidates do not have adequate skill or are advanced in age, new
employees have to be selected from outside the company. Sometimes it is necessary to introduce new blood into the
organization to foster new thinking and ideas.

Sound personnel policy demands that whenever there is a vacancy for a high post, it should, if possible be filled in by
promotion from within. If all higher posts are filled from outside there will be no inducement for the existing staff to
increase their efficiency. Although, it is not always a good practice to fill every vacancy in this way and never bring in
‘new blood,’ it is very encouraging for employees to stay with an employer.

A sound promotion policy should give preference to internal candidates for senior posts. In selecting candidate for
promotion, careful and objective review of records of performance as well as appraisal is necessary. A company
which has no clear-cut promotion policy will have disgruntled and dissatisfied workers who see no prospects for
themselves. Discontent will produce frustration and turn good workers into “trouble-makers.” Career progression is
often structured by the employer, for example, in the armed forces and in public sector jobs. In the private sector,
there is greater flexibility in terms of job promotion. Few people continue to do the same job, at the same
performance level, applying the same skills and knowledge for an entire working career. With experience comes
knowledge, and with training skills are enhanced. This helps people to climb the career ladder through job
promotions.

Higher Performance Level

Employees are sometimes called upon to perform duties at a higher level of complexity or with increased
responsibility than is required in their present position. When an employee performs additional duties and
responsibilities beyond the scope of the existing job profile, an evaluation of the job process and a reclassification of
the employee’s role may be required. For example, a junior administrative clerk may be required to handle additional
responsibilities such as dealing with suppliers, managing payments and inventory control. This need arises because
of the increased workload in these areas. The company may promote the person to a full-time position, handling
suppliers and inventory, with a new designation, job profile and salary increase.

Filling an Existing Higher-Level Vacancy

Job promotion becomes necessary when a vacancy at a higher level is created through retirement, resignation or
dismissal of an employee. For example, if a departmental manager retires or resigns, there is an immediate need to
fill the position for the smooth continuity of business processes. The company evaluates promotable individuals from
a lower position in the company. For example, the assistant manager of the department, who has experience
handling the department in the manager’s absence, may be considered to step into the managerial position.
Companies prefer to promote within the organization to keep employees motivated.

Proactivity

Employees who have career goals are often willing to start at the bottom and work their way up the career ladder.
They continue to learn, gaining on-the-job training, field experience and knowledge. To fill a role successfully, the
candidate needs to approach the learning curve proactively. Employees who demonstrate an eagerness to perform
additional tasks and assume greater responsibilities are often brought to the attention of the management.
Companies try to identify proactive employees with a go-getting attitude and job capabilities to prepare them for
promotion to higher positions of responsibility.

Grooming Successors

Succession planning is a part of the company’s plan to identify and develop people within the organization to fill
leadership positions as they arise. Succession planning strategy is based on grooming employees to fill higher
positions when senior management employees leave their jobs. Through training, skills enhancement and hands-on
experience, chosen employees who demonstrate the capabilities are trained and promoted to higher positions.
Succession planning generally is done for top-level positions that need someone at the helm to prevent the company
from losing momentum, for example a financial controller.

Factors to be considered in promotion

Finding the best employees can be a difficult task. However, a great candidate for that open position may
already be working within the organization. Promoting an employee in the company can be a great way to
foster talent within an organization, but HR departments must consider a number of factors before making
the decision to promote.
As BusinessKnowledgeSource.com notes, loyalty and dependability are two important considerations when
deciding who should be promoted. If an employee has these qualities, they might be a good choice for a
promotion because they will have the goals of the company and their team members in mind. A candidate
that is dedicated is more likely to be the right person for the job. Consulting with other departments is a
crucial step in determining the best candidate to receive a promotion. As departments have their own inner
workings and unique ways of operating, it is essential that HR meets with other departments to get an idea
of how the candidates work within them.
When there are multiple candidates under consideration, HR managers have to evaluate all of them. This
will involve examining employee records as well as consulting with other departments within the
organization. Having a way to organize and access this information will help increase the accuracy and
efficiency of this process. The more organized this process can become, the better the results will be.
Keeping detailed employee records can help HR departments vet candidates. HR software solutions can
help departments develop systems to keep track of important employee information, like performance
reviews, skills and development activities they have completed. The ability to assess factors like these can
help HR departments select the right candidate for the promotion.

Employee 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”.
Transfers of employees are quite common in all organizations. This can also be defined as a change in job
within the organization where the new job is substantially equal to the old in terms of pay, status and
responsibilities. Transfers of employees can possible from one department to another from one plant to
another. Transfer may be initiated by the organization or by the employees with the approval of the
organization. It can be also due to changes in organizational structure or change in volume of work, it is
also necessary due to variety of reasons. But broadly can be done either to suit the conveniences of
organization and to suit the convenience of employees.

The purposes of the Transfer

The transfer is generally affected to build up a more satisfactory work team and to achieve the following
purposes:
 To increase the effectiveness of the organization.
 To increase the versatility and competency of key positions.
 To deal with fluctuations in work requirements.
 To correct incompatibilities in employee relations.
 To correct, erroneous placement.
 To relieve monotony.
 To adjust workforce.
 To punish employees.

Types of Transfers
Production Transfer: Such transfers are resorted to when there is a need of manpower in one department
and surplus manpower in other department. Such transfers are made to meet the company requirements.
The surplus employees in one department/section might be observed in another place where there is a
requirement.
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.
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.
Versatility Transfer: Such transfers are made to increase versatility of the employees from one job to
another and one department to another department. Transfer (Job Rotation) are the tool to train the
employees. Each employee should provide a varied and broader job experiences by moving from one
department to another. This is for preparing the employee for promotion, this will definitely help the
employee to have job enrichment.

Transfer Policy
Every organization should have a fair and impartial transfer policy which should be known to each
employee. The responsibility for effecting transfers is generally entrusted to an executive with power to
prescribe the conditions under which requests for transferred are approved. Care should be taken to
ensure that frequent or large-scale transfers are avoided by laying down adequate selection and placement
procedures for the purpose.

A good transfer policy should:

o Specifically clarify the types of transfers and the conditions under which these will be made.
o Locate the authority in some officer who may initiate and implement transfers.
o Indicate whether transfers, i.e., whether it will be based on seniority or on the skill and competency
or any other factor.
o Decide the rate of pay to be given to the transfer.
o Intimate the fact of the transfer to the person concerned well in advance.
o Be in writing and duly communicated to all concerned.
o Not be made frequently and for sake of transfer only.

A sound, just and impartial transfer policy should be evolved in the organization to govern all types of
transfers. This policy should be clearly specified so that the superiors cannot transfer their subordinates
arbitrarily and subordinates may not request for transfers even for the small issues. The management must
frame policy on transfers and apply it to all the transfers instead of treating each case on its merit.

Such a policy must be based on the following principles:

1. Transfer policy must be in writing and be made known to all the employees of the organization.
2. The policy must very clearly specify the types and the circumstances under which company initiated the
transfer will be made.
3. Basis of the transfer should be clearly mentioned in the policy, whether it will be based seniority or on the
skill and the competency or any other factors.
4. It should indicate the executives who will be responsible for initiating and approving the transfers.
5. The policy should specify the region or unit of the organization within which transfers will be
administered.
6. The effect of the transfer on the pay and seniority of the transferred employee may be clearly evaluated.
7. It should be prescribed in the policy whether the training or retraining is required on the new job.
8. Transfer should be clearly defined as temporary or permanent.
9. The interest of the organization are not to be forgotten in framing a policy of transfer.
10. Reasons for the mutual transfer of employees or reasons to be considered for the personal transfers
should be specified.
11. The fact of the transfer should be intimated to the person concerned well in advance.
12. Transfer should not be made frequent and not for the sake of transfer only.

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.

Reasons for employee transfers:

To avoid favoritism and nepotism.
To avoid gaining capacity of influencing and egocentrism.
To avoid monotony in the work of an employee.
Makes an employee accountable to his seat, so as not to find mistake by his successor.
So as to avoid excess dependency on particular employee, otherwise may affect the purpose of hierarchy
and lose control over subordinates.
To create transparency among the employees and their work.
It limits taking advantage and sole control over the seat or section.
To avoid unnecessary influence on others for their own advantage.
To make conversant of different seats work.
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 organization for the purpose of minimizing 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 organization.
An employee transfer is considerable, as most essential when a position of employee is a top-level in
hierarchy. Especially in the governmental organizations employees holding top-level positions are affected
with frequent transfers for the reason, to obviate nepotism into increase transparency in the
work. Organizations having no transfers for their employees may create their own informal groups for their
common interest and their own benefit. Subsequently, this may lead to secrecy in the flow of work,
eventually, no transparency in work. Employee transfers less organization may definitely see organizational
politics among employees that which leads to fall in coordination in between employees, eventually may
lead to drop in overall organizational performance.

Drawbacks from employee transfers

Inauguration point of view, transfer of employees will definitely benefit organization and also keeps away
disturbances and misunderstandings in between employees. However, there are a few drawbacks out of
employee transfers that effect individuals or employees.
Below listed are a few drawbacks due to employee transfers.
o Employees who are having attachment with the organization and their morale maybe disturbed due
to transfer to some other location.
o Family members of employee who got transferred maybe psychologically disturbed because they
have to shift their entire family to new location for which it may take time to get accustomed to new
place.
o Definitely, employee transfer will financially cost to him by way of shifting of his households and
furniture in transportation.
o In case of your employees, employee transfer may lead to resignation for the reason he may not
willing to leave current location if that location is his native place.

Demotion
Demotion is just opposite to promotion. In demotion, the employee is shifted to a job lower in status, grade
and responsibilities. “Demotion refers to the lowering down of the status, salary and responsibilities of an
employee.” In the words of Dale Yoder, “Demotion is a shift to a position in which responsibilities are
decreased. Promotion is, in a sense, an increase in rank and demotion is decrease in rank.”

When an employee is demoted, his pride suffers a more severe jolt than it does when he is superseded by
his junior. Some managers hesitate to demote a man. They prefer to discharge him rather than to demote
him on the lower job because he will not accept the lower job and will turn to be a disgruntled employee
and his position will not be good for better industrial relations.

Causes of Demotion:
There are several reasons for demoting a man from his present position.
Demotion may be caused by several factors which may be beyond an employee’s control.
Some of these reasons are as follows:
1. Inadequacy on the part of the employees in terms of job performance, attitude and capability. It happens
when an employee finds it difficult to meet job requirement standards, following his promotion.
2. Demotion may result from organizational staff reductions. Due to adverse business conditions,
organizations may decide to lay off some and downgrade some jobs.
3. Demotions may be used as disciplinary tools against errant employees.
4. If there is a mistake in staffing i.e., a person is promoted wrongly.
5. When, because of a change in technology, methods and practices, old hands are unable to adjust or
when employees because of ill health or personal reasons, cannot do their job properly.

Demotion Policy:
Demotion is very harmful for the employees’ morale. It is an extremely painful action, impairing
relationships between people permanently. While, effecting demotions, a manager should be extremely
careful not to place himself on the wrong side of the fence. It is, therefore, necessary to formulate a
demotion policy so that there may be no grievance on the part of the trade unions.

Yoder, Heneman, Turnbull and Stone have suggested a five-fold policy in regard to demotion
practice:
1. A clear list of rules along with punishable offences be made available to all the employees.
2. Any violation be investigated thoroughly by a competent authority.
3. In case of violations, it is better to state the reasons for taking such a punitive step clearly and
elaborately.
4. Once violations are proved, there should be a consistent and equitable application of the penalty.
5. There should be enough room for review.
Demotions have a serious impact on need fulfillment. Needs for esteem and belongingness are frustrated
leading to a defensive behavior on the part of the person demoted. There may be complaints, emotional
turmoil, inefficiency or resignation. Hence, demotions are very rarely resorted to by managers. Managers
prefer to discharge employees rather than facing the problems arising from demotion.
Demotion is just the opposite of promotion. It refers to the lowering of the status, salary and responsibilities
of an employee. Demotion is generally used as a punitive measure and is a preliminary step to discharge.
The usefulness of demotion as a punitive measure is questioned on many grounds. Losing pay over a
period of time is a form of constant humiliation. Moreover, a demoted employee will be always dissatisfied
and his dissatisfaction may spread to co-workers, adversely affecting morale, productivity and discipline of
the work-force.
Demotion becomes necessary
(1) if a company curtails some of its activities and employees with longer service bump persons in lower
jobs with shorter service
(2) It may be used as a disciplinary weapon.
Demotion will serve its purpose if it satisfies the following conditions:
(a) A clear and reasonable list of rules should be framed, violations of which would subject an employee to
demotion.
(b) This information should be clearly communicated to employees.
(c) There should be a proper investigation of any alleged violation.
(d) If violations are found, there should be a consistent and equitable application of the penalty, preferably
by the immediate supervisor.
(e) There should be a provision for review.
Since demotions produce an adverse effect on employee morale, they are made infrequently.

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 organizations 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 organization, 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.
Procedure in Handling Separation of Employment
” Employee separation” or “separation of employment” refers to the process of managing the end of the
employment cycle. There are many different types of separations which include both voluntary and
involuntary.

Voluntary Processes

1. When possible, employees should typically provide written notification with a minimum of two
weeks’ notice of their intention to separate from the company.
2. After management receives this letter, they should forward it to their HR department along with a
signed “Separation Notice”. This separation notice will serve as notice to stop the employee’s
payroll and benefits.
3. Next, a neutral party should conduct an exit interview with the employee for the purpose of
discovering his or her reasoning for leaving your employ.
4. Finally, mail a letter to the employee confirming their resignation and cancellation of benefits. Also,
give the employee a letter regarding the option for filing for unemployment. Please note this does
not guarantee the employee will be found eligible for unemployment. (See below for an explanation
on why these letters are sent.)
5. Keep copies of all separation documents in the employee’s personnel files.

Involuntary Processes
1. Employers that decide to separate an employee should first ensure that they are in compliance
with Federal and State labor laws and review if steps have been taken (for example, progressive
discipline) to avoid perception of violation of these laws. (We recommend our clients they speak
with their HR Consultant before terminating an employee.)
2. Complete a “Separation Notice” for the employee to sign on his or her last day that details the
reason for the separation. ESC recommends in most cases that employers share specific reasons
for terminating an employee. This helps lessen the amount of confusion and frustration of the
person being separated. However, we recommend you do not give the employee a copy of this
notice. You are not required to do so and it is for internal purposes only.
3. Have a formal separation meeting between the employee and a manager/owner. This is where the
employee will find out he or she is being let go from the company. We strongly recommend a
witness. (We encourage our clients to contact their HR Consultant to assist with this process.)
4. Mail a separation of employment letter to the employee confirming their separation and
cancellation of benefits. (This is not the same as a internal separation notice. See below for an
explanation on why this letter is sent.) Also, give the employee a letter regarding the option for filing
for unemployment. Please note this does not guarantee the employee will be found eligible for
unemployment.
5. Keep copies of all separation documents in the employee’s personnel files.
Handling Human Resources Turnovers
In a human resources context, turnover or labor turnover is the rate at which an employer gains and loses
employees. Simple way to describe it are "how long employees tend to stay" or "the rate of traffic through
the revolving door."
Turnover is measured for individual companies and for their industry as a whole. If an employer is said to
have a high turnover relative to its competitors, it means that employees of that company have a shorter
average tenure than those of other companies in the same industry. High turnover may be harmful to a
company's productivity if skilled workers are often leaving and the worker population contains a high
percentage of novice workers.
Employee turnover costs can significantly affect the financial performance of an organization. On average,
it costs a company about one-third of a new hire's annual salary to replace an employee.

Steps can take to improve retention rates, including:

1. Hiring employees with the right "fit". Compatibility is critical to retention. Behavioral based
interviewing and competency screening goes a long way in determining personality, work style and
potential match and success within your company.
2. Hiring older workers. Consider hiring candidates who are seeking stability. Older applicants may not be
looking for the development opportunities that their younger counterparts may be in need of.
3. Describing the job correctly. Make sure you describe the job as accurately as possible so candidates
will know what is expected. Misconceptions regarding the job responsibilities and work environment are
one of the major causes of employee turnover.
4. Developing competitive compensation and benefit packages. Understand and research market pay
ranges in your area and consider the value of benefits and employee perks; offering such extras to your
workforce may be the key to your retention efforts.
5. Challenging your employees. Employees want to be challenged in the job they are performing to feel
like they are growing both personally and professionally when challenged with attainable assignments.
6. Providing excellent supervision. Incompetent supervisors are often one of the first issues linked to
employee turnover. No one wants to work for a manager who cannot adequately complete the tasks of his
or her job, who is not passionate about the work being done and who fails to provide regular feedback.
Providing better employee supervision as well as enhanced communication helps decrease employee
turnover.
7. Recognizing employee success. It is important to let your employees know that their work does not go
unnoticed. Employees are more willing to stay with a company if they feel a sense of pride and success in
their work. When employees meet or succeed your expectations, show your appreciation for a job well
done.
8. Providing an employee-friendly work environment. Be accommodating to your employees' outside
demands. Providing employees with flexible schedules makes for a productive, satisfied workforce. The
stress of balancing work and life diminishes when employees can work around their outside obligations.
9. Career Advancement Opportunities: Whenever possible, provide opportunities within the company for
cross-training and career progression. Employees are seeking to develop themselves and offering that
opportunity to them may provide the satisfaction and stability they are seeking.

The bottom line is that it's extremely important to understand the impact of turnover in your business and
determine the reasons why employees are leaving. The most effective way to do so is by conducting exit
interviews with departing employees. This strategy alone will help you make adjustments that will reduce
future turnover.
Human Resource and Development
Group 9: Chapter 10

“CHANGES IN PERSONNEL STATUS”

COLAPO, ARLENE MAE S.

IGLESIA, ELOISA JANE
PAROM, ARMIE
SOREVEGA, ANA MAUREEN

BS PSYCHOLOGY
CAS-06-704E
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