Promoting an employee to a more senior position is usually based on their skills and future potential. However, promotions don’t always lead to the expected outcomes. When a promoted employee struggles to meet the demands of their new position, employers are faced with challenging decisions. Should you terminate, demote, or find another solution? Promotions are milestones that recognize an employee’s potential, yet they can also present challenges, as highlighted by the Peter Principle—the idea that people are often promoted to their “level of incompetence.” Starting a new role often means taking on new responsibilities and learning new skills, which can sometimes cause a dip in performance, either briefly or for a longer period.
For example, a skilled software engineer might be promoted to a managerial role but struggles with leadership responsibilities. This often happens because the promotion is based on their success in the current role rather than potential for the next. A top performer in one position may not have the skills needed for the next.
To tackle these challenges, organizations can set clear expectations, provide focused training, and create a culture of regular feedback. These approaches help newly promoted employees settle into their roles while reducing the risk of under-performance and potential disruption or inefficiency for the organization. Here’s a breakdown of the legal and practical considerations to assist you in managing this sensitive situation.
Step 1: Assess the Situation
Before taking any drastic action, document the employee’s performance issues and see how they compare to the expectations outlined in their job description. Were the expectations clearly communicated? Did the employee get enough resources and support? If the employee’s former position has been filled, moving them back might be difficult or infeasible.
Here’s what you should do: Set up formal feedback sessions and create a performance improvement plan (PIP) with clear, measurable goals. Schedule regular follow-ups and offer support like training or mentorship to help them succeed. Allow a reasonable time-frame for improvement. This ensures fairness and makes sure the employee has had a real chance to succeed.
Step 2: Evaluate Your Options
Provide Development Opportunities:
Address performance gaps by investing in development through training and mentorship. If the demands of the new role exceed their capabilities, consider restructuring the role or gradually transitioning them to a more suitable position.
Explore Alternative Roles:
Consider lateral moves, special projects, or customized roles that utilize their strengths and provide growth opportunities. Not all employees aspire to be in a leadership position. Some may prefer to specialize in their current role, focus on technical expertise, or contribute in ways that align with their personal strengths and interests.
If you decide to have them retain their promoted salary and benefits, this can demonstrate goodwill and loyalty, which may encourage their commitment. However, if re-adjustments are necessary, it is strongly recommended to seek legal advice, as employment laws can be complex and vary depending on the specific circumstances.
Consider Demotion:
Demotions can pose legal risks, especially when they result in a substantial reduction in compensation, responsibilities or the perceived status of the employee’s role. Reducing an employee’s pay, benefits, or job status without their consent can be considered constructive dismissal. This allows the employee to treat the demotion as a termination and sue for severance or wrongful dismissal.
To avoid constructive dismissal claims, secure the employee’s written consent, clearly explain the reasons for the demotion, and, if possible, offer an alternative role with comparable pay or responsibilities aligned to their skills.
Consider Termination:
If performance issues are severe and no suitable alternative roles exist, termination may be necessary. Termination (in this case without cause) requires appropriate notice or pay in lieu of relevant employment and common law principles.
Ensure that the performance issues are not related to a protected ground under the Human Rights Code, such as a disability. If accommodations are needed, you are obligated to explore those options. It’s best to consult an employment lawyer for guidance before moving forward with termination.
Step 3: Maintain Employee Morale
Handling a demotion with care is crucial to maintaining workplace morale and culture. Communicate openly with the affected employee, offering support and clarity during the transition. Be transparent with the team, framing the decision positively by emphasizing the employee’s alignment with company values and long-term potential. Show that you’re dedicated to keeping great people on the team and helping them grow, so others feel reassured, and trust stays strong.
Preventing Premature Promotions:
Promoting employees before they’re ready can shake up team dynamics and hurt productivity. To avoid this, create a clear plan to help employees transition smoothly into new roles. Start by setting clear promotion criteria that focus on the skills and potential needed for the new role, not just past achievements. Offer training and development options like leadership programs, mentorship, and technical training to help them build the right skills.
Keep communication open by having honest conversations about career goals and readiness. This allows for tailored feedback and growth plans. Use fair evaluations, like 360-degree feedback and performance metrics, to make informed decisions. Offering flexible career paths that gives employees more options and normalizes turning down a promotion if they don’t feel ready.
Key Takeaways:
Dealing with an under-performing employee post-promotion is challenging, but it’s essential to align your actions with local employment laws to avoid issues and maintain a positive workplace. If the employee reflects your company’s values but struggles in their current role, retaining them by building on their strengths, providing support, and being open and transparent can turn a difficult situation into an opportunity for growth.
For fairness, compliance, and proper documentation, contact Bridge Legal and HR Solutions at (647) 794-5442 or admin@bridgelegalhr.ca for tailored advice on resolving employee issues effectively.