CHAPTER NINE
Managing Employee Promotion, Transfers and Separation
Introduction
Promotions and transfer are integral part of most people’s careers. Promotions traditionally
refer to advancement to positions of increased responsibility; transfers are reassignments to
similar /higher positions in other part of the firm without a change in responsibilities or
remuneration.
The final human resource management function is that of separation. Like other HRM functions,
this also requires preparation and planning. Separation can be initiated by employers like
mandatory retirement, dismissal, layoff; by employees like resignation, voluntary retirement,
quit; by agreement of the two parties like when the contract ends; or it can also be caused by
things outside the will of both the employer and the employee like accidents, death etc.
Retirement, layoff, dismissal, turnover, quit, permanent disabilities are among the causes of
separation from the organization.
❖ Lesson Objectives
After studying this section of the training material, you should be able to:
1. State the purpose and principles of promotion
2. Identify the reason and principle of transfers
3. State clearly the cost and benefits of separation
4. Describe the types of employee separations
9.1. Meaning and Definition
Promotion
Promotion means an improvement in pay, prestige, position and responsibility of an employee
within his or her organization. A mere shifting of an employee to a different job which has better
working hours , better location and more pleasant working condition does not mean promotion
.The new job is a promotion for the employee only when it carries increased responsibilities and
enhanced pay .
9.2. Purpose of Promotion
The purpose of promotion may be outlined as follows:
To motivate employees to higher productivity
To attract and retain the services of qualified and competent people
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To recognize and reward the efficiency of an employee
To fill up higher Vacancies form within the organization
To build loyalty, moral and a sense of belongingness in the employee
9.3. Principle of Promotion
Promotion is a double –edged weapon .If handled carefully, it contribute to employee
satisfaction and motivation. If mishandled, it leads to discontentment, frustration, skepticism and
bickering among the employees, and culminates in a high rate of turnover. It is the responsibility
of HR department to lay down a sound promotional policy and ensure its implementation.
The policy of promotion should be clear on the following matter:
➢ The management must make it clear whether it fills up higher positions by internal
promotions or recruit from outside. Generally speaking, top positions in an
organization are filled through external recruitment. The lower positions, however,
are filled up by promotions from within.
➢ When it has been decided to fill up higher positions with promotions, a further
decision on determining the base of promotions should be made by the management.
The base of promotion may be seniority or merit or both
If seniority is the base for promotion, an employee with the longest period of service will get
promoted irrespective of whether he or she is competent to occupy a higher post or not. This is
the practice followed a unionized industrial establishment, government –owned undertakings and
educational institutions. A promotion on the basis of seniority has merits and demerits.
Merits
1. It is easy to administer
2. There is less scope for subjectivity or arbitrariness in fixing seniority.
3. labor union well come seniority –based promotions
4. seniority and experience go hand in hand ,and therefore , it is right and proper to make
promotions on this base
5. Subordinates are more willing to work under and older boss who has given many years
of service to company
Demerits
1. Seniority is not indicator of competency
2. Young and competent people get frustrated and might leave the organization
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If competency is the base for promotion, an employee whose performance is the best, as revealed
by performance appraisal, is promoted. He or she beats all the others by his or her merit is
rewarded, just as an athlete is rewarded when he or she touches the tape first in a 100 meter dash.
Such a promotion has its own charm because of it is won by hard work and dedication.
The merits of promotion by competency are:
1. Efficiency is encouraged , recognized and rewarded
2. Competent people are retained because better prospects are open to them.
3. Productivity increased
The demerits of promotion by merit are:
1. Discontentment among senior employees
2. Scope for favoritism
3. Loyalty and length of service are not rewarded
4. opposition from union leaders
➢ When promotions are made on the basis of competence, openings for promotion
should be displayed prominently at several places to enable interested people to
apply.
➢ A promotion should be preceded by a job analysis, and performance appraisal. A job
analysis is essential to know what the job demands from the incumbent. Employee
assessment on the other hand , enables the management to know whether the
employees in question can match the requirement of the job
➢ A promotion policy should establish a well –defined promotion Chart. Showing who
can get up to what level in the organization. The promotion chart is highly useful to
the management because it clears any suspicion which the employees may have and
enables the aspirants to make them eligible for promotion.
9.4. Transfers
A transfer involves a change in the job (accompanied by a change in the place of the job) of an
employee without a change in responsibilities or remuneration. A transfer differs from a
promotion in that the latter involves a change in which a significant increase in responsibility,
status and income occurs, but all these elements are stagnant in the former. Another difference is
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that transfers are regular and frequent, as in banks and other government establishments, but
promotions are infrequent, if not irregular.
9.5. Reasons for Transfer
The reasons for transfers may vary from organization to organization, and form individual to
individual within organizations. Broadly speaking, the following are the reasons for transfer.
1. There is a shortage of employees in one department or plant because of a heavy demand
which necessitates an increase in the number of shifts or expansion of production
capacity. In other department or plant of the same organization, employees may be
surplus because of slackened demand for the products manufactured by the department.
Workers are transferred from the surplus department to another department or plant
where there is a shortage of staff.
2. Removal of the incompatibilities between the workers and his or her boss and between
one worker and another worker.
3. Correction of faulty initial placement of an employee
4. Over a period of time, the productivity of an employee may decline because of the
monotony of his/her job. To break this monotony, the employee is transferred.
5. The climate may be unsatisfactory for an employee health. He or she may request a
transfer to a different place where his or health will not be affected by its climate.
6. Family related issues cause transfers, especially among female employees. When they
get married, the female employee wants to join their husbands, and this fact necessitates
transfers or resignations.
9.6. Principles of Transfers
The management must frame a policy on transfers and apply it to all transfers interested of
treating each case on its own merits. Such a policy must base on the following principles:
1. The criteria for entertaining transfer need to be laid down and strictly adhered to.
2. The effect of transfer on the pay and seniority of the transferred employee may be clearly
evaluated.
3. Transfer should be clearly defined as permanent or temporary
4. The performance of the employee needs to be assessed before transferring him or her to a
different job. Similarly, the job itself must be properly described. Job description and
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employee assessment enable the management to know whether the individual fits the new
job or whether he or she needs training before taking up the new assignment.
5. The interests of the organization are not forgotten in framing a policy of transfers.
9.7. Employee Separation
An employee separation occurs when an employee ceases to be a member of an organization
.The rate of employee separations in an organization, the turnover rate, is a measure of the
rate at which employees leave the firm. Companies try to monitor and control their
employee’s turnover rate so that they can, in turn, monitor and control the cost of replacing
employees. An excessive high turnover rate compared to industry standard is often a
symptom of problems within the organization.
9.8. Cost and Benefit of Employee Separation
The cost of Employee Separation
The cost of employee separations depends on whether managers intend to eliminate the positions
or to replace the departed employees. By eliminating positions, the company can reduce costs in
the long run. Human resource replacement costs includes: recruitment costs, selection costs,
training costs, and separation costs.
Recruitment costs. The costs associated with recruiting replacement may include advertising the
job vacancy and using a professional recruiter to travel to various locations (including college
campuses) and generate a pool of job applicants.
Selection costs. Selection costs are associated with selecting, hiring, and placing a new
employee in a job. Selection can involve interviewing the job applicant, which includes the costs
associated with travel to the interview site and the productivity lost in organizing the interviews
and arranging meetings to make selection decisions.
Other selection cost involves testing the employee and conducting reference checks to make sure
the applicant’s qualifications are legitimate. Finally, the company may have relocations costs,
which includes the cost of moving the employee’s personal property, and travel costs.
Training costs. Organizations incur costs in providing new employees with the knowledge
necessary to perform on the job. Most new employees need some specific training to do their job
.Also important are the direct training cost- specifically, the cost of instruction, books, and
materials for training costs. Finally, while new employees are being trained, they are not
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performing at the level of fully trained employees, so some productivity is lost until trainees
master the skills required by the job.
Separation costs. A company incurs separation costs for all employees who leave, whether or
not they will be replaced. The largest cost of separation involves compensation for the job loss in
terms of pay and benefit. Less frequently, employees may continue to receive health benefits
until they find a new job. Employers who lay off employees may also see their un employment
insurance rate go up because they are penalized with a higher tax if more of their former
employees draw benefits from the un employment insurance fund in the states in which they do
business.
The Benefits of Employee Separation
Reduced labor costs. An organization can reduce its total labor cost by reducing the size of its
work force. Although separation costs in a layoff can be considerable, the salary savings
resulting from the elimination of some jobs can easily outweigh the separation pay and other
expenditures associated with a lay off.
Replacement of poor performers: An integral part of management is identifying poor
performers and helping them improve their performance. If an employee does not respond to
coaching or feedback, then he or she may be advised to leave so that a new (and presumably
more skilled) employee can be brought in.
Increased innovation: Separations create opportunities for advancement so that high-
performing individuals can be rewarded with promotions .They also create opportunities for new
entry-level positions as employees are promoted from within to fill job vacancies.
The opportunity for greater diversity: Separations create opportunities to hire employees form
diverse backgrounds and to redistribute the cultural and gender composition of the work force.
This allows an organization all the advantages of a diverse work force and to maintain control
over its hiring practice while remaining in compliance with the government’s EEOC polices.
9.9. Types of Employee Separation
Retirement, layoff, dismissal, turnover, quit, permanent disabilities are among the causes of
separation from the organization.
Turnover
This is the movement of employees into and out of an organization. In other words it is the
measure of the extent to which old employees leave and new employees enter the organization.
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Causes of Employee Turnover
❖ Low wage and salaries ❖ Bad promotion policy (not
❖ Poor working conditions merit based)
❖ Poor quality of supervision ❖ Personal and psychological
❖ Social and economic factors factors
aiding mobility
Remedies of Employee Turnover
It is clear that excessive employee turnover is costly to an organization. It is therefore
essential to minimize the extent of turnover in organizations. The possible remedies
include:
Improvement of wage structures and compensation package.
Improvement of working conditions and environment. Proper layouts,
adequate housing, schools, hospitals etc. should exist.
Proper selection and training (eliminate workers who are not suitable for the
work)
Proper promotion policy- promotion must be based on seniority and merit
Improvement in supervision- a good supervisor is often a source of stability to
his fellow workers.
Retirement
This is a point at which a person gives up work, usually because of old age. But generally
retirement can be mandatory or voluntary. Mandatory retirement is separation of the
worker from the job, which is required by law and the organization when the worker
reaches a certain age defined by the law. Early retirement is nowadays becoming
mandatory in most organizations because of the idea of downsizing and other problems.
Voluntary retirement on the other hand is a retirement initiated by the worker himself
because of different reasons. Workers may request their organization to retire but in most
cases they can be entitled to retirement benefits if they have a certain year of service.
Layoff
This is a reduction in the work force when there is a temporary shortage of work in the
organization. Organizations may have temporary jobs, which may need large number of
workers to perform. The organization hires workers when there are such jobs and layoff
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when the job is completed. The organization may promise them to call them back when
such jobs are created in the future. Layoff is one of the most difficult decisions for
managers because it is highly related to creating unemployment in the society and
workers are not ready and willing to accept layoffs. Layoffs are nowadays widely
practiced because of downsizing and the need to avoid bulky and unproductive human
resource.
Dismissal
This is involuntary termination of employment usually initiated by the employer. There are
various reasons for dismissal including:
▪ Unsatisfactory performance
▪ Misconduct and other disciplinary problems
▪ Lack of qualification for the job etc.
Dismissals are again the other challenging and even the most difficult decisions for
human resource managers. The labor union and the dismissed workers themselves highly
resist dismissals and take it as unfair HR practice.