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• Promotion is upward movement of employees
• Promotion means an improvement in pay,
prestige, position and responsibilities of an
employee within an organization.
• A mere shifting of an employee to a different
job which has beet working hours, better
location and more pleasing working conditions
does not amount to promotions

‘A movement to a position in which responsibilities

and presumably , prestige are increased’
- Dale Yoder.
Purposes of promotion
• To put the employee in a position where he will be of
greater value to the company.
• To motivate employees for higher productivity
• Satisfy high order needs of employees
• To attract and retain the services of qualified and
competent people
• To recognize and reward the efficiency , effectiveness &
performance of an employee
• To fill up higher vacancies from within the organization.
• To build loyalty, morale and a sense of belongingness in
the employee.
• To impress upon others that opportunities are available
to them too in the organization, if they perform well
Principles of promotion
• Clear policy for filling the positions from internal employees
or through recruitment. Top positions are normally filled
through recruitment and lower and middle positions
through promotions
• Basis of promotion usually is merit or seniority
• Basis of promotion may also be competence of the
• Vacancy or non vacancy promotion
• No frequent promotions
• Promotion should be preceded by job analysis and
performance evaluation
• Promotional policy should be discussed with the union
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

 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.

Types of Promotion:
 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

 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.
Promotion Programme:

It must provide for a uniform distribution of promotional opportunities

throughout the organization. This means that the ratio of internal promotions to
external recruitment must be the same at various levels in all departments.

• A sound promotion programme is that it must tell employees in advance what avenues
for advancement exist.
• There should be some definite system for the selection of employees who are to be
promoted from within the promotion zone.
• Finally all sanctions must be approved by the concerned line heads.
• A sound promotion policy must provide for suitable system of follow up and review.
Advantages of a well defined and documented Promotion scheme:

 It provides an opportunity for the present staff to move into jobs that provide greater
personal satisfaction and prestige.

 It provides opportunities to the management to provide recognition and incentives to

the better employees.

 It generates within an organization beneficial pressures on work performance and

desired behaviour of all its members.

 It serves as an orderly logical and prompt source of recruitment for management to fill
vacancies as they arise.
Promotion Policy

Every organization should have a promotion policy.

Each organization should strike a balance between the

internal sources of personnel promotion and external
sources of recruitment on one hand and between merit and
ability as against length of service on the other.
• Practices in India.

In India promotions are made sometimes on the basis of seniority and

sometimes on the basis of merit.Usually in the case of lower cadre, the
basis of promotion is seniority.

In public sector concern, the promotion policy is based on seniority. But

often due to political pressure, seniority is violated.

In case of private sector concern, there is no clear-cut policy. Usually

promotion is based on efficiency and merit. Sometimes due to the
employee’s relationship with the employer, efficiency and merit is set

In a developing country like ours, where liberalisation and globalisation

concepts are gaining prominence, promotions just based on seniority
cannot be adopted.
Should Promotion’s be given on seniority or merit ?
• Transfer is also called as horizontal or lateral
movement of employees.
• Transfer involves change of job (accompanied
by a change in the place of the job) of an
employee without a change in responsibilities
and remuneration
Reasons of transfer
• Shortage of employees in one department and
surplus employees in other department
• To sort out boss employee issues
• Correction of faulty initial placement of an
• Monotony/boredom can be avoided by transfer
• help in raising productivity
• Health reasons (climate may not be good to work
for longer periods)
• Family related issues
Principles of transfer
• The frequency of transfers and the minimum
period between transfers need to be decided
upon and made known to all the employees.
• The authority which would handle transfers is to
be decided
• The criteria for entertaining transfers need to be
laid down and strictly adhered to.
• The area of the organization over which transfers
can be made need to be defined.
• Performance of the employee should be assessed
before transfer.
Types of transfer
• Broadly transfers can be classified into three
types –
– Those designed to enhance training and
– Those making possible adjustment to varying
volumes of work within the firm
– Those designed to remedy the problem of poor
• Specifically transfers may be production,
replacement, versatility, shift and remedial
– Production transfers: to meet the shortage of
employees during production
– Replacement transfers: to replace senior positions by
junior officers
– Versatility Transfers: To make employees versatile and
competent in different areas
– Shift transfers: transfers between work shifts
– Remedial transfer: on request of employees (also
called personal transfers)
Employee Separation



involuntary Retrenchments



Voluntary separations
• When employee decides to terminate his/her
relationship with the employer. Two types are

– Quits: out of dissatisfaction in the current job, and

– Retirements: Occur when the employees reach

end of their careers
• The termination of employment is initiated by the
• A discharge takes place when the employer
discovers that it is no more desirable to keep an
employee any longer,
• Discharge, also called termination, should be
avoided as far as possible.
• Reasons for Dismissal or Discharge
• Excessive absenteeism
• Non-performing
• Serious misconduct
• False statement of qualification at the time of employment
• Theft/intentional damage of company’s property
Separation : Layoff
• It is temporary separation of the employee.
• Section 2 (KKK) of the Industrial Disputes Act,
1947, defines layoff as the failure, refusal or
inability of an employer to give employment to a
• Reasons of Layoff:
– Breakdown of machinery
– Economic recession
• Section 25 of The Industrial Dispute Act, 1947,
makes it mandatory on the part of the employer
to pay compensation for all the days of the layoff
(half of the normal wages)
Separation : Retrenchment
• It refers to the termination of the services of
employees because of the replacement of
labor by machines or the close of department
due to continuing lack of demand
• Retrenchment differs from layoff, as in Layoff,
the employee continues to be in the
employment of the organization and is sure to
be recalled after the end of the period of

Separation : VRS
• Began in the early 1980’s
• companies both in public and private sectors, have
been sending home surplus labour for good, not
strictly by retrenchment, but by the novel scheme
called the VRS,
• Also called the Golden Hand Shake Plan.
• Handsome compensations are paid to those who opt
to leave
• Like Hindustan Lever VRS consisted –
– A lump sum payment equal to 2.25 times in July 1992
salary multiplied by remaining years of service
(subsequently reduced to 15 years service)
– Pension equal to 70% of the July 1992 salary payable till
the age of 60 (the company’s retirement age)
– Prizes such as computers, trucks, houses, and so forth (99
in all) to be decided on the basis of a lucky draw.
Separation : Rightsizing
• Rightsizing: means reducing the size of the
workforce or increasing it to maintain the
employee strength at the most desired level.
• Mostly it is downsizing only
• Triggered by –
– The company’s bottom line is threatened
– Technological advancements renders people
redundant, and
– Organizational restricting
– Economic and market pressures to cut cost
• It is quite painful for the employee and his family.
• Affects the morale of all the employees
Guidelines to manage downsizing

• Consider the human element

• Make ‘who goes and who stays’ decisions judiciously
• Delay and pay hikes
• Freeze hiring
• Restrict overtime
• Retain or redeploy employees
• Engage part-time employees
• Switch to job sharing
• Implement early retirement plans
• Attend to morale of serving employees
Managing separations
• Positive outcomes
– Organizations become fitter and trimmer
– Saving on wage and salary bill
– Fresh ideas brought by new entrants
• Negative outcomes
– Disrupts employee morale, may rather add to cost
– Cost of turnover include retirement costs and
hiring and training costs