CHAPTER EIGHT

8. Promotion, Transfer and Separation

8.1 Promotion
What is Promotion?
Promotion means an improvement in pay, prestige, position and responsibilities of an employee
within his/her organization. A promotion is a move to a higher-level job with more authority,
responsibility and pay. A mere shifting of an employee to a different job which has better
working hours, better location and more pleasant working conditions does not constitute
promotion. The new job is a promotion for the employee when it carries increased responsibility
and enhanced pay. In promotions, it’s important to consider not only how an employee performs
in the current job, but also how he or she will adapt to a new one.

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

Types of Promotion
A promotion involves an increase in status, responsibilities and pay. But in certain cases only
the pay increases and the other elements remain stagnant. In other cases, the status only
increases without a corresponding increase in pay or responsibilities.
Depending on which elements increase and which remain stagnant, promotions may be
classified into the following types. Such as
A. Horizontal promotion
B. Vertical promotion
C. Dry promotion
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A. Horizontal Promotion
This type of promotion involves an increase in responsibilities and pay, and a change in
designation/title. Horizontal promotions are those under which employees may be promoted
to higher ranks in other departments as well. But the employee concerned does not
transgress (go beyond the limit) the job classification. For e.g. lower division clerk will be
promoted to upper division clerk. In this case there is no change in the nature of the job.

B. Vertical Promotion
This type of promotion results in greater responsibility, prestige and pay, together with a
change in the nature of the job. Vertical promotions are made under which the employees are
promoted from one rank to the next higher rank in the same department. A promotion is
vertical when a canteen employee is promoted to an unskilled job. The concerned employee
naturally transgresses the job classification.

C. Dry Promotion
Dry promotions are sometimes given in lieu of increases in remuneration. In this promotion the
worker are moved to higher subsequent level hierarchy with greater power, responsibility,
position and no increase salary. Designations are different but no change in responsibilities. The
promotee may be given one or two annual increments. For example, when a university professor
is made Head of the Department, there is no increase in salary.

8.2 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. It differs from a promotion in
that the promotion involves a change in which a significant increase in responsibility, status, and
income occurs, but all these elements are stagnant in the transfer. Another difference is that
transfers are regular and frequent, but promotions are infrequent.

Reasons for Transfer

The reasons for transfers vary from organization to organization, and from individual to
individual within an organization.
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 Broadly speaking, the following are the reasons for transfer:
 Workers are transferred from the surplus department to another department or plant
where there is a shortage of staff.
 Removal of the incompatibilities between the workers and his or her boss and
between one worker and another worker.
 Correction of faulty initial placement of an employee.
 A change has taken place in the interests and capacity of an individual, necessitating
his or her transfer to a different job.
 Over a period of time, the productivity of an employee may decline because of the
monotony of his or her job. To break this monotony, the employee is transferred.
 The climate may be unsatisfactory for an employee’s health. He or she may request a
transfer to a different place where his or her health will not be affected by its climate.
 Family related issues cause transfers, especially among female employees. When
they got married, the female employees want to join their husbands and this fact
necessitates transfers or resignations.
Types of transfers
Broadly speaking, transfers may be classified into three types:
 These designed to enhance training and development
 These making possible adjustment to varying volumes of work within the firm
 These designed to remedy the problems of poor placement
Specifically, transfers may be production, replacement, versatility, shift and remedial.

a) Production transfers: A shortage or surplus of the labor force is common in different

departments in a plant or several plants in an organization. Surplus employees in a
department have to be laid-off, unless they are transferred to another department. When
the transfer are being made for filling the position in such departments having lack of
staff, from the departments having surplus manpower it is called production transfer.
It prevents the layoff of the organization and it is good to adjust existing staff than to
hire the new staff.
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b) 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.
c) Versatility transfer: Versatility transfers are effective to make employees versatile and
competent in more than one skill. It is done to increase the versatility in the employees
so that he/ she can work different job.
This is done by transferring employee to deferent job closely related in the same
department or process line. This is used as training device.
Versatile transfers may be used as a preparation for production or replacement transfer.
It helps employee to develop him and he is equipped for the high responsibility jobs as
he is having knowledge of the whole process.

d) Shift transfers: Generally speaking, industrial establishments operate more than one
shift. Transfers between shifts are common, such transfers being made mostly on a
rotation basis. Transfers may be effected on special requests from employees. In many
multi shift jobs such as call centers employees are transferred from one shift to anther
due to their personal reasoning like health problem or evening college for higher studies
or any family problems.

e) Remedial Transfer: Remedial transfers are affected at the request of employees and
are, therefore, called personal transfers. It refers to rectification of wrong selection or
placement employees. If the employee can adjust himself in the given job he/she can be
transferred to the job where he can use his skills and abilities accordingly. It takes place
because the initial placement of an employee may have been faulty or the worker may
not get along with his or her supervisor or with other workers in the department. He or
she may be getting too old in his or her regular job, or the type of job or working
conditions may not be well-adapted to his or her present health or accident record. If
the job is repetitive, the worker may stagnate and would benefit by transfer to a
different kind of work.
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 8.3 Separations
When a person joins an organization, the main aim is to work and develop oneself but that
does not necessarily mean that the person will continue working with that organization
only. Besides that there can be various other reasons that may force an individual to leave
the organization.
Separation refers to employee leaving the organization. It means end of service with the
organization. It is called “negative recruitment”.
Exit simply means separation from the organization. It may take the form of retirement,
either compulsory or voluntary, resignation, dismissal, lay-off or retrenchment. Though it is
end of relationship of an organization with an employee but it can give important
guidelines to an organization about the way it works and what change may be required.
Separations are painful to both the parties and should, therefore be administered carefully.

There may be many causes of separation/employee exit. Broadly these causes can be
classified under the following headings - Avoidable causes and Non avoidable
causes/unavoidable causes.

Employee’s preferences or incompetence or poor health could be considered as

unavoidable causes. Such clear-cut demarcation is not possible in the case of avoidable
causes. Avoidable causes can be on personal reasons like incompatibility with peers or
superiors, lack of interest or aptitude of the given job, perceived fears and apprehensions
about one’s own career prospects, change of technology, change of product mix,
production volume, poor working conditions, etc…
Separation may be voluntary or involuntary.
 Involuntary separations: It occurs when an employer decides to terminate its
relationship with an employee due to:-
 Economic necessity or
 A poor fit between the employee and the organization.
 Voluntary separations: a separation that occurs when an employee decides, for
personal or professional reasons to end the relationship with the employer.
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a) Lay-offs
Layoffs are often temporary and employees may be brought back if conditions improve. A
company that is losing money may need to downsize, or reduce the number of employees.
Layoff means the “failure”, “refusal" or “inability” on the part of any employer to give
employment to any number of workmen on account of shortage of raw material,
accumulation of stock, breakdown of machinery or for any other reason. In other words,
it refers to separation of employees for an indefinite period due to reasons, much beyond
the control of employer. It is intended to reduce financial burden of organization. It may be
for a definite period on the expiry of which the employee will be recalled by the employer
for duty. As the employees are laid off at the instance of the employee, they have to be paid
compensation for the period they are laid off.

The basis for the lay-off may be merit or seniority. If merit is the basis, employees with
unsatisfactory performance are laid of first. If seniority is used as the basis of lay off, then
the employees with the shortest period of service will be first laid off and the older
employees are retained as long as conditions permit. The basis for recalling the employees
as soon as the lay-off is lifted needs to be made clear. Naturally key employees must be the
first to be recalled.
Top management has to decide who are to be laid down. By “last in first out (LIFO)”
principle is used; when they are recalled and reemployed, last out first in (LOFI) principle
is used.

b) Resignations
An employee resigns when he or she secures a better job elsewhere, or when an employee
suffers from ill health, and for other reasons. The administration of separation caused by
resignation is very simple because the employee himself/herself is responsible for it.
However, such process by employee can be in either of the following two ways -Voluntary
resignation and Induced resignation.
In voluntary resignation, the employee seeks separation from the organization due to
reasons of personal nature like lack of promotional opportunities, chances of better
employment elsewhere, health reasons, reasons of dissatisfaction of job etc.
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 On the other hand, induced resignation implies avoiding termination on grounds of
discipline. Meaning the individual may be induced or persuaded to leave due to any other
serious charges brought against him/her, and the proceedings of which might result in
conviction and termination of service.
c) Dismissal or discharge
Dismissal is the termination of services as a punishment for some major offences done by
the employee. Such punishment is awarded through a judicial or quasi-judicial process in
which ample opportunity is given to the employee who has been accused to defend
him/her, call witnesses in defending his/her case, etc. A dismissal needs to be supported by
just and sufficient reason. Principle of natural justice is applied in such proceedings and
also in the award of punishment.
In case the reason of discharge is attributed to incompetence, poor health or those due to
organizational reasons, the employee must be given adequate notice and must be properly
explained the reasons of discharge.

The following reasons lead to the dismissal of an employee: Excessive absenteeism;

serious misconduct; false statement of qualification at the time of employment and theft of
company’s property.

d) Retrenchment
It refers to the termination of the services of employees because of the replacement of labor
by machines or the closure of a department due to continuing lack of demand for the
products manufactured in that particular department of the organization. In other words, it
is the termination of the services of an employee, permanently due to any reason, which is
economical but not discipline. It is acceptable if it can be proved, that retrenchment alone
can save the company. This may happen due to change of technology, competition, high-
rise of cost of production, mounting losses etc. On retrenchment, employee is entitled for
gratuity in addition to some compensation. The general principle for retrenchment is “last
in first out (LIFO)”.
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 Retrenchment differs from lay-off in that, in the latter, the employee continues to be in
the employment of the organization and is sure to be recalled after the end of the period of
lay-off. But in retrenchment the employee is sent home for good, and his or her connections
with the company are severed/detached immediately.

Retrenchment differs from dismissalas well. An employee is dismissed because of his or

her own fault. On the other hand, retrenchment is forced on both the employer and the
employees. Moreover, retrenchment involves the termination of the services of several
employees. But dismissal generally involves the termination of the service of one or two
employees.

e) Retirement
Here there are two ways in which retirement can take place.

i. Compulsory retirement schemes

This type of separation method applies to persons working in an organization who
have reached a particular age. Currently most employers fix their compulsory
retirement ages at between 60 and 65.

ii. Voluntary Retirement Scheme (VRS)

VRS is yet another type of separation. Beginning in the early 1980s, companies
both in public sector and in private sector have been sending home surplus labor for
good, not strictly by retrenchment, but by a novel scheme called the VRS, also
known as the Golden Hand Shake Plan. Handsome compensations are paid to those
workers who opt to leave.
Management prefers pay hefty/substantial sums and reduces staff strength than
retaining surplus labor and continuing to pay them idle wages. Further, VRS is
perceived as a painless and time-saving method of trimming staff strength, easing
out unproductive older workers and other dead wood. Unions, too, can not object as
the schemes are voluntary.
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