Why do managers back away from demotion of older workers? A vignette study

Hendrik P. van Dalen, Netherlands Interdisciplinary Demographic Institute (NIDI)
Kène Henkens, Netherlands Interdisciplinary Demographic Institute (NIDI)

Why is demotion – a reduction of an employee’s rank and salary - of older workers used so little in actual practice and why is often mentioned as a measure to increase the employability of older workers? This paper takes a fresh look at these questions by the use of a vignette study among Dutch managers (N = 651). Approximately 40 percent of the managers is in favor of demotion. But when asked about the consequences of demotion most managers expect adverse consequences of demotion: work motivation and loyalty towards the firm will seriously diminish and on the plus side managers expect that the employability and the willingness to participate in training courses will improve. In evaluating choices in the work place age does not seem to play a role of some significance. Obvious character traits of workers (not willing to participate in training, bad health, not motivated, overpaid) or the firm (financially vulnerable) are substantial reasons for considering demotion. But when it comes to making actual choices the financial situation and the worker characteristics are considered far less important. It appears that there is a strong divide among managers: believers of demotion who see the incentive effects of demotion; and the non-believers who take a broader view and who expect that demotion will disrupt the functioning of their own organization. Demotion may perhaps solve one focused problem but the indirect effects on worker motivation, loyalty and solidarity between young and old employees will diminish. This divide is of substantial importance in explaining the gap which lurks between the desirability and the practice of demotion.