Employment decisions go beyond determining which employees are due for raises. Through regular, objective performance appraisals, managers acquire information to make and implement decisions about promotions, transfers, demotions, separations, and compensation.
In most organizations, outstanding employees are recognized for their hard work and outstanding performances, and offered promotions. A promotion generally means rewarding an employee's efforts by moving that person to a job with increased authority and responsibility.
Downsizing has led many firms to rely on lateral moves or transfers instead of promoting employees. A lateral move can act as an opportunity for future vertical advancement because it can broaden an employee's experiences and add skills.
On the other hand, sometimes employees' performances signal that they aren't adapting well to their jobs and may need fewer responsibilities. One option is a demotion, or reassignment to a lower rank or less prestigious position. Demotions are not a popular technique because of the stigma attached to this move. A misconception is that demotions should be used as punishment for ineffective performance.
The departure of an employee from an organization is referred to as separation. Separation may be voluntary or involuntary. Resignations and retirements are voluntary separations. Involuntary separations are layoffs and/or firings. Lately, the rash of downsizing throughout the United States has resulted in many layoffs.
Sometimes, however, an employee must be terminated because of poor performance. Dismissal or firing of employees should occur only on the basis of just cause and only after all reasonable steps to rehabilitate the employee have failed. In some cases, such as gross insubordination or theft, immediate dismissal is required.