Demotions are a taboo subject in workplaces as they are often associated with failure, a fall from grace, a loss of dignity/respect and negative emotions. Generally, people who have been demoted have fallen foul of the Peter Principle which dictates that in hierarchical organizations, the ambitious rise and rise to the point of incompetence at which point they fail and typically crash out of the organization in a blaze of bad publicity.
But, there is a key element of the Peter Principle that is often overlooked as employers rush to crucify these high-flying, Icarus-like workers who have flown to close to the sun, and that is they have indeed reached their point of incompetence. This, of course, means that they were competent at several stages up until this point presumably. This is often forgotten at this point.
What is also forgotten is that the ambitious individual has often shown the courage and drive to take on greater responsibility and was prepared to risk failure, all of which can be admirable traits. Many thought leaders and entrepreneurs argue that failure (assuming that you learn from mistakes) is a necessary destination on the route to success. Failure does not have the taboo it once did in elite business circles as many successful entrepreneurs can demonstrate one or more failures on route to success. Google even rewards failure and has a list of high-profile project failures in its history, even while being one of the most successful companies in the world.
So, I argue that a failed role within an organization is not a cardinal sin, and while not operationally acceptable, it should to a degree be socially acceptable; where possible, high flying employees should be given the chance to fail gracefully. What does that mean?
I think it means not demonizing a failed employee and clearly remembering the previous roles and positions where they were confident and competent and allowing a dignified and respectful fall from grace or climb down in a reverse promotion process.
This means that prior to looking to fire failing high fliers, you discuss and try to find an opportunity for them to return back to a lower position during which they were successful, so they can build confidence and be successful again. This does not mean they can never apply for promotions again, but it could also mean that they decide to focus future promotion applications in areas that suit their strengths or they look to develop new skills and address their weaknesses.
Also, rather than reverse promotion, they could be given the option to move sideways to a similar role, which plays more to their strengths and puts less emphasis on their weak areas. There is even a name for this more flexible career ladder approach, a career lattice,which is where you can move in all four directions during your career (up, down and sideways) as par for the course and without social recrimination with it being seen as a more flexible and adaptable career system suited to the contemporary workforce. It’s about developing and promoting a workplace culture that is accepting of reverse promotions and sideways move, so they are seen as a normal and acceptable part of the organizational career pathway.
So, I do think there is a good way to demote someone and that is when it is an alternative to dismissing an employee who still has plenty to give the organization in another form. But, it does need to be done in a flexible, multi-directional career-lattice structure where moving downwards and sideways are seen to be as socially acceptable as promotions.