Dear Rakesh,
Relies to your questions are as below:
1. His present designation is Manager can we demote as Dy. Manager
Reply: - Yes
2. Can reduce his present emoluments?
Reply: - Yes, but do not reduce the basic salary as it will impact the PF contribution. Secondly, basic salary should be equal to the minimum wages.
3. Can recover his perks which paid during existing designation.
Reply: - No. You cannot have demotion with retrospective effect.
4. Before demotion, show cause notice required for his poor performance.
Reply: - More than show cause notice, you may conduct the domestic enquiry. In the enquiry, if the under-performance was proved then you may award him punishment as "demotion".
5. On the basis of his present performance can demote him/her.
Reply: - This reply relates Reply to Q 4. Performance Appraisal (PA) is done for a specific performance cycle. This cycle could be of three or six months or year. On completion of PA for specific cycle, if it emerges that the performance was not up to the mark then the employee may be given warning letter. If in the subsequent performance cycle also if the performance does not improve then you may conduct domestic enquiry and award suitable punishment. You wanted to give punishment as demotion. Please check whether you are demoting a manager after one PA cycle itself!
6. Any other suggestion for appropriate step.
Reply: - On the grounds of performance, you wanted to demote an employee. Nevertheless, you need to investigate the causes of the under-performance. Did you define the measures of performance well in advance? Were these measurable? If yes, then did you communicate these at the beginning of the performance cycle? Of the total work, how much time the Manager spent in secondary duties which were not measured? Did he face any resistance from the subordinates? Was he reporting to multiple authorities? Were the targets unreasonable? Was there any resource crunch? Did he spend unreasonable amount of time in attending the meetings? What was the past performance of the manager?
By the way, gentleman, is demotion a ploy to remove a manager?I ask this question because in some organisations this method is considered as smart method to get the resignation from the unwanted person!.
Last comments: - When employers think that the employee is getting more salary than he/she deserves,, they resort to the method of demotion. However, you need to find out whether the demoted employee acquires sympathy of the fellow employees. If other employees consider it as injustice to the demoted employee, it will degrade your organisation's culture. Under these circumstances, the cost of degradation of the organisation's culture could be too high than the savings that you will accrue because of the reduction of salary on account of demotion!
Thanks,
Dinesh Divekar