The purpose of this thesis is to examine the employee perspectives and attitudes of employees regarding demotion. Furthermore, I investigate whether this depends on the personal characteristics risk aversion, locus of control or negative reciprocity, or the feeling that demotion is a sign of personal failure.
Design/methodology/approach – I used unique employee survey data retrieved from the ROA health care 2016 survey and matched administrative data provided by the pension fund of the health care sector (PGGM). This data set comprises cross-sectional information on the labor market position of Dutch employees employed in health care or social services. Moderating and mediating analyses are estimated using OLS, and consist of the variables openness to demotion, attitudes towards demotion, and the personal characteristics risk aversion, locus of control and (negative) reciprocity. Furthermore, I analyzed whether the feeling that demotion is a sign of personal failure influences the openness towards demotion.
Findings – I find strong evidence that positive attitudes towards several aspects of demotion have a positive impact on the degree to which an employee is open to the idea of getting a demotion. Negative reciprocity and openness to demotion are strongly negatively related. Additionally, I analyzed the relation between openness to demotion and the personal characteristics locus of control and risk aversion. The results of these analyses showed to be insignificant. Furthermore, I analyzed the feeling that demotion is a sign of personal failure. When this is the case, he or she is less inclined to be open towards a demotion. However, this does not depend on the personal characteristics analyzed in this thesis.
Practical implications – This thesis gives an insight in how the perceptions and attitudes of employees influence their opinions about demotion. Considering the results, organizations should avoid using demotion, but rely on training and development instead. When demotion is unavoidable, be sure the action is legal and that the organization understand the (negative) consequences. Moreover, this thesis analyzed the influence personal characteristics have on the opinions regarding demotion. I found that especially negatively reciprocal employees hold negative opinions regarding demotion. For employers considering implementing a demotion, it might therefore be useful for employers to investigate what kind of employees are being demoted. My results underpin that not one employee is the same and different people react differently on various situations. Managers should be particularly careful with negatively reciprocal employees, since they can cause the most harm on to the organization by retaliating and demotivating other employees.
Contribution – This thesis fills a gap in the demotion-literature, by empirically analyzing how the demotion of workers is perceived by employees and to what extent these perceptions and attitudes are influenced by three personal characteristics: risk aversion, locus of control and negative reciprocity.

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