In some countries the laws are such that it is very hard to give someone a pay cut (Sweden, for example). It can be done, but a big challenge.

IMO, I think a lot of employers that I have worked with really undervalued how expensive it is to hire someone.

Another option is a company like Daily has a transparent, years-of-experience based, pay structure. So if you switch to a new role, it is clear how your compensation will change:

https://www.daily.co/blog/rethinking-levels-promotions-and-s...

There are significant differences between the two, for both the employer and the employee.

In terms of economic theory, you’d say that staying within “the firm” (Coase) saves both of them a lot in transaction costs.

In normal terms — the employee spent time and money finding the previous job and spent time learning how to exist inside that company. Instead of immediately needing to discard and repay those costs - they can “hit the ground running” in a role that is more suited to them.

And so on. To overlook all of the advantages here would be very cynical.

This is where I feel if you hire the right person, they can very easily be equally effective in another role within a very short period of time. Business context is key. They have it, so it is much easier for both them and me. Also they don't want to leave the company, that is the critical thing here.

The four times I've been seconded over the last 20 years it has always been to "act up" and come with a temporary pay bump. Usually because I'm taking over a manager's job while they're on maternity leave / until a new one can be found because they've quit, or because a team could do with one of my weird skills for a few months. In my experience people either stay at the same pay or their pay goes up while on secondment. Secondment is generally supposed to be temporary so "overpaying" someone for a few months is generally worth it, especially when you consider the costs of onboarding a new employee.

of course there is!

For the worker, it can be the difference between homelessness and merely tough times; between covered medical insurance and untreated disease; between hopelessness and a wake-up call.

For the company, it can be finding that someone was put into a bad spot and they are now able to shine without having to pay for new talent acquisition.

Even the suggestion could also be humiliating for the employee. And if accepted, a demotion on the resume isn’t ideal.

Sure, a new role with less responsibility and less pay could work, but that doesn’t mean it’s in the best interest of both parties.

I could see a horizontal change being effective, but not a demotion.