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In my department, an assistant professor was denied tenure. However, he remains in the faculty as a lecturer.

Is this the typical protocol of departments. If a professor is denied tenure, do their departments typically offer them some sort of position of lower stature?

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Unless this was the assistant professor's request, this is ethically questionable by your department. Every tenure denial I have heard of allowed the person to keep their title for a year or two while they searched for jobs elsewhere. This kind of demotion could kill the professor's chance at getting another tenure track job. This department is asking for people to start job searches prior to tenure review and this could result in them losing their best assistant professors (or having to pay more money than they otherwise would have). –  MHH Apr 17 at 14:12
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No, this is not common. Someone denied tenure is generally allowed to stay in their current position for another year, to give some time to find a new job. However, it's not standard to offer them a non-tenure-track job as a replacement. Theoretically there's no reason they couldn't apply for such a job, but it sounds really awkward. I imagine most people wouldn't want to stay in the same department in a lower status position, and the department wouldn't want them to either; I've never seen it actually happen. When it does happen, I'd bet there's some compelling reason behind the scenes. (For example, perhaps the lecturer in your department has a strong personal reason to want to stay in the area, and there are no other suitable jobs available.)

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Maybe 'lecturer' is the job title for the one-year extension after negative tenure review (the question does not say whether the lecturer position is fixed term)? I mean, after tenure has been denied, one can hardly continue calling it a tenure track position, right? –  xLeitix Apr 17 at 6:51
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@xLeitix: That's possible, although in the cases I've known about the person who was denied tenure has kept the same job title as they had before coming up for tenure. Changing to a lower-level title would be adding insult to injury and might make their job search even harder. –  Anonymous Mathematician Apr 17 at 13:45
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