Have you seen a manager get demoted?
Need advice on converting an indirect demotion into a leadership role?
First, give up the tactic of breaking down your leadership in order to move forward. Once you start doing this, you lose your team's goodwill because when you are ready to step on a person to move forward, you assume that you will do it all over again. You can create a culture of cutthroat office politics that can turn a productive and working team into a cancer that needs to be removed.
While I can understand how you can see what happened as a downgrade, I assure you that your management did not see this at all, which is reflected in the responsibilities assigned to you. Neither of them had a long track record of success with the company having been there for less than a year, but they had more experience and on paper looked like the best choice. The fact that you were involved in hiring him likely made them feel that you would accept his guidance. You could have done a better job with the transition, but it's very unlikely that it was meant to be a slap in the face.
You have built a history of increasing responsibility and leadership. In my opinion, it is appropriate that you try to move forward, not because of the mistakes or shortcomings of others, but because of the work you have done.
The first part is selling you. Bring a list of achievements as you have here, but include more details and if you have other achievements with the company include them.
The second part is the plan for the future. Think about how you can divide the team so that some stay under your current leadership but take over some aspects, and divide the work between your two subteams. It is best if you can get your team on board with this idea as it will improve your position if they support your plan to management.
If your plan is rejected, have a conversation about what path management sees for your future with the company. If your plan doesn't work for you, it may be time to make some tough decisions. You have a track record that should allow you to go elsewhere and take a leadership position. This could be the best thing for your career. If you make this choice, do it calmly and maintain your professionalism throughout the process. You are in a good position that you held out in for 5 years. So hold on until you get a position that you can be very happy with. Don't just take the first offer because it's there.
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