Many companies must make the difficult decision to conduct a reduction in force or layoff due to financial hardship or other unforeseen reasons. While it’s never easy to let employees go, managing this transition with compassion and professionalism will positively influence how your employees, competitors and customers perceive you and impact your future business outcomes.
Randstad RiseSmart can help you best manage the reduction in force process and has prepared a reduction in force checklist for when the time comes.
what is a reduction in force (RIF)?
A reduction in force (RIF) is when a company permanently eliminates positions with no intention of refilling them in the future. RIFs may occur for several reasons, including when a business pivots or restructures, shutters an office or branch, undergoes a merger or acquisition, moves to a new location, or faces financial hardship.
the difference between RIFs, furloughs and layoffs
Though some may use the terms interchangeably, RIFs are not the same as furloughs or layoffs. A furloughed employee may see their hours temporarily reduced, but they remain an employee. Layoffs are typically intended as temporary, such as during a slow season or due to budget concerns. A layoff leaves the door open to rehire employees in the future or, if they’re unavailable, hire new employees to fill those positions. RIFs result in a permanently lower headcount. A layoff could ultimately become a RIF if the company never rehires or restaffs.
tips for planning a reduction in force
Before you conduct a RIF, there are several steps to take to ensure it goes smoothly and that you’ve accounted for various outcomes. They include, but are not limited to, the following:
create a team to manage the RIF
Typically, the team will include upper management and department heads, plus representatives from finance, legal and HR.
determine the details
How many employees will be affected by this decision? Which departments, positions and employees will be impacted? When will the RIF take place and, based on that date, when must employees be notified? Will there be a notification period, or will employees’ positions end on the day of notification? Note that per the Worker Adjustment and Retraining Notification (WARN) Act, employers with 100 or more employees must provide notice of a mass layoff at least 60 calendar days in advance. More information is available via the U.S. Department of Labor.
conduct an adverse impact analysis
There are some legal considerations for workforce reductions to consider. According to the Society of Human Research Management, a worst-case scenario if a RIF isn’t conducted properly can involve costly litigation. For example, if a company conducts a RIF that disproportionally affects women, older employees or employees of color, those employees may file a discrimination claim. To avoid litigation, companies should do their due diligence and perform an adverse impact analysis to identify any disparities before making final decisions.
prepare separation packages for each affected employee
This may include information on final paychecks, payouts, reimbursements, outplacement services and benefits such as insurance/COBRA information and next steps.
decide who will inform employees
The message will likely come via HR or senior management if you do not have an in-house HR resource available.
compose a RIF notification to send to impacted employees
While you will not provide this until after the employees have been notified in a meeting, having the written details is an important step. Be brief, clear and professional, and make sure to include all relevant information in the letter. For example, do employees have badges, laptops or other equipment to return? Let them know when and how to do this. Additionally, what information do they need to know about their severance benefits? Outline this information in detail.
prepare for emotional situations
Losing one’s job is difficult and may provoke a variety of feelings, including anger, shock, grief or denial. Take steps to make sure everyone involved in delivering the message knows how to handle and respond to these emotions in a calm, professional manner. Manager notification training can go a long way toward preparing those who must notify employees so that they can handle a stressful event with composure and professionalism.
If the notification is taking place on-site, you may wish to have security on standby in the event of an outburst or emergency. You may also want to have medical personnel on standby or emergency numbers on hand. In addition to employee safety and security, be sure to have your IT team involved in this process to ensure all access has been properly restricted and proprietary system information remains intact during the transition.
schedule meetings for impacted employees to explain severance benefits and guide them to outplacement services
Individual meetings are best. Prepare a private area for each meeting complete with water and tissues to offer impacted employees. Managers should follow a script that has been reviewed by the legal team. This ensures consistency of message and avoids the risk of managers providing their own interpretations of the message.
think about what impacted employees will need
For example, will your employees who take public transit or carpool need an alternate way home? You may decide you want to offer a rideshare code as a courtesy.
connect with your IT department
Determine which services might require revoked access, such as access to the building, email, phone and computer systems.
don’t forget to schedule meetings with remaining employees
RIFs are stressful for remaining employees, too, and they’ll likely have questions about their job security and how their role will change. Informing remaining employees about the benefits offered to impacted employees, including general information on severance, benefits and outplacement services, can help assure remaining employees that their friends are being cared for.
what is outplacement?
Outplacement services are an essential unemployment benefit to help impacted employees find new jobs. Services may include a targeted and optimized resume and social profiles, personalized career coaching and access to targeted job leads. Outplacement is considered part of the severance package, which may also include salary and health benefits continuation, vacation payout and other means to ease the transition. Find out how to choose the best outplacement provider for your company.
a word about virtual notification
If your notification must be conducted online, there are unique factors that govern such events, including how to time email and subject lines to use for meeting invitations, how to conduct group versus one-on-one notifications by video and how to conduct follow-up meetings.