A reduction in force (RIF) is the permanent elimination of positions caused by changes in business strategy, budget cuts, mergers and acquisitions, or other unforeseen issues. Businesses consider which positions are no longer needed to meet their changing business needs. As a result, this leads to a reduction in their workforce.
2020 has led to major business upheaval and uncertainty. Many organizations are contemplating their need to furlough or lay off employees as a result of the pandemic. While business challenges will make these decisions unavoidable for some, the effect they will have on a company must not be downplayed.
A RIF effects more than the separated employees. As organizations evaluate their reasons for position elimination, they must analyze how it will effect the remaining workforce, the company as a whole, the community, and the company’s financial future.
The choice to eliminate positions is a gut-wrenching one to make. However, a reduction in force doesn’t have to be debilitating for your business.
How Should You Prepare for a RIF?
Position eliminations or a reduction in force must be carefully planned to reduce risk, protect your employer brand, and establish a clear path forward. Furthermore, establishing a solid plan will put your entire team at ease.
Approach your reduction in force with compassion and a strategy.
For example, focus on these key areas:
- Making the decision.
- Planning and preparing for notification day.
- Telling someone their position is eliminated.
- Leading company recovery efforts for remaining employees.
Making the Decision
Stay in front of the potential negative affects the RIF will have on your organization as a whole. While making decisions, consider how many positions will be eliminated. Then, create a RIF budget and ensure HR teams and managers are up-to-date on Federal and State regulations.
Planning & Preparing for Notification Day
Careful planning in this phase will help your reduction go as smooth as possible. Firstly, it’s important to focus on creating severance packages and empowering your separated employees. Secondly, develop a clear and compassionate notification message.
Telling Someone Their Position is Eliminated
As separated employees face the news, your managers need to be prepared for a variety of reactions. Provide notifying managers with the paperwork and information they need. In addition, coach them on how to address the immediate grief needs of separated employees. Also, remember to talk with your remaining staff as soon as possible. News will spread quickly. (Our guide on 15 Best Practices for Delivering the News covers this topic in more detail.)
Leading Company Recovery
A “going-forward plan” will help your company recover faster. It also provides remaining staff with clear direction. Likewise, it’s important to maintain open communication after the RIF. Survivor syndrome can quickly take up residence with your remaining employees, leading to a negative down slide you will want to avoid. In fact, survivors can experience a…
- 41% decline in job satisfaction
- 36% decline in organizational commitment
- 20% decline in job performance1
How Does a Reduction in Force Affect Your Employer Brand?
Position eliminations have ripple effects across your organization. Certain business moves have a direct affect on your employer brand. A reduction in force is one of them. You can’t afford to ignore your employer brand when making these decisions.
Stakeholders, customers, social media followers, and the local community develop an opinion about how you handle a RIF. As a result, all of these individuals need to be carefully considered as you create your plan.
63% of customers refuse to buy products/services from a distrusted company.2
61% of surviving employees believe their company’s future prospects are worse.3
If you handle your reduction in force in a reputable way, the lure to seek greener pastures can be minimized. Direct investments that display your commitment to doing the right thing – even in the wake of hard business decisions – save your employer brand. Furthermore, they make it less risky for surviving employees to remain with your company.
Turnover rates are 28% lower if a company has a reputable brand.4
Do You Need a Communication Plan for Laying Off Employees?
Your internal and external communication plan should be at the top of your to-do list when preparing for a RIF. There are multiple audiences you need to speak to, including exiting employees, remaining employees, clients, and the public. The more accurately and clearly you deliver the news, the easier it will be. Above all, people will be able to see your company’s future vision in the wake of business disruptions.
To sum up, essential items to cover include:
- The business rationale for your reduction in force.
- How you will care for exiting employees and remaining employees.
- Your company’s go-forward plan and future vision.
Click here to download your Strategic Planning Checklist to lead a RIF that is as seamless – and trauma-free – as possible.
Outplacement services are instrumental in mitigating RIF risks.
IMPACT Group helps some of the nation’s biggest logos with protecting their employer brand during a reduction in force. Our outplacement services mitigate RIF risks by preparing leaders to make decisions, deliver a compassionate message, empower exiting employees, and lead company recovery. Learn more here: www.impactgrouphr.com/business/services/outplacement
1 Layoffs that Don’t Break Your Company, Harvard Business Review
2 Stakeholder Trust: A Business Case, Compliance & Ethics
3 Don’t Expect Layoff Survivors to be Grateful, Mark Murphy, Leadership IQ