Reduction in Force (RIF): Best Practices for HR Professionals
April 09, 2018 by Laura Gariepy
Human resources is full of buzzwords that seem like one thing and end up meaning another, or where–even if they truly mean what they logically appear to–the true definition has been lost thanks to misuse.
For example, workforce planning–the act of aligning your talent with your business goals–has essentially come to mean “layoffs are imminent.” While this can become true, workforce planning is first and foremost a strategy that helps you figure out if you have the right people doing the right job. This could include changing employee’s roles to better fit their talents or hiring new employees. However, this term still often means layoffs to many people.
The good news is that there are also plenty of straightforward terms in human resources. A reduction in force–commonly called a RIF–is one of them.
WHAT IS A REDUCTION IN FORCE (RIF)?
Let’s start with the basics. You’re probably wondering what a RIF is, and if a reduction in force is a termination. A reduction in force (RIF) is when any number of employees are let go from a company due to budgetary reasons, workforce planning initiatives, position eliminations, or other right-sizing events. Reductions in force are typically permanent because the roles of those who are let go are usually eliminated with the termination of employment.
When a company holds a RIF, or permanent layoff event, it is highly unlikely that the employees let go will ever be brought back or ‘recalled’ by the organization. This is largely due to the fact that the position in which the employee worked has been eliminated in an effort to right-size or restructure the organization as a whole. By permanently eliminating these positions, the organization can maintain a proper budget and staff level to achieve its goals.
What Causes a Reduction in Force?
Much of the time, RIFs happen because there are redundancies from a merger or acquisition. Other times, they occur because the company’s overall strategy has changed, making some staff positions no longer necessary.
Technological advancements can cause a company to change how they operate. For example, some retailers have installed self-checkout machines, replacing the need to employ many cashiers.
CONSIDERATIONS BEFORE CONDUCTING A REDUCTION IN FORCE
Conducting a RIF is a serious matter that will alter the course of your employee’s lives. Therefore, you must first be sure to carefully plan out the event. Here are some questions to help guide your thinking:
- Is a RIF necessary? Does the company have another alternative?
- Which department or departments will be affected? Which positions will be eliminated?
- Which employees will be terminated through the RIF?
- When will the RIF occur?
- How and when will we notify impacted employees and the rest of the organization?
- Can we offer severance pay or outplacement services to the affected employees?
- How will the workload of the remaining staff members change? What will they need to handle their new responsibilities?
- Can we afford to pay the remaining staff members more for taking on this extra work?
Pro Tip: Involve an employment attorney in your planning process and have them review any related written communication you plan to send. This will ensure that what you’re doing is legally compliant.
Reduction in Force Laws
Your employment attorney can help you navigate the legal complexities and applicable laws of conducting a RIF. For example, if your RIF results in 50 or more people losing their jobs, your company may need to provide them with a written 60-day notice of their impending termination under the Worker Adjustment and Retraining Notification (WARN) Act.
You also need to be careful that the RIF doesn’t disproportionately impact members of a protected class, such as women, minorities, or workers over age 40. Your best bet to combat potential discrimination claims may be to document the specific selection criteria you use to determine which employees stay and which employees go. If you have any concerns, share the demographics of the impacted employees with your lawyer.
HOW DO YOU HANDLE A REDUCTION IN FORCE?
It is incredibly important that you handle a reduction in force (RIF) carefully and sensitively. Here are the general steps to follow to stay on track with your RIF:
- Decide whether a RIF is necessary.
- Set your RIF effective date.
- Determine which employees will be impacted.
- Determine how to help the affected employees and support the remaining team members.
- Communicate the RIF event (in writing) to the impacted employees and the rest of the staff.
- Meet with the affected employees individually.
- Contact your outplacement services provider (if applicable). That way, the firm will expect an influx of your staff.
- Try to keep morale up during any notice period (especially if the WARN Act applies).
- Ensure departing workers receive whatever severance or benefits they were promised.
- Maintain an open-door policy for all team members throughout the event.
Remember to lean on your employment attorney throughout this RIF process. We cannot advise this enough. The last thing your firm needs is a lawsuit from a disgruntled employee.
Sample Reduction in Force Communication
You will also want to consult your legal team as you draft and distribute any communications to employees impacted by your RIF. This should include a thoughtful and thorough reduction in force notice letter that you will send out to all impacted staff members.
It can be helpful to follow a sample or template of what this communication might look like to cover all your bases and avoid any problems, but make sure you customize it to fit your organization’s RIF specifics and legalities.
WHAT ARE ALTERNATIVES TO RIF?
A RIF is just one way to reduce your payroll expenses or make an organizational pivot. Depending on your specific situation, another workforce planning strategy may work better.
Here are some alternatives to consider:
- Layoff: If your company thinks it may want to bring back (or recall) some of the impacted employees, a layoff is worth considering.
- Furlough: If your company wants to retain the impacted workers and believes it can resolve budgetary issues relatively quickly, a furlough–or mandatory, temporary, unpaid leave–could fit the bill.
- Hiring freeze: If your company leadership caught the financial problem early and you don’t need to make as significant of an operational shift, you may be able to get away with implementing a hiring freeze until cash flow improves.
- Retrain staff: If your staff members can learn a new skill that would benefit the organization, you may want to retrain and retain them.
Your best bet is to select the option that causes the least harm to employee morale, productivity, and company reputation while also addressing your underlying reason for needing the change.
How Does a RIF Differ From a Layoff?
People frequently tend to lump RIFs and layoffs together, and often consider them as the same thing. However, they are actually quite different. Make sure you understand this distinction so you can decide when either move is right for you. The considerations, process of implementation, and impact on your company can be quite different for each.
Unfortunately, the result often ends up being the same for the impacted individual. They are let go from their current position and will probably land a new job elsewhere, regardless of how the company classifies the event. That said, it’s still important to remember this difference for legal reasons if your company does need to hold such an event in the future.
REDUCTION IN FORCE BEST PRACTICES
Conducting a reduction in force (or RIF) is never easy. However, you can soften the blow to your impacted employees, your remaining workforce, and your organization by following these best practices:
- Be transparent. Openly and honestly communicate with all employees.
- Be empathetic. Show compassion for everyone involved. Emotions will run high.
- Be helpful. Do what you can to assist departing employees with the outplacement process of securing a new position. Support your remaining staff as they adjust to the new normal.
Remember: You never know when a reduction in force (RIF) event could impact you and your organization. So it is important that HR and leadership always treat all employees–whether they are staying or going–as they would want to be treated.