How to Properly Conduct a Reduction in Force

Eric Mochnacz
February 9, 2024

A reduction in force (RIF) is the process by which a company decides to reduce the size of their workforce.  RIFs have also commonly been referred to as layoffs or downsizing.  The need for a company to conduct a large layoff is often the result of an economic downturn or uncertainty, a shift in business strategy, changing market conditions, or organizational restructuring.  A RIF is larger in scale than terminating one or two employees, usually resulting in the elimination of numerous positions, an entire department, or total divisions in a business to cut costs and streamline operations.  

Layoffs are tough for a business.  But they are tougher for the impacted employees.  And even though they are a business necessity, how the terminated employees and retained workforce are treated throughout the RIF process makes all the difference.  In this blog, we review the practical tips for managing an RIF, but also how to treat employees with dignity and respect as you conduct a workforce reduction.   

Set a Clear Plan and Be Prepared

Generally speaking, an employer decides to conduct an RIF because the company cannot continue in its current state and still remain profitable or competitive in the marketplace.  This reason influences the business case for a reduction in force.  As you evaluate the next steps, you critically evaluate every decision related to the RIF to ensure it is aligned with the business case.  

For example, at the onset of the pandemic, we worked with an events organization as their outsourced HR department.  Given the fact they needed to cancel all in-person events for the foreseeable future, they couldn’t financially sustain a large portion of the events division, which also had an impact on their marketing and vendor relations teams.  When we worked with the business to critically evaluate who would be impacted by the terminations, we considered the financial impact of retaining or terminating members of the impacted teams while also evaluating who the company would need to retain for business continuity and growth should we ever get out of the pandemic.  

Working with leadership in developing the process steps and executing on the RIF, every decision we made as part of the due diligence process was impacted by the business case.  We asked “If we make this decision, what is the financial impact on the business?  Does it save the organization money?  Will this job have a role in critical business continuity?”  Having a clear plan and understanding the core reason for the reduction in force established criteria at the beginning of the process by which we made every decision.  

Once you’ve established the business case, then you plan out the entire process from beginning to end.  Creating a comprehensive plan where you’ve considered every alternative and outcome better prepare everyone involved for any situation that could arise throughout the timeline of the RIF process.  There are a number of logistics and HR and legal considerations related with RIFs and they all need to be reviewed and evaluated before you deliver the message to the impacted stakeholders. If you want to successfully manage a RIF from beginning to end, partnering with HR is critical to its execution and compliance.  And if you don’t have access to a full-time HR resource, work with an HR consulting firm with direct, practical experience in supporting small businesses through a reduction in force.  

Communication is KEY

One of the key components of properly preparing for an RIF is having a comprehensive communication strategy.  An effective comms strategy considers all stakeholders and how your company will communicate to each population, by what means, and the overall message.  The methods and messaging will be different for each group because the impact on each of them is different.  But, the impacted employees should always be the center of your communication, as the RIF has the most direct impact on them and their lives.  

As you develop your overall plan for the RIF, your communication plan is an important part of that plan.  Typically, CEOs and other key business leaders rely on us to develop the communication plan to ensure that the messaging is clear and direct, but empathetic, provides the recipient of the information with all they need to know, and is legally compliant to mitigate risk.  An effective communication plan includes who receives the message, what the message will say, when certain messages are activated, who delivers the message, and who the escalation points are for certain communication.  It may seem incredibly granular and time-intensive, but a well-thought-out communication plan for every scenario is incredibly valuable when an employee confronts you about a topic, and you already have a script prepared to respond appropriately.  

And as much as we advocate for transparency in communication, HR has the responsibility to maintain discretion as they navigate the initial planning stages.  Planning for a reduction in force is a live event, and positions and attitudes change throughout the entirety of the planning process.  Only involve team members who you consider  “need to know”, will be involved in the eventual message delivery and can be trusted to navigate this difficult employee action with tact, privacy, and respect for the company’s position. 

Lead With Empathy 

Anytime I write about layoffs, I state simply that they suck.  No business owner or CEO runs a business to end up in a position where they have to terminate a large number of employees or close down a portion of their business.  And as much as they aren’t easy for the employer, the greatest impact is on the terminated employees.  The employer is delivering a difficult message, but you can still do it with empathy by acknowledging the employee’s contributions and developing the day of communication scripts with empathy, respect, and dignity at the foundation.  If you’re on-site, the message should be delivered in person.  If you’re remote or hybrid, consider the best approach to communicating the RIF to the employee.  We prefer the phone because it tends to be more reliable, but if your standard practice is using video, then deliver the message via a web call.  If you’re a larger workforce, consider how you can still deliver the message directly to the employee and be available for their response, rather than just sending a mass email and cutting off access.  Ultimately, you have to directly inform the employee their employment is over, but you can still do so by recognizing the employee is a person, and losing a job will elicit emotions and reactions.  

Consider Remaining Employees 

With a reduction in force comes uncertainty from the retained workforce.  They may still be employed, but their colleagues and friends were just let go and they are probably concerned about the future of the business.  Part of the communication strategy is preparing clear messaging for the retained workforce.  To the extent possible, you want to assuage the remaining employees’ fears without guaranteeing anything.  

They will want to know if there will be further cuts.  They will want to know if the RIF means more work for them with fewer resources and budget.  They will seek out guidance on if they can communicate with the employees who just left, and if so, what can they say.  To create a comprehensive communication plan for the retained workforce, put yourself in their shoes and understand their position as the company navigates the aftermath of the RIF.  

Provide Support to Employees Who Were Let Go

One other way to demonstrate empathy for the impacted workforce is by understanding their position and offering support and resources.  One way HR provides guidance in situations like this is by having a clear philosophy and practice on how the employer will support the employee after their termination and articulating it in the termination meeting.  

As the employer is evaluating the various outcomes of the RIF, HR will help the business clarify what consideration the employer will provide upon separation.  HR evaluates company PTO policies as well as state and federal requirements to understand what the company owes in vacation or sick payout and when the employer needs to pay it.  Additionally, HR leads the discussion on severance philosophy and what, if any, severance benefits are available to the terminated workforce.  HR and the employer also determine if they will continue benefits coverage or help supplement COBRA costs.  Finally, HR coordinates if the employer will provide outplacement services as a resource to help the laid-off employees find their next job.  

The terminated workforce also needs to know who to contact should they have any questions after the RIF.  This is the final part of a strategic, comprehensive communication plan.  And as a general note, we always work with trusted employment counsel to ensure compliance through every step of the RIF and when conceptualizing consideration and drafting all documents related to the separation.

Not Sure Where to Begin With Having to Conduct a RIF? 

Although difficult, RIFs are sometimes a business necessity.  How you handle it makes all the difference.  Before undertaking a complicated process rife with risk by yourself, consider managing it the right way with skilled HR support.  Red Clover is equipped to guide small businesses through the entirety of the RIF process with mindfulness of your company’s core values and treating all stakeholders with respect.  Don’t go it alone.  Let’s chat if you’re embarking on organizational change and need subject matter expertise.    

Photo by Jornada Produtora on Unsplash

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