While some layoffs are temporary, a reduction in force (RIF) is a permanent layoff or an elimination of jobs. RIFs are caused by changes in business strategy, budget cuts, or mergers and acquisitions. Each year, U.S. businesses lay off millions of workers. In 2022, 15.4 million layoffs occurred vs. 41.7 million in 2020 – a peak year for layoffs.
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:
- Check in with your legal advisors.
- Determine the reasoning for your decision to reduce staff.
- Plan and prepare for notification day.
- Communicate position eliminations.
- Lead company recovery efforts for remaining employees.
Check in with Your Legal Advisors
It’s important to consider all legal aspects of the RIF, such as what notices you are required to provide stakeholders. As an example, check in with your legal advisors to determine where the RIF will trigger obligations under the WARN Act.
The federal WARN law requires employees with at least 100 employees to provide 60-day notice when separating at least 50 employees at a single site of employment. However, there are additional provisions, and some exceptions are allowed.
Each state has its own laws. In 2023, New Jersey recently amended its version of the WARN law so that an employer must provide advance notice when eliminating at least 50 jobs within the state – rather than a single job site.
Determine the Reason
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 to address costs for outplacement services, severance, and potential legal fees.
Plan & Prepare 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.
Communicate Position Eliminations
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 Ultimate Workforce Reduction Checklist covers this topic in more detail.)
Lead 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.
Less Trust
Stakeholders, customers, social media followers, and the local community develop an opinion about how you handle a RIF. As a result, create a plan that carefully considers each of these audiences.
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
More Turnover
Minimize turnover by handling your reduction in force in a reputable way. 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.
- Lastly, your company’s go-forward plan and future vision.
Download your Ultimate Workforce Reduction 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
4 Effectiveness of Job Search Interventions: A Meta-Analytic Review
