The Functional 5: Best Practices for Reductions in Force
Let’s be real: reductions in force (RIFs) are unpleasant.
A company can be armed with a remarkably flawless vision and incredible financial sense, but even the best-laid strategic plan may eventually encounter friction. A RIF is nobody’s first choice and, instead, is likely a result of other unsuccessful attempts to right a ship that’s veering off course. Despite a company’s most valiant efforts, circumstances like mergers or global pandemics can make RIFs unavoidable. When a RIF is necessary, it’s best to make sure your offboarding process is handled as smoothly as possible.
Though it might sound appealing to cut corners during an already trying time, it’s not worth the associated risks. When it comes to onboarding, companies are future-oriented, and the same should apply to offboarding; the impacts can be long-lasting. RIFs are never a cause for celebration, but, when done correctly, this type of workforce reduction can serve as an opportunity to showcase your company culture, engage employees, and better position the business for future success.
By understanding the ins and outs of the RIF process, offboarding companies (*ahem* like Onwards HR) can inject simplicity into an otherwise complex situation. Having helped companies riff through some RIFs of their own, we’ve compiled five things to keep in mind during your workforce reduction.
1. Warn them
Nobody likes to be blindsided, so advance notice is appreciated and, in some cases, entirely mandatory. The Federal Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ employees to provide at least a 60-day advance notification in certain cases of plant closings and mass layoffs. When preparing for a RIF, it’s imperative that companies understand the details of the WARN Act and its state-based counterparts, mini-WARNs. (Oh, and we can help determine which regulations are applicable to you.) If you violate the WARN Act or its affiliates, you’ll quickly learn that the penalties can be substantial.
Regardless of whether your company is mandated to adhere to the WARN Act, a heads-up is considerate. By providing as much notice as possible, given the specific industry and urgency, employees will be better prepared for the prospective loss of employment. Though the waiting game isn’t fun for anyone, it gives employees more time to process the transition and what it might mean for them personally. Plus, it’s complies with employment laws.
2. Explain the reason
Make sure the reason for the change is clear and put thought into how your message will be delivered. The more explicitly you can explain the situation that led to the RIF (merger, COVID-19, etc.), the better. If you considered alternatives but rendered them no-gos, touch on that as well. For example, maybe the company considered furloughs, changes in overtime, or a hiring freeze, but ultimately realized there was no option other than a RIF.
Make sure your messaging is as transparent and consistent as possible. Not only is this beneficial for the employees who are being eliminated, but it can also help maintain positive relationships with those who are staying. Rumors will be inevitable, but you can do your best to quash them by providing employees with much-appreciated honesty. Employees should always learn the facts from leadership rather than a random internet article.
3. Pay ($$$) some respect
Since money often drives layoffs, the thought of a severance package may instinctively sound counterproductive. After all, why fork out money when your ultimate goal is to cut costs? Though a workforce reduction will save money in the long term, it’s important that your company does its part to retain existing talent, boost morale, and preserve its image during a difficult time.
Take a Coca-Cola global reorganization, for example. The company gave employees the option to volunteer to leave in an effort to reduce the involuntary response. Though it didn’t eliminate the need for layoffs entirely, it did empower employees to take charge of an otherwise powerless situation. Coca-Cola also offered hearty severance packages that included cash, equity, and health and welfare coverage – a decision that will cost the company a pretty penny in the months to come but will likely net a positive result for the brand. Look for opportunities to benefit from an otherwise undesirable situation.
4. Lend a hand
“It’s not you; it’s us.” Though the thought of outplacement services can sound consolation prize-ish, it’s a gesture that can make a lasting impact during a turbulent time. By offering outplacement services, employers can support departing employees through a transition that is no fault of their own. By contracting with a recruitment firm that is well-versed in the industry, you can help your soon-to-be-former employees land new jobs as soon as possible.
Outplacement services include networking, coaching, and guidance, as well as access to services for résumé development, cover letter writing, and interview preparation. The sooner your former employees can settle into a new organization, the lesser the feelings of despair.
5. Make it easy
No, RIFs aren’t easy; they have the uncanny ability to instill dread in even the most seasoned HR professionals. After all, hiring is way more exciting than firing. However, sometimes the situation is unavoidable, and that’s why we exist. A RIF is not a pleasant experience, but it’s important to make the process as simple as possible. For example, we can develop an employee transition hub so that information is easily accessible and consistently delivered – a move that can minimize frustration for all parties.
By enlisting help to tackle the serious things, like adhering to regulations and avoiding discrimination lawsuits, you’ll have more time to focus on the people part – on showing compassion at a time when it’s most needed. Empathy might sound time-consuming, but it can leave a lasting positive impression despite a less-than-ideal situation.
