Conducting a reduction in force (RIF) is one of the most difficult things HR professionals face. Too many times HR is brought in too late, or a company starts from the desired outcomes and tries to work its way backwards. There are steps organizations can take to ease and streamline this process. Even before the company settles on a RIF consider these alternatives.
Alternatives to a RIF:
1. Cutting unnecessary costs
Almost all RIFs are due to financial reasons. Before reducing headcount ask yourself if you have done everything else possible to reduce unnecessary costs. Do employees need to travel for meetings, or can they be done virtually? Can you scale back or no longer use outside vendors? Are there amenities in the office potentially not being utilized – snacks, drinks, ping pong table?
2. Reducing pay and/or hours
This can either be temporary or not, however, the key here is communication. What is the reason for the reduction and what is the expected timeline? If there is no end in sight, it’s better to communicate this as more of a status change for the foreseeable future. It’s easier to surprise employees when hours and pay go back up than to say it’s only for one month which turns into six. This option is still poor for morale. Plan for managers to have more frequent employee check-ins. Also, prepare communications to acknowledge the hard times. Resources to help with uncertainty and change are beneficial and might be available through an Employee Assistance Program (EAP).
3. Furlough (temporary layoff)
Many companies implemented furloughs (temporary layoffs) during Covid. Furloughs can be implemented across the organization or targeted at specific departments or roles based on business needs. Employees on furlough might be eligible for unemployment based on applicable state law. Check your state for the requirements and process. Also, keep in mind, you cannot dock the pay of an exempt employee unless they perform no work in an entire workweek.
If you must RIF:
If reducing headcount is still necessary after the above options are considered or implemented. Use the below as a framework for the RIF process.
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Identify and document the business reason for the RIF. It is crucial to start with this step to defend a legitimate reason for a RIF versus a termination. Examples of business reasons are the loss of a client or increased costs in production no longer leading to a profit.
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Next, identify which business line(s) are the most affected. Then you can determine which positions (not individual employees!) might no longer be needed.
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After the eliminated positions are identified, you can narrow them down to determine affected employees. This process is based on objective criteria, such as documented performance, specific skillsets (i.e. ability to perform more than one position), and/or certifications held.
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Once specific employees are identified, conduct an analysis to determine if the RIF will result in disparate impact based on any protected class (e.g., age, race, national origin, sex, etc.). If it does, but your selections are based on other objective and reasonable factors, it’s likely the RIF can be defended but you will want to know your risk ahead of time.
After the selection process, begins the communication process. You will need to consider if WARN applies (some states have their own WARN requirements) or if you will offer some type of severance agreement. We have multiple additional resources in our Termination and Layoff toolkit including a detailed planning document, letters, and templates.
RIFs are complicated and need to be carefully thought out. Don’t go at it alone. Reach out to the HR Advice team to discuss your particular situation and receive customized guidance.