What is Reduction in Force?
Reduction in force, means permanently minimizing the workforce of a company by laying off and termination of employees. The downsizing occurs due to budgetary issues or to save expenses for the company.
In this Article
Why Reduction in Force?
The company or the employers turn to Reduction in Force (RIF) when there are fewer needs or absolutely no need for the products and services provided by the company.
The concept of reduction in force was prevalently observed during and post Covid as the need for services and products deteriorated after the pandemic. For example, downsizing was primarily observed in the travel industry, retail and manufacturing sector and small businesses.
Some of the major reasons noticed are-
- Digital transformation of workforce
- Rise of technology
- Artificial Intelligence
What is the Difference Between “Reduction in Force” and “Layoffs”?
Reduction in force and layoffs, both concepts are used by companies to cutdown their workforce and save money.
As per SHRM, “These are all types of cost- saving employment actions that are commonly misunderstood because the words are often used interchangeably when their meanings are actually different.”
Reduction in Force
The concept of Reduction in Force is a well-planned and strategically laid plan to eliminate employment with no prospect for future rehiring. The reasons could be:
Technology
The advancing technology and the rise of Artificial Intelligence has already put a lot of jobs at risk, which makes it quite a relevant factor in Reduction in Force.
Budgetary issues
The company may decide to reduce its workforce to either save money or avoid bankruptcy.
Lack of need of service
Reduction in Force can also be a result of lack of need for a service provided by the company or the deteriorating need of the service among the targeted people.
Decision to close a specific department
A company may decide to permanently shut down a department because there is no longer a need for it or its services may not be of use anymore.
Layoff
Layoff is a similar, but quite a different process of saving money. It may not be well planned, but it is immediate. A company may lay off its employees for the time being and rehire them in future. A few reasons behind layoffs are: –
Lack of funds
A company, or an organization may not have enough funds to support many employees; in such situations, employers lay off a few employees. Though, if the situation changes, they may fill those vacant positions.
Save money
At times, an employer may lay off their employees for the time being to save some money on salaries and benefits.
Fewer needs
There might be a chance that the services needed are much less. E.g. in a department of 5, if an employee is laid off, it may not change the dynamic of the department or affect the work quality.
How should Organizations Communicate Reduction in Force?
Communicating a sensitive message such as that of Reduction in Force is a fragile task for a company. This is because Reduction in Force will negatively impact the lives of all employees in the company, even those whose jobs have not been impacted.
To soften the blow, companies could be transparent about the situation and maintain confidentiality at the same time. They must also provide advanced notice to employees, provide outplacement services and career counselling for the employees impacted.
What to Expect after Reduction in Force?
Being fired during a Reduction in Force can be frustrating and emotionally exhausting. It’s common for an individual to feel irritated, tense and anxious for the unforeseeable future.
Sudden announcements of Reduction in Force may disrupt an individual’s long-term goals, it can also be seen as an opportunity for a new career path and to build up new skills. It can also be observed as one’s personal time.
A few steps one should follow to step back into the job market are listed below: –
Assess your options
Upon falling victim to Reduction in Force, you can assess your financial situation and may take a break. You can then start looking for a new position that fits well with you.
Update your resume
Updating your resume and socials like LinkedIn can help grab a recruiter’s attention. Adding more skills to your resume can also be helpful in finding a new job.
Explore and consider your options
You can start searching for new jobs. These jobs could be connected to your current line of work, or you may also consider a career change.
Develop new skills
You can take a break and utilize this time to further enhance and develop new skills. Developing new skills can enhance your resume and hence present it as a better employment opportunity.
Conclusion
Reduction in force is a strategic process for permanently minimizing the work force of a company. Reduction in force is a permanent solution to save money, whereas layoffs are temporary.
Layoff is a sudden action to save an organization money and the employees can be hired back unlike reduction in force. Employees can overcome the reduction in force by enhancing their skills and updating their resumes.
FAQs
Q1. What to do after a RIF?
A1. After a RIF, employees must assess their options keeping in mind their financial situation, update their resume and social portfolios like LinkedIn and enhance or develop new skills.
Q2. How should organizations communicate Reduction in Force?
A2. To soften the blow of RIF, companies could be transparent about the situation and maintain confidentiality at the same time. They must also provide advanced notice to employees, provide outplacement services and career counselling for the employees impacted.
Q3. How can employers avoid Reduction in Force?
A3. To avoid Reduction in Force, employers can abide by the concept of furloughs-meaning mandatory leave, hiring freeze, limited overtime and natural attribution.