Leading Through a Reduction in Force (RIF)
Many industries are cyclical in nature. They often have periods that require a downshift in staffing needs. But for industries that have typically sustained business activity, an economic downturn that requires a reduction in force (RIF) can be new – and scary – territory for leaders.
As I counsel CEOs and CHROs, I help them navigate leading through economic downturns or recessionary times while also looking ahead. Beyond making sure that your leadership behaviors are recession-proof, there are many considerations when delivering challenging news to your employees.
Are you well-equipped to communicate a reduction in workforce (RIF) and support affected employees? In your separation plans, are you prepared to bridge employees to their next opportunity with career guidance, severance, and/or other supports? If you expected loyalty of employees during their tenure, it is time to repay that loyalty through your treatment of newly separated team members.
How will you communicate a RIF to unaffected employees? In truth, all your employees are affected by a RIF. They will see their friends let go, their departments restructured, or additional tasks added to their roles. In some cases, they will see all of these impacts. As well, the cultural ripple caused by RIFs can’t be understated. Employees will watch closely how you treat their friends and colleagues and will want to see them respected and supported as they transition out of the company.
What is your plan for investing in your remaining workforce? Remember that you need to take excellent care of those still in your employ. Continue to invest in their training, skill-building, recognition programs, and career pathing. Demonstrate your understanding of their concerns surrounding a RIF and answer their questions before they ask them.
Do you have an effective internal/executive communications function? If you don’t know whether you’re communicating frequently enough with employees and sharing the information they believe they need to do their jobs and feel connected to the organization’s mission, there’s a simple two-step fix. 1. Ask them what they need and want. They’ll tell you. 2. Then deliver it. Remember that if you don’t communicate, employees will fill the silence with supposition and rumor. Don’t leave an information vacuum.
Are you able to succinctly share what your plan is for emerging from the downturn? RIFs are just one piece of the puzzle. Be prepared to clearly explain your forward-looking strategy and how you will collectively execute it.
Do you have a plan for recognizing and/or acknowledging current employees’ efforts this year? Even if you are not prepared to hold a large-scale awards program or have a mechanism for doing so, some method of recognition is preferable to none. This is a hallmark of a high-performing culture.
There is no better example of how not to do a reduction in force than what is currently happening with Twitter. Elon Musk fired the CEO and leadership teams immediately upon taking the helm, and seemingly without conversation. He then gave employees a deadline by which to respond via an online form if they wished to continue their employment. It included an acknowledgement that if they stay, they will be subjected to long hours with high intensity. As well, he offered no accommodation for those with visa to work in the U.S.
Multiple news outlets reported that for staff who chose to stay on there would be financial rewards through company stock. A message Musk sent stated that “exceptional amounts of stock will be awarded for exceptional performance.” However, with no firm details of the compensation structure shared, employees were uncertain about the risk versus reward. Within hours of the response deadline to accept or decline continued employment, hundreds of employees resigned. Some elements of the social media platform were operating without key roles, and the hashtag #RIPTwitter began to trend.
How could employees focus on immediate tasks and goals with so much potential volatility in leadership? The answer is, they simply couldn’t. If you want the blueprint for the opposite of a smooth and people-centered RIF, look no further.
While workforce reductions are less than ideal, an organization can treat its employees with respect and communicate effectively throughout the process to ultimately strengthen its culture and exemplify its values.
Note: Even if your company and industry had an exceptional year, you also have an important situation to handle. If your company achieved record profits, you need to monetarily reward your people. To not do so is incongruous and will be noticed by employees when you share news of “record profits” or similar results. The alternative is a likely loss of valuable team members who will go elsewhere to feel appreciated and have their contributions validated.
Beyond financial plans and discussions, take time in the final weeks of the year to structure your human capital strategy for Q1 and beyond. Define the concrete steps you’ll be taking to develop and recognize your people. After all, your company can’t function without employees.