Reduction in Force Best Practices

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

A reduction in force may be necessary for budget or restructuring reasons, but all bases should be covered to protect employee and business. In this lesson, you'll learn some best practices for a reduction in force.

Navigating a Workforce Reduction

Most employers work to offer a stable and secure environment for their employees, but sometimes circumstances present themselves that make it necessary to eliminate certain jobs. A reduction in workforce can happen as the result of a floundering budget, restructuring or reorganization, changes in a market, poor management or a host of other reasons. A reduction in force, or RIF for short, is when a separation from employment happens due to some of the reasons previously listed. Typically, an employee who is let go during a reduction in force is not likely to be re-hired because his or her job has been eliminated, unlike a layoff where an employee may be recalled in the future.

A reduction in force is not a pleasant situation for anyone. It creates tension, fear and feelings of uncertainty. For employers, there are special considerations that should be taken in handling this type of occurrence carefully and effectively. This lesson will talk more about some best practices employers should consider when planning for a reduction in force.

Best Practices

Handling a reduction in force requires careful handling and consideration from long before the process begins to well after it's over. It starts with a downsizing plan, complete with a business purpose and budget, and continues through to looking for risks and communicating with employees. These tips can help you navigate the reduction in force process.

1. Before a reduction ever happens, a business should have a downsizing plan in place. This document can help you measure business locations, departments and personnel who might be affected by a potential reduction. A downsizing plan can help you assess how deep the RIF needs to go based on certain numbers, such as budget requirements or number of locations closed. It can also protect a business from claims of discrimination and wrongful termination further down the road.

2. Set your business purpose and write it down. Why are you resorting to a reduction in force? What events precipitated it and what will it take to fix it? Document your specific purpose for a reduction. For example, if a department is responsible for a particular product that is not performing well in the market, the purpose for the downsize may be related to the poor sales figures of that product. Eliminating the product may eliminate the need for that department and its employees. This can also help you more accurately determine the individuals who may be affected.

3. As odd as it sounds when you're trying to cut costs, build an RIF budget. Downsizing will cost you some money, both in terms of employees (offering severance packages and administrative costs) as well as reduction in work productivity due to fewer employees and remaining employees struggling with poor morale and stress.

4. Determine a timeline. Early planning is crucial in the RIF process, giving you time to consult with an attorney, evaluate how you'll make reduction decisions, create a selection process, conduct a comprehensive assessment of every employee and department and analyze potential risks and liabilities.

5. Look for liabilities, sometimes called an adverse impact analysis. Protected classes of employees, including those over a certain age, individuals with disabilities, minorities and others should be carefully considered for potential complications arising from perceived discrimination. Lawsuits can be a costly addition during and after a reduction in force.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create An Account
Support