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How to Diligently Plan a Reduction in Force

Layoffs can be a touchy subject, as a number federal, state, and local laws govern reductions in force and serve to protect both the employer and the employee. To avoid legal hassles that can arise from poorly executed layoffs, it is imperative that companies prepare a reduction in force plan. Companies might decide to reduce their workforce for a variety of reasons, including debt, over-staffing, change in management, and relocation. 

Furthermore, layoffs affect everyone associated with the company — the people being let go, the people being retained, and the leadership team. Handling a termination badly can irreparably damage employee morale and company reputation. 

reduction in force steps

A reduction in force is one of the most stressful events in an organization’s lifecycle.

Select Employees for Layoff

The organization must select employees that will be laid off, and prepare a comprehensive plan on how to go about it. Aside from laws, some companies choose to extend support in finding new workplaces, and insurance policies. In a right-sizing situation, a company weeds out employees based on job performance, seniority, job skills, and so on, as per business requirements. On the other hand, while downsizing, an organization is looking to permanently reduce its workforce.

Plan Meticulously

Set a timeline on how to handle layoffs and then work backwards. The process must be discussed in detail with management, accounting, and legal teams before it is set in motion. Comb through the plan to weed out any signs of discrimination — intentional or unintentional. This can affect the company’s hiring, retention, and sales at a later stage. Layoff notices must be given to employees and contain clear information on why they have been let go and what are their next steps, pertaining to pay, benefits, and last day of work.

Lawful Compliance

The Age Discrimination in Employment Act (ADEA) of 1967 protects employees from wrongful termination based on age. Title VII of the Civil Rights Act protects individuals from being treated differently on the basis on gender, which includes pregnancy, sexual orientation, and gender identity. Laws are also in place to protect individuals with disability, and to dissuade employers from going against public policy. These laws forbid discrimination of any form with any aspect of employment. 

The Worker Adjustment and Retraining Notification (WARN) Act demands that employers must notify employees about upcoming layoffs or closures. If due notice is not given, individuals are eligible for compensation and can seek damages. 

Support

Offer support to the employees transitioning, to the employees retained, and those who are involved in the RIF process. Most companies offer substantial severance packages, assistance with future employment, and extend insurance policies for the entire year to employees who have been laid off.  The entire process can also be traumatic for people managers who would have to deal with difficult employees and emotions. Training and collaborating with managers on how to handle layoffs will ensure a smooth transition. 

Clear communication before, during, and after the event is essential to keep employees focused and engaged. Negative rumors can have far more damaging effects in case of a lack of transparency. 

Moving Forward

Once the layoffs are completed, the management must inform the remaining workforce about the process and the factors that were considered. They must also share their vision for the company going forward and encourage feedback, as employees will be anxious to know what their future with the company looks like. Employers must keep the channels of communication open to sustain cooperation and keep employee morale high. Often, layoffs scare employees into jumping ship, even if their jobs are not on the line.

Most of all, whether it is a reduction in force meeting or a hiring event, it is of utmost importance that individuals are treated with dignity. Employees must be dealt with kindness and compassion, and having a script prepared can help move things along. Human resources must work on and be ready with a strategy to build and maintain trust, as layoffs tend to rattle even the most secure employee.

Anna Verasai
Anna Versai is a Team Writer at The HR Digest; she covers topics related to Recruitment, Workplace Culture, Interview Tips, Employee Benefits, HR News and HR Leadership. She also writes for Technowize, providing her views on the Upcoming Technology, Product Reviews, and the latest apps and softwares.

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