Those three little words—reduction in force —represent a pretty taboo subject in HR. Even more hush, hush is the topic of how to choose who goes. In the business of outplacement we’re here to take the stigma out of this particular topic.
Reductions in force are part of business. Although we’re on a decent upswing from the recession, RIFs are still a common occurrence across the nation. Wells Fargo, the U.S.’s largest mortgage lender very recently announced the reduction in force of 2,300 employees from their mortgage division. Layoffs are a fact of life, and business leaders truly need to know how to deal with them. A RIF is one thing that companies want to get right.
At this point the company has already decided that a layoff is in the best interest of the majority. In most instances, cuts have to be made in order for the company to survive. The first step is to determine exactly who and what the company will need to move forward. Consider what direction the company should be moving in. Take the previous example, Wells Fargo, its RIF is only in its mortgage department. Although it is the leader in this industry, the recent spike in mortgage rates has caused Wells Fargo to better align its workforce with market trends.
I’m sure that many of the 2,300 employees who are facing unemployment were great at their jobs. They might have even been key players in their team, but at the end of the day, these decisions have to be made for the success of the company. The best mortgage-lending manager in the world is of little use if the business simply isn’t there. For most companies, the initial cuts should be focused on positions and jobs rather than individual employees. The workforce should match the market.
Now that the direction of the company is established and well communicated to your team, decision makers should assess what skills the company will need as it moves forward. This is where the RIF comes down to the individual level. In order to keep things fair and legal (which I can’t stress the importance of enough), the team should stick to subjective attributes of employees like work ethic, quality and timeliness of work, communication skills and ability to learn and grow.
Having documented work evaluations is very handy at this point. When things are in writing, it makes these decisions cut and dry. Regardless of the qualities that the team chooses to focus on, each evaluation should be consistent and unbiased. Having a team in place to make these decisions together acts as a checks and balances for fairness.
Now that the initial list has been compiled by the team, take a step back and look at the group or groups of employees who are getting laid off. Even if the selection process was completely non-discriminatory, the end result can look discriminatory. This is where it can get tricky. In order to safeguard against legal action, companies need to make sure that there aren’t a disproportionate number of any age group, minority or sex. This is a balancing act between being fair and being safe.
Finally, have an internal or external counsel review the RIF plan to determine that it passes all laws and polices, especially when considering cutting a significant piece of the workforce. Staying legal and fair is a huge part of the decision making process. Extra steps should be taken to ensure compliance.
Handling a reduction in force will go a whole lot smoother when companies are prepared for them. Knowing the steps to take and the right way of doing things can go a long way in preserving the employer brand and safeguarding the success of the company. When it is clear to everyone that this isn’t a popularity contest, but rather a strategic business move, it reduces the stigma of RIFs and promotes the value of individuals.