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Reduction in Force - Don't Kill Your Company

Janine Yancey 2017-02-24T13:30:00+00:00

As a growing startup, a reduction in force (RIF) might be the furthest thing from your mind. Unfortunately, a rif is a reality that most companies must consider at least at some point in their growth, and it’s better to be prepared than to leave it all left to chance.

Looking around at today’s business landscape, we can see that even amidst the mostly positive news, there are companies like Macy’s and Kmart that must constrict in order in to survive. In this context, a riff can actually be a painful, but critical part of building a more effective organization.

So no matter what you call it – a layoff, rightsizing, downsizing – a rif must be planned for and conducted properly to avoid becoming a culture killer that undermines rather than reinforces your company mission.

To help with this question of downsizing, I asked renowned talent and culture expert Steve Cadigan to help me with tips for avoiding the most common culture-killing missteps that can occur in a rif.

Here are some suggestions:

1. Conduct the RIF with compassion and humanity

This is rule number one rule in any rif situation. These are the same employees you originally entrusted to help build your business, so extend an equal level of sincerity at their departure as you did when you hired them.  

After all, the employees impacted by the rif will continue to have relationships and influence employees in your workforce; show them respect and humanity on the way out.

2. Be clear about the business reasons for the RIF

Remember that not all your employees have as much visibility into the business as you do. For some, this could be a complete surprise. Help them to understand the reason behind the rif. While it may not soften the blow in that specific moment, it does help them to see it as a personnel rather than a personal decision in time.

The key here is creating a clear communication plan so that everyone from line employees to third-party vendors knows what to expect in the coming months.

3. Share easy-to-understand criteria for layoff selection and apply this consistently

Similarly, it’s important to communicate how you arrived at those personnel decisions. By sharing the criteria with staff, it can help them process the rif in relation to the business more effectively. And, if they see these criteria applied equitably versus arbitrarily across the organization, it reinforces the business motivations of the decision.

Additionally, you should have a documented, objective comparison of employees where skills and job performance are the criteria in making layoff determinations. This documentation is critical in the event of litigation challenging some aspect of the layoff.

4. Provide meaningful, yet appropriate levels of assistance for those impacted

These will vary greatly by organization depending on your stage of growth, financial resources, and your industry. But in all instances, it’s important that departing employees feel that the company is attempting to do right by them. This can be anything from a credible severance package to employee retraining for another job.

How you treat employees during a rif will speak directly to your workplace culture, so be aware of what is at stake. The choices you make during a rif will leave an impression with employees forever, whether they are departing or staying with your organization.

5. Pay attention to your top talent

It’s just as important to focus on those who are staying as those leaving, especially for your top team members. Clearly communicate the rif and its reasons and criteria to these employees, along with reasonable assurances about their employment and insight into the company's plans.

In this way, you can send a message of growth that helps to retain this talent versus frightening them into a covert job search. The last thing you want during a rif is to experience a loss of your key talent while the business is contracting and productivity is down.

Conclusion

Keep these five lessons in mind as you build a rif crisis playbook or if you find yourself in the midst of one. Even if your startup is in a growth cycle at this very moment, these guidelines will help you better execute the tough decisions when the time arrives.

For more about how to conduct a rif without sacrificing your culture, you can download our free guide here.

About the Author

Janine Yancey

Janine Yancey is a tech CEO, lawyer and expert on HR and workplace compliance issues. As founder and CEO of Emtrain, Janine innovated a unique technology platform that provides HR and compliance education, expert guidance and data analytics to promote healthier organizations. Janine’s focus is on neutral, third party guidance and problem solving and Emtrain’s on-demand educational content and interface for employee’s questions and concerns put Janine at the forefront of thought leadership on sexual harassment, unconscious bias, discrimination and ethics issues in Silicon Valley and beyond. Janine is a sought-after speaker and has been published and interviewed in the media including Fast Company, Esquire, USA Today, Bloomberg Business, and Tech Crunch. Prior to founding Emtrain, Janine was a partner at Employment Law Partners where she specialized in solving labor and employment problems for high tech firms including Google, Intuit and a variety of start-ups. Janine also worked as counsel at Liebert Cassidy Whitmore, served as Board Member of the Northern California Human Resources Association, and authored of The HR Handbook, designed to help young tech companies navigate workplace laws. Janine earned her JD at University of California Hastings School of Law and a BA in English and Political Science at the University of California Berkeley.