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After a Reduction in Force: Engaging Your Remaining Employees
Your company underwent a reduction in force. Now what?
At a high level, a reduction in force is about damage control. No one takes the decision lightly. But if you are in the C-suite or on the HR team, the days and weeks after an RIF are just as critical — if not more so — than the time spent leading up to the decision itself.
What does this reduction in force mean for the employees who didn’t lose their jobs?
It’s absolutely critical to be proactive in the days and weeks following an RIF. A reduction in force typically causes uncertainty and increased employee attrition among the team members who remain. Your job during this crucial time is to keep your remaining workforce motivated, productive, and intact.
In this article, we give strategies for maintaining morale and discuss what a reduction in force means for the employees who remain. We also talk about how you can use people analytics to identify new concerns and limit further attrition following an RIF.
What does reduction in force mean?
Any time a company removes a position with no intention of replacing it, this is a reduction in force. However, when we talk about reduction in force, most people mean the large-scale removal of positions across a company. Eliminating just a few positions is usually called something less intimidating, like “downsizing.”
Regardless of how many positions are removed by a reduction in force, there are certain legal considerations you need to follow. There will also be an impact on your remaining workforce, though it may be less widespread if only a few positions are eliminated.
Whether the RIF was big or small, the remaining employees are going to have questions and concerns. The last thing you want is for these legitimate concerns to spiral into full-blown turnover contagion. (It happens!)
Therefore it’s best to take every reduction in force seriously and work to mitigate the impact on your remaining employees. (We’ll get into strategies a little later in this article.)
Reduction in force vs. layoff vs. furlough
In theory, layoffs and furloughs are temporary and a reduction in force is a permanent removal of positions. However, layoffs and furloughs can turn into permanent reductions in force if business doesn’t pick up again as expected.
For the purposes of keeping a reduction in force from causing additional, unwanted attrition, it’s best to treat both permanent and temporary reductions in force the same: be proactive about keeping your remaining employees on board.
How a reduction in force impacts your remaining employees
Whenever an employee leaves your organization, voluntarily or otherwise, it impacts the people who remain.
That being said, a reduction in force can have an especially severe impact on your remaining employees because the underlying causes incite more anxiety than an employee quitting for a better paying job or because they had to move to a new city.
It’s important to be particularly sensitive to how an RIF impacts your employees. Here are the most common pitfalls to watch out for.
Increased uncertainty
A reduction in force shakes your team’s sense of stability. Reductions in force are caused by factors that affect the entire company, so people get the feeling their job could be next on the chopping block.
According to a survey by Leadership IQ, 61% of remaining employees believe the future prospects for their company are worse after a reduction in force, and a whopping 87% report being less likely to recommend their company as a great place to work.
Humans are naturally averse to uncertainty, and the more severe the uncertainty, the more likely it is people will take action to regain a sense of stability.
Decreased morale and productivity
Uncertainty is enough to decrease morale and impact productivity in and of itself. However, a reduction in force amplifies this by also breaking connections in employee personal and professional networks. Inevitably, these broken connections make the employee experience less enjoyable.
Some employees may simply have fewer close friends at work. Others may have more difficulty doing their jobs if there was a reduction in key support staff.
According to the same Leadership IQ survey, 74% of employees say their productivity declined after an RIF, and 64% say the productivity of their coworkers declined. Regardless of the specific situation, employee morale is going to sink and productivity will suffer.
Increased risk of attrition
These impacts culminate in an increased risk of employee attrition.
To maintain their personal connections, some employees may consider moving to a company where their coworkers or managers landed on their feet. Others may look to get a job with a company they think offers more job security. Still others might seek a position with a company that has more robust support staff.
The bottom line is that employee attrition causes more employee attrition, and a reduction in force is at its core a type of employee attrition.
In a minute, we’ll talk about how talent intelligence helps companies of all sizes mitigate this risk by focusing retention efforts where they are likely to make the most impact. A talent intelligence platform like Praisidio takes the HR data you already have on hand and uses it to pinpoint employees most at risk of attrition.
Communicating a reduction in force to your team
Open communication is the first step in mitigating the impacts of an RIF. This begins on the day you announce the reduction in force. If employees think the company is being tight lipped or trying to hide anything, they’ll feel more uncertain and demoralized, and the increased risk of attrition will be even more severe.
The best course of action is to be as open and transparent as possible. This might feel intimidating, but there’s a two-step strategy to make transparency work in your favor as much as possible.
Take responsibility
First, take responsibility for whatever caused the reduction in force.
This is uncomfortable, but it really is the best course of action. If you try to present the problem as something outside the company’s control, it signals that there is no way for the organization to protect jobs in the future, because it’s out of everyone’s control.
If your organization takes responsibility for the problem, it’s much more believable when you say it won’t happen again.
Present a clear plan
Second, present a plan for getting back on track and preventing further reductions in force. Keep in mind that this is only convincing if you first took responsibility for the problem. If you own the problem, you also own the solution.
Do keep in mind that these two steps are only the first phase in your employee retention plan. Following up with concrete employee retention strategies is where the bulk of the damage control happens.
How to maintain morale and reduce attrition after an RIF
Once you’ve communicated the situation, it’s time to roll up your sleeves and do the on-the-ground work. This means taking a few targeted actions to directly counteract the impacts of the RIF that we discussed earlier.
Make sure everyone understands their role in the path forward
Outlining a plan for recovery demonstrates that you have a solution to the problem that caused the RIF in the first place. It also establishes a company mission for the short and medium term.
This is important because the uncertainty surrounding a reduction in force can make employees feel disconnected from the company mission. Establishing a few more immediate goals helps everyone regroup and realign.
However, this only works if everyone understands their role in the plan. If they don’t, the company’s larger mission will still seem nebulous and jeopardized.
Make sure your managers and supervisors understand the roles of their teams and schedule team and 1:1 meetings to help each employee understand their role moving forward.
This helps everyone focus on working together to get the organization back on track. It also reassures remaining employees about their job security because they understand their role in the future of the company.
Give everyone has the support they need
A reduction in force will almost certainly impact support staff for certain roles. Every position in a company is there for a reason, so it’s rare that you can remove some positions without increasing workload and stress for others
It’s important to find ways to manage workloads and stress for remaining employees. You may have to get creative, since hiring likely isn’t an option. It may be necessary to restructure work processes or reorganize teams to keep people from getting overburdened.
Also keep close contact with your employees and get feedback on workloads and challenges, so you can make ongoing adjustments.
Use talent intelligence to predict attrition risks
All of these mitigation efforts work well enough when applied broadly. However, attrition risk does not impact every employee equally. It's important to focus additional resources on those employees who are at the highest risk of attrition.
Using a talent intelligence platform to analyze your existing HR data is one of the most valuable tools in this process.
Talent intelligence helps you visualize key metrics, like number of projects per employee, time-in-position, and compa ratio and to use these metrics to identify employees most at risk of quitting.
However, talent intelligence does more than simply show you who’s most at risk. A good talent intelligence platform not only identifies at-risk employees, it also identifies targeted strategies to help mitigate attrition risk for each individual employee.
When resources are tight (which they inevitably are after a reduction in force) this type of targeted talent intelligence is absolutely necessary.
You’ll have the information you need to spend your resources wisely and get the best return on your employee-retention investments as your organization works through the aftermath of a reduction in force.
Use your data to stop an RIF from causing excess attrition
A reduction in force is a big deal in any scenario, but it is even more devastating if key employees needed for recovery also leave in the wake of the RIF. It’s critical to start your mitigation efforts as early as possible and take a targeted approach to alleviate attrition risk among your must-retain team members.
Praisidio enables your company to use the HR data you already have to track attrition risks, identify attrition factors, and proactively take action to retain employees, even when it might seem like you are out of options for increasing employee retention.
Praisidio clients commonly reduce employee attrition costs by $10 million for every 2,000 employees, which could be just what you need to stabilize after a reduction in force.
Book a demo to find out how Praisidio can help you minimize the impacts of an RIF.
FAQs
Q: How does a reduction in force impact the long-term company culture and employee morale, and what steps can be taken to rebuild trust and confidence among the remaining workforce?
A: A reduction in force can have a profound and lasting impact on company culture and employee morale. The remaining workforce may feel uncertain about their future with the company and may experience decreased motivation and engagement. Rebuilding trust and confidence among the remaining employees requires transparent communication, acknowledgment of the challenges faced, and a clear plan for moving forward. Additionally, fostering a supportive environment where employees feel valued and heard can help mitigate the negative effects of a reduction in force on company culture and morale.
Q: Are there specific industries or types of companies where reductions in force tend to have a more significant impact on employee attrition, and if so, what unique strategies might be necessary for mitigating this effect?
A: While reductions in force can affect companies across various industries, certain sectors may experience more significant impacts on employee attrition. Industries with high competition for talent or those undergoing rapid changes may see increased turnover following a reduction in force. Tailored strategies may be necessary in these cases, such as offering additional support programs, career development opportunities, or retention incentives to mitigate attrition risks effectively. Learn more about employee attrition.
Q: What are the potential legal ramifications or challenges a company may face following a reduction in force, especially concerning employee rights, severance packages, or potential lawsuits, and how can these be navigated effectively to minimize further disruption or negative outcomes?
A: Following a reduction in force, companies must navigate potential legal challenges and obligations to ensure compliance with employment laws and regulations. This includes providing proper severance packages, adhering to notification requirements, and avoiding discriminatory practices. Seeking legal counsel and carefully reviewing relevant laws can help mitigate the risk of lawsuits or negative legal consequences. Additionally, maintaining open communication with affected employees and providing support throughout the transition can help minimize potential legal challenges and foster a smoother process overall.
