Reduction in Force (RIF) Checklist

Unfortunately, even successful businesses sometimes need to make strategic cutbacks to stay viable during periods of economic hardship. This type of cutback is called a reduction in force (RIF). An organized RIF is different from simply firing an employee. Reductions in force happen when a company makes a calculated decision to eliminate a particular area of the organization (such as a role or department) as a cost-cutting measure. If your business is considering a reduction in force, use this reduction in force checklist to help you get through the process as efficiently and painlessly as possible.

Download the Reduction in Force Checklist

1. Define Your Goals for the Reduction in Force

The first step is to identify your business reason(s) for the reduction in force. Ask yourself the following questions to clarify your organization’s downsizing objectives:

• What is the intended result of the RIF (e.g., reduce operating expenses by 10%)?
• Which departments or locations will be affected?
• Are there alternatives to a RIF that could achieve the same result?
• What is the intended timeline for the RIF?
• What kind of public narrative do you want to portray for the business during this time?

2. Develop a Reduction in Force Plan

After defining your goals, you can create a plan for how you want to approach downsizing. To do so, you’ll need to form a team of decision makers comprising representatives from each relevant stakeholder area of the business (eg., company leadership, affected department heads, human resources, legal, etc.). Then, use the following list of questions to guide your decision-making process:

• Which locations, departments, and/or specific positions will be affected by downsizing?
• What is your RIF plan’s budget?
• How will you measure the scope of downsizing necessary (e.g., how many branches need to close, etc.)?
• Will your organization ask for volunteers for early retirement plans or voluntary separation plans?
• Will you institute a hiring freeze?
• What is the timeline for your RIF plan based on the goals you’ve defined?

Once you’ve created a RIF plan that answers each of these questions, you’ll need to have it reviewed by legal counsel before you officially put it into action.

3. Determine RIF Selection Criteria

Next, you need to determine how you will select the specific individuals within the affected areas of your organization who will be impacted by downsizing. If you operate in a union environment, make sure you understand and account for your workers’ collective bargaining rights. Then, use the following checklist to determine your selection criteria:

• Which factors will you use to determine who is affected by your RIF plan (e.g., seniority, job performance, location, etc.)?
• Does the entire RIF decision-making team understand the criteria to be used in the selection process?
• Do you have an efficient way to document all selection decisions?
• Which individuals fit your chosen downsizing criteria? (Make a preliminary list of these individuals.)
• Are any of the individuals on your preliminary list of affected employees members of protected classes (race, religion, sex, disability status, etc.)?

Once you’ve addressed each of these questions, you can finalize your list of employees for RIF.

4. Ensure WARN Act Compliance

The Federal and State Worker Adjustment and Retraining Notification (WARN) Act is an important regulation that governs the way businesses communicate with their employees during reduction in force initiatives. Ask yourself the following questions to make sure your business remains compliant:

• Have you reviewed the requirements of the Federal WARN Act and prepared appropriate notices for your employees?
• Have you verified whether or not there are applicable state-level WARN requirements for your business and prepared notices as necessary?

5. Decide on Severance Packages

Next, ask yourself the following questions to help you plan the severance packages the business will offer to affected employees:

• Will a severance package be required as part of your release agreements? (Consider special requirements for certain employees like the Older Workers Benefit Protection Act (OWBPA).)
• What will the severance package contain (e.g., continued salary, continued benefits coverage, accrued vacation/sick pay, etc.)?

6. Communicate RIF with Employees

Informing your employees of downsizing is perhaps the toughest part of carrying out a RIF initiative. Here are some tips to help you distribute the news throughout your organization:

• Prepare the required materials for RIF communication to affected employees (e.g., severance agreements, COBRA information, etc.) in advance.
• Conduct team meetings or one-on-one sessions with affected employees to inform them of the reduction in force. Provide them with all relevant information, such as final pay, health benefits, 401(k) options, etc., and review the severance agreement together. During this meeting, encourage affected employees to ask any questions they have.
• Conduct an all-hands meeting to inform your remaining workforce of the downsizing. Again, encourage questions and provide transparent answers.
• Inform IT or facilities management of all resulting personnel changes so that appropriate termination procedures can be followed (e.g., updating computer databases or security clearances, etc.).