1. Reduction in Force (RIF): Strategy and Tactics
Dick Hoell
Sun Microsystems
May 1, 2002

2. Reduction In Force: Strategy and Tactics
Areas to Be Covered
Strategic Issues
Selection Criteria
Logisitics
Communication
Legal Issues
Outplacement Support
RIF's Outside the US
Measurement
Lessons Learned

3. Reduction In Force: Strategy and Tactics
Strategic Issues
Organizational Reason for Doing the RIF
Financial (Cost Reduction)
Lack of Work
Skill Mix Change
Site/Office Relocation or Closing
Outsourcing Work
RIF vs Redeployment

4. Reduction In Force: Strategy and Tactics
Strategic Issues
Organizational Impacts of a RIF
On the culture
Treatment of staff
How decisions are made
On the external marketplaces
Labor
Financial
Customers

5. Reduction In Force: Strategy and Tactics
Selection Criteria
Balance Between Sense of "Fairness" and Disruption to the Organization
Business Case
Skills, Experience, Documented Performance
Seniority
Selection or Seniority Units
"Bumping"
Voluntary

6. Reduction In Force: Strategy and Tactics
Logisitics
Planning is the Key
"Sweat the Details"
Selection Approval Process
Legal review
Changes
Notification Letter Preparation
Resource Material Preparation
Manager Training

7. Reduction In Force: Strategy and Tactics
Logistics
Notification Meeting Scheduling and Preparation
Manager/employee at different locations
HR support
Security support
"High Risk" employees
Systems access cutoff
Outplacement & EAP support
Collection of Company Property
Knowledge Transfer

8. Reduction In Force: Strategy and Tactics
Communication
Different Audiences
External
Directly impacted employees
Remaining employees ("survivors")
Managers
Different Media
Written/
Group meetings
1 on 1 meetings
Websites 1

9. Reduction In Force: Strategy and Tactics
Communication
Issues/Challenges
General pre-notification or not
If pre-notification, then how long before notification?
Ensuring all employees understand the business need
Helping remaining staff regain focus and productivity
Work unit level
Larger organization level

10. Reduction In Force: Strategy and Tactics
Legal Issues
Worker Adjustment and Retraining Notification Act (WARN)
Offers protection to workers, their families and communities by requiring employers (100+ employees) to provide notice 60 days in advance of covered plant closings and covered mass layoffs (or pay in lieu of notice)
Covered plant closing – employment site closed down and 50+ employees experience "employment loss" during 30 day period
Covered mass layoff – employment loss for 500+ employees at a site; multiple reduction events during 90 day period exceeding 500 employee threshold in total can also qualify

11. Reduction In Force: Strategy and Tactics
Legal Issues
Improper Selection Decisions
Individual disparate impact
Class action exposure - statisitically significent adverse impact
ADEA Notification for Impacted Staff Over Age 40
Release and Waivers
45 days to sign
7 days to revoke after signing
Severance pay contingent on signed Release and Waiver

12. Reduction In Force: Strategy and Tactics
Outplacement Support
External Vendor vs Internal Resources
Opportunity to Process Feelings
Re-focus to Finding Another Job
Career change
Job search strategies
Resume/interview preparation support
New skills development
Networking/support group

13. Reduction In Force: Strategy and Tactics
RIF's Outside the US
Country-specific Legal/Cultural Differences
Formal consultative processes
Unions
Works Councils
Legally defined selection criteria
Legally mandated severance packages
Involuntary RIF's illegal in some countries (e.g. Japan)
Time Between Decision to RIF and Actual Employee Sermination can be significantly Longer than US

14. Reduction In Force: Strategy and Tactics
Measurement
Reduction Target Achieved
Process
Errors in letters, notice/severance pay calculation, etc.
Managers trained
Consequences
Grievances/formal legal actions
Disruptive acts by impacted employees

15. Reduction In Force: Strategy and Tactics
Measurement
Survey/Focus Groups with Remaining Staff
How well was the RIF managed?
Have employees' perceptions of the company as an Employer of Choice been impacted by the RIF?
Has the RIF impacted employee productivity?
Has the RIF impacted the ability of employees to meet customer requirements?

16. Reduction In Force: Strategy and Tactics
Lessons Learned
Treatment of Staff is the Key
If treated with respect and dignity then incidents of inappropriate acting out will be minimal if not non-existent
Important to provide a severance/notification pay package that is perceived as "fair"
Treatment of RIF'd employees will significently influence the performance of your remaining staff
Pre-notification is Effective (Minimizes the Surprise), but Need to Ensure the Time Between Pre-notification and Notification is not too Long

17. Reduction In Force: Strategy and Tactics
Lessons Learned
You Can Not Over Plan
The "devil is in the details"
Ensure All Employees Fully Understand the Business Need
Ongoing Communication is Very Important
Cascading of consistent messages
Use of different media
Important to Provide Thorough Training to Managers Including the Opportunity to Role Play the Notification Meeting
Help Remaining Employees Gain Closure and Re-focus