Author: David Neilly
Guiding Principles and Assumptions
When you go through a messy, painful process like this, it is important for the executive team to understand and buy into some guiding principles. The guiding principles are very important because your termination process, no matter how well planned, will inevitably go “off script” and you will need to rely on executives, managers and administrators to use their common sense to deal with those situations. They will handle those situations much more effectively if they are all clear about your goals for the process.
Here are some guiding principles/assumptions that we believe are very important to identify up front:
1. These people whose employment you are terminating might be customers, investors or employees (again) in the future, so treat everyone involved with respect and dignity.
2. No matter how hard you try, and no matter what you do, some departing employees and some continuing employees will be angry and resentful. Don’t beat yourselves up or paralyze yourselves trying to make everyone happy because it’s just not realistic under the circumstances.
3. Confidentiality and a certain amount of secrecy are required. The people involved in planning and executing the process need to be reliable and discrete. Information leaks should be strongly discouraged and minimized.
4. The number of people involved in planning the RIF should be the minimum required to organize the process. The number of people involved increases as the RIF day approaches due to support requirements.
5. As stressful and draining as the RIF process is on the organization, the energy level needs to be sustained or even raised to re-focus and engage the organization afterwards.
6. Keep the communication “spin” to a minimum. Employees become very cynical and resentful when the rhetoric is too sugar coated.
7. How the company conducts itself in managing the RIF will be seen as a strong reflection about the true leadership culture of the company. Every action and decision will be dissected and remembered for a long time.
Planning A Reduction In Force (RIF)
A well-executed RIF requires at least two weeks of planning prior to the event. The following are some tips for planning a successful RIF.
There should be an overall project manager who is responsible for coordinating all decisions and activities related to the RIF. The project manager is typically an HR Director or Senior Manager, someone who can easily and comfortably interact with the executive team, lead a small, multi-functional group and coordinate information and logistics with external suppliers.
The executive team should play the role of “steering committee” for the planning process and should review/vet all major decisions.
The RIF project team should include HR managers and administrators under the direction of the project leader, as well as at least one representative from Payroll, Finance, IT, Legal, Corporate Communications and Facilities. Payroll will be responsible for supporting all payroll and employee information-related activities around the RIF, which are considerable. Finance will prepare a budget for the project and ensure that resources for severances, career transition services and legal fees are approved and in place. IT will be responsible for identifying and protecting computers and intellectual property. Legal will interface with outside counsel as necessary to review the termination letters and advise on any number of legal issues that can arise. Corporate Communications will be responsible for developing the internal and external communications plan to support the process, including scripts for managers, an FAQ document, press releases, etc. Facilities will be responsible for any security issues that might arise related to the building, company property or the safety of employees.
A severance “formula” should be developed that takes into account employee level, years of service, age and any other factors that might affect how the organization deals with severance. The severance formula should create a consistent approach to severance arrangements. There will inevitably be exceptions to the formula for special circumstances, but those exceptions should be carefully scrutinized.
A termination letter template should be developed that can be used for the vast majority of departing employees. Although the details of the letter will vary by employee, the legal phrasing and framework should be consistent for all departing employees.
Career transition consultants should be retained to support the organization and separated employees on the day of the RIF and afterwards. There are many benefits to retaining career transition consultants:
1. They can provide helpful advice regarding your process on RIF-day;
2. Their presence sends a positive message to both departing and surviving employees that you care;
3. They can defuse difficult situations that might arise on RIF-day by counseling angry or defiant employees as a third party, and;
4. They can be very effective in getting departing employees immediately focused on the future and letting go of the past.
Our experience has been that RIFs of large groups of employees are best carried out on a single day at the same time in a group or groups. Although it might seem insensitive to “herd employees into a room and fire them”, the alternative is to conduct many one-to-one meetings over several hours, with the loss of control over process and message that occurs when many managers are asked to conduct termination meetings with inadequate HR support. Our rule of thumb would be that if you cannot properly conduct all your one-to-one termination meetings within an hour, and if HR representatives cannot be present for every termination meeting, then you should strongly consider group meetings.
The Day of the RIF
On the day of the RIF, the following should be in place:
1. Termination letters should be in individually addressed envelopes;
2. Large meeting rooms should be booked for the day with no possibility of conflict or disruption;
3. IT should be ready to disconnect network access for departing employees while the termination meeting is taking place. Although the vast majority of departing employees will leave respectfully and professionally, there is a possibility that company information or equipment might be damaged or stolen.
4. Career transition representatives should be organized to arrive prior to the termination meetings;
5. A communication should be prepared for all surviving employees, to be delivered at the end of the day and when all departing employees have left the building, and;
6. A plan should be in place to ensure that company property is secure and that departing employees leave the building within 30 minutes after the termination meeting is concluded. This is usually accomplished by drawing up a list of senior managers who will act as “hall monitors” throughout the building, whose role is to ensure that employee departures are orderly and as quick as possible.
Late on the day prior to the RIF or very early on the day of the RIF, there should be a separate termination meeting for all managers who are departing. This is important so that managers who attend the managers’ briefing following this can be fully briefed about the details of the RIF, and so that the surviving managers can know that they can stop worrying about their own jobs and focus on assisting with the employee termination and departure process.
After departing managers have left the building, all surviving managers should be pulled together into a meeting room and fully briefed on the business rationale for the RIF, the plan for the day, roles and responsibilities, key messages, the Q&A, and the process following the RIF.
After the managers’ briefing, the RIF should begin almost immediately, normally late in the morning. Here are the main steps:
1. Human Resources staff should bring all the letters into your meeting room(s). You might require only one room or several, depending on the numbers of departing employees and your available meeting rooms.
2. The CEO should deliver the message to employees if possible. This sends the message that the CEO is standing behind the process and lends more credibility to the message. You should have other executives in the room for moral support, and you should also have a representative from the career transition firm.
3. Managers should be asked to bring all the employees who are to be terminated from their workstations to the meeting room.
4. Once all the employees are present, the CEO/President should read a prepared statement that briefly outlines the business rationale for the RIF and the key messages. This statement should be no longer than 2 minutes. Then the HR person should explain the logistics and hand out the envelopes. He/she will also introduce the career transition consultant and explain how the service will work. The departing employees will be encouraged to read the letter when they get home. Departing employees should be encouraged to collect their personal effects and leave the building in no more than 30 minutes, saving their more lengthy good-byes for another time. This termination meeting should be no more than 10 minutes in duration and questions should be avoided.
5. While the above termination meeting is taking place, a brief email communication should have been sent to all remaining staff, and IT will have cut off network and building access for departing employees. Finance will ensure that company credit cards for departing employees have been cancelled at this time.
6. Once the departing employees have left the termination meeting and returned to their workstations, the goal is to gently and respectfully get the terminated employees to leave the building. For the vast majority of departing employees, this is not difficult because they are shocked and possibly embarrassed and will leave the building quickly. Others will want to hang around to say prolonged goodbyes, and a few might show some anger and defiance. Managers should gently usher these employees out of the building, and for more difficult cases someone from Security might be required.
With good planning, good luck and a bit of problem solving, you should have the building cleared of all terminated staff by about 1:00PM.
After the RIF- Time to Re-engage Employees
Settle down the organization- Immediately after the RIF, senior managers should pull departments into groups, re-iterate the key messages and answer any questions that surviving employees have about the RIF, the future, next steps, etc.
Focus the organization on the future right away- An “all employee meeting” or teleconference should be organized for the following day so that the CEO can deliver a consistent set of messages about the RIF and then shift focus to the business direction and future. There should be concrete information about how the company is going to succeed and the tone should be positive.
Communicate who has left on a “need to know” basis- Surviving employees should not find out that a colleague from another department has left by receiving a “bounced” email or inactive phone extension. Our recommendation is that each department should send a brief email to those departments or individuals that have regular business interaction with departing employees from their team. In this way, there is not a “big list” of departed employees on the bulletin board, which can be interpreted as insensitive and embarrassing. Rather, employees are told about the employees who left on a “need to know” basis.
Implement a process to redistribute responsibility and workload- Aside from the loss of colleagues and the feelings of insecurity, the biggest worry of surviving employees is about having to take on more responsibility and work. The redistribution of responsibility and work should be orderly and participative to the extent possible, and should avoid simply piling more work on employees who are probably already fully loaded. The process should seek to take work out of the system and make processes more streamlined wherever possible.
Communicate direction, goals and results regularly- The organization will take some time to settle down after the RIF, and this process can be accelerated through regular communication and feedback with employees. This should be done at individual, team, department and company levels to increase alignment and root out and fix inconsistencies that will be inevitable after the disruption caused by the RIF.
Increase employee recognition and team building- Employee spirits need to be buoyed up and trust needs to be restored after the shock of the RIF. Resources should be earmarked for team building and employee recognition to help the organization “gel” in a positive way.
Hopefully you can incorporate some of these ideas into your plans for restructuring. Your particular circumstances- company size, geographic distribution, facility layout, corporate culture, number of departing employees, HR capability- all shape the way in which you go about your reduction in force. As you can see from the suggested ideas, the main messages for you to take aware are:
1. You need to plan extensively to minimize financial/legal risk and business disruption;
2. Some things will probably go wrong because this is not something you do very often, so go easy on yourself and colleagues if things do not go perfectly;
3. No matter how hard you try, many employees will have hard feelings towards the company as a result of the RIF. You need to accept this and dedicate yourself to rebuilding trust and productivity after the RIF;
4. The work leading up to the RIF seems exhausting, but you need to sustain management energy to re-engage employees after the RIF.
About the Author
David Neilly is the Managing Director of PeopleCOMP Inc., a human resources consulting firm specializing in increasing employee engagement and designing performance-based compensation programs. Typical projects include employee engagement surveys, HR strategy advice, total compensation strategy and annual incentive program design.
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http://www.peoplecomp.ca