Problems Associated With RIF

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Reduction in Force (RIF) is a move that may be necessary for an organization’s survival, but it brings along several complications in its wake because it spells job loss for many. A successful implementation of RIF requires a sound plan that covers all sides possible if the aim of cutting costs and increasing productivity is to be met.

Companies often take the help of software solutions to arrive at an objective assessment of its human capital and to facilitate decision making that minimizes risks. However, there are problems that may arise and invariably do, if the RIF is not planned and executed properly.

  • RIF or downsizing may incur significant legal costs for the organization if the employees who have been shown the door feel that they have been treated unfairly. The lawsuits may also result as desperate measures in a limping economy that does not provide adequate reemployment opportunities.
  • There may be a tougher stance adopted by labor unions and groups whenever any kind of negotiations come up with management.
  • There could be a slump in the morale of the employees. More often than not, it has been observed that employees who survive a RIF do not feel good about it and are plagued by survivor guilt. There may suffer from guilt, however much unfounded, about their coworkers being given a pink slip.
  • There may be insecurities for employees—perhaps that they would be asked to leave, if there were to be a next round of layoffs. This issue is critical especially as a badly handled RIF process engenders mistrust against the management which may be very hard to undo.
  • RIFs may make a dent in employee loyalty unless the whys and wherefores of the process are communicated clearly to everyone in the organization.
  • A new organizational structure with new roles and clearly defined functions and responsibilities needs to be visualized, planned and ready before the RIF is set in motion. Inability to have a sound restructuring plan in place could have serious consequences. Productivity will take a hit as confusion and ambiguity about communication channels prevails.
  • Employees take longer in adjusting to new setups, day-to-day functioning is hampered and the net result may actually be a gain of inefficiencies.
  • Improper assessment of employees may result in laying off the wrong employees, a mistake that can cost an organization dearly.
  • A mismanaged RIF could result in poor customer service. A process tainted with flaws will lead to employees focusing on their own issues before they can give their best at the workplace. The customer understandably suffers in the process due to poor quality of service rendered to them.
  • The RIF spells many psychological issues for the employee whose services have been terminated, from depression to marital problems, etc.
  • Apart from the released employee, the managers and supervisors who become conduits of the bad news go through an extremely stressful period as well.
  • The process also ups the stakes for managers who will now be expected to yield better results with lesser resources. They may need to recalibrate their way of functioning and requirements.

The organizations that try to work out alternatives to RIF may need to draw up effective severance agreements that work for both—do justice to outgoing employees and sustain the employees that remain, without adding to its liabilities.

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