3 Factors That Lead To Reductions In The Worforce

Are reductions in force caused by retention or by poor management practices and legal hoops?

I read a great article yesterday by John Sumser over at HR Examiner called Retention Doesn’t Work. John asserts that RIFs are caused by retention programs.  According to John, “RIFs mean that we hired too many people. Said another way, we didn’t let enough people go when times were good.”  Hiring too many people and/ or not letting enough people go is a basic cause of the need to reduce headcount when financial stability takes a down turn.  On that I agree.  I think there is much more to it though.

The need to reduce the workforce is  just a symptom of overarching poor management practices that finally catch up to the leaders of an organization.  This is compounded by other factors.  So, why have a RIF?

• It’s easier- Many leaders I’ve known don’t like to admit it but they see it as far easier to wait for senior leadership to demand a RIF just so they don’t personally have to manage poor performers in their departments.  I’ve seen it in several industries myself and heard similar stories from HR pros all through my career.
• Lack of documentation- The legal guidelines for documentation of performance issues is one factor that many leaders struggle with.  That is why it is so critical for HR pros to advise, coach, counsel, and teach leaders to document poor performers all along the way so that they do not use a reduction as a way to get rid of a poor performer.   Poor performers should be terminated and not given many of the financial benefits that are given to employees who are part of a RIF.
• Lack of business acumen- As organizations promote leaders who do not have a clear understanding of how the business makes money and how to manage to a budget, we will continue to have organizations that over hire and under terminate.

What have you seen in your organization or department?  What other factors lead to the need to reduce the workforce?  Be sure to comment and to click through to John’s article and leave feedback there.  John also addresses seniority and the idea of whether or not youth and innovation is what’s needed.