To RIF or Not to RIF
Downsizing can be traumatic, but sparing jobs can do more harm than good.
Reduction in force is a term that frightens most federal workers. It means uncertainty, potential loss of a job, disruption, and usually more questions than answers. Politicians (even the ones who want to shrink the federal government) oppose them. So do managers, unions, and most people who write about government issues. Most agencies have been “successful” in recent years in avoiding RIFs. They have used attrition, hiring slowdowns and buyouts to reduce their workforce without resorting to a RIF. Most people will tell you a RIF is something to be avoided at all costs.
During my federal career I developed an early understanding of the RIF process when I faced a reduction in force in my first federal job. I immersed myself in the subject when I had to conduct several RIFs over the next 30 years. The last large scale RIF I conducted abolished 700 occupied jobs in a Navy command of 3,200 employees. With that background, I should join the chorus that says RIFs are always bad and attrition is always better. The problem is that it is just not true. Sometimes the alternatives are worse. In fact, sometimes the alternatives do much more damage and disrupt the organization far longer than a RIF might.
Let’s start with that Navy RIF. How could abolishing 700 jobs be better than downsizing through attrition? The command was the Naval Aviation Depot in Jacksonville, Florida. The Navy had more aviation depots than it needed and everyone knew one or more would be closed via the Base Closure and Realignment process. Our conclusion was that Jacksonville would most likely fall victim to BRAC because we were too expensive to compete effectively for work. The NADEP’s senior leaders and the leaders of the five unions that represented the bulk of the workforce agreed that costs had to come down if the command had any hope of remaining viable. We agreed to restructure and abolish 700 jobs. I led the RIF team.
The process was tortuous. We had families in which both breadwinners lost their jobs. The “bumping” and “retreating” during the RIF caused the number of people affected by reassignment, change to lower grade, or separation to swell to over 1,500. The process was expensive, painful and took months to complete.
The outcome? The 1993 BRAC Commission closed three of the six NADEPs (Alameda, California; Norfolk, Virginia; and Pensacola, Florida). Additional work was assigned to Jacksonville, and the NADEP grew from the 2,500 jobs it had after the RIF to a peak employment of more than 5,000 jobs. In recent years it has downsized again, but still has more than 4,000 civilian and contractor jobs (it is now called Fleet Readiness Center Southeast). None of that would have happened if the organization had not made itself more competitive by reducing its costs and doing it quickly.
Most downsizing is not as dramatic as the story of NADEP Jacksonville. Usually it is smaller numbers and is driven by budget cuts or mission changes. The first choice of solutions is generally to let attrition take care of the problem. If normal attrition is not adequate, agencies accelerate it by offering buyouts. There are some problems with that approach. Here are just a few:
Buyouts are not what they used to be. When buyouts were first introduced in the 1994 Workforce Restructuring Act, employees were offered up to $25,000 to voluntarily leave, either by retiring or resigning. Twenty years later, buyouts are still $25,000, even though they would have to have increased to $39,300 to keep pace with inflation (as measured by the consumer price index). The $25K that looked like a good deal 20 years ago looks a lot less desirable today.
Buyouts are usually not targeted effectively. The intent of buyouts was to (a) accelerate turnover to maximize savings and (b) target where that turnover occurred so agencies would lose people in the jobs and grades they no longer wanted and keep the ones they needed to keep. In the interests of “fairness” many agencies simply offer blanket buyouts first-come, first-served. The acceleration factor remains, but the targeting is lost. What was intended as a precision tool for making targeted reductions becomes a blunt instrument. Agencies often lose the people and skills they need to retain and keep the people and skills they need to lose. What is touted as fairness is often leadership cowardice and unwillingness to make the tough decisions leaders are paid to make. The wrong jobs are vacated, the wrong people leave, and buyouts just help an agency get to a bad outcome faster.
Rumors of buyouts often stop attrition. People are not stupid. When they hear their agency may be contemplating buyouts, those who are planning to leave but have options will wait until the offer is made.
Attrition leaves staffing decisions to chance. Rather than making intelligent decisions based upon specific needs that are identified via a thorough workforce planning process, jobs are abolished based upon who chooses to leave. It is not a well-thought-out process, it does not take workload and required skills into consideration, and it does not necessarily encourage the best talent to stay.
The most marketable people are among the first to leave. When an agency is struggling and needs to downsize, the most talented people are the ones who can more easily find other employment and are among the first to get out.
When all of the above are combined, the result might achieve the desired downsizing numbers, but with the wrong skill mix and little or no capacity to quickly recover. The effect on mission may be immediate and long-lasting. The effects on morale can be equally damaging. Imagine an organization that allows too many people to exit from critical jobs. The work has to continue, usually with little relief on volume of work, so the remaining staff become overtaxed and stressed. They burn out quickly, morale tanks and turnover in the most critical (and overworked) skills increases. The outcome of not making the hard decisions is that the survivors pay for the bad decisions for years.
There is clearly a better way. Agencies can downsize with less impact on productivity and more control over the outcomes. Here are a few guidelines for downsizing in a planned and predictable way:
- Develop a workforce plan that includes workload and required competencies, tempered by the realities of the budget.
- Consult with the union(s) representing the workforce early and include them in the planning process.
- Freeze hiring (including internal promotions) in all surplus occupations for the grades that are surplus.
- Identify cross-placement opportunities for people in surplus jobs, based upon realistic assessments of the competency match between the excess jobs and existing and anticipated vacancies.
- Target buyouts and early retirement and limit them only to positions that the plan identifies as surplus.
- Never, ever offer across-the-board buyouts and early retirement with a first-come, first-served way of meeting the overall reduction number.
- Be prepared to deal with external stakeholders (such as Congress) with a clear and convincing explanation of the agency’s planning process and intended outcomes.
When agencies take these steps and still have more employees than they can retain in surplus occupations, they should consider whether a thoroughly planned and executed reduction in force is a better option than letting attrition takes its course. Although the RIF process has perils of its own, it may be a better course of action than random attrition, depending on how long the agency has to get to its downsizing targets and the degree of flexibility it will have to fill critical vacancies in the interim.
If the agency can use attrition only for surplus positions, but continue fill critical jobs with critical skills, attrition is the best choice. If they have no flexibility and have to do mindless cuts where virtually no jobs can be filled until the target is met, they are better off with a RIF. It allows officials to target surplus jobs, place people based on a clearly defined set of reduction in force regulations, getting the reduction over and done and letting the organization and its workforce move on. If an agency gets to the point of conducting a RIF, it can take steps (such as retraining and outplacement) to reduce the number of people who are involuntarily separated, and it can offer many outplacement options to the affected employees.
A RIF is not a great experience and it should never be the first tool to pull from the agency toolbox. But it should be in that toolbox and should not be a forbidden subject. It is far more effective and less dangerous than random attrition, untargeted buyouts and early retirement.
Jeffrey Neal is a senior vice president for ICF International and founder of the blog ChiefHRO.com. He was formerly the chief human capital officer at the Homeland Security Department and chief human resources officer at the Defense Logistics Agency.