How should a reduction in force (RIF) align with a company’s strategic vision? 

RIFs should be part of a broader company strategy, not just a cost-cutting measure – an effective RIF deliberately repositions the company for sustainable growth, improves operational efficiency, and ensures that remaining talent aligns with future business needs. While RIFs save money by reducing headcount, those savings should serve a long-term strategic purpose.

Well-planned RIFs use a single disruption to support future stability – reductions in force support financial stability and business continuity while minimizing legal risks and employee relations issues that can impact employer brand and company reputation. This balance is difficult to achieve without careful planning, execution, and communication.

Proactive RIFs can improve retention of critical talent during periods of change – RIFs generally occur after an acquisition or when a company needs to pivot—2 scenarios when restlessness might result in employees attritioning themselves before they know if they will be impacted.  A well-executed RIF gets ahead of this problem by securing key talent before announcing the RIF itself.

Planning a RIF

What is the ideal timeline for planning a RIF?

Planning a RIF typically takes anywhere from 2 to 6 weeks, depending on the size and complexity of the organization.

Phase	Description	Estimated Time
1. Strategic Planning	Define business case, identify impacted functions, align with leadership	3–10 days
2. Selection Criteria & Impact Analysis	Define who is impacted, check for adverse impact (age, gender, etc.)	5–10 days
3. Legal Review	Ensure compliance (WARN, local laws), draft separation agreements	3–7 days
4. Communication Planning	Create scripts, manager training, FAQ documents, timeline	3–7 days
5. Final Approvals	Executive sign-off, legal/finance/HR lock-in	1–3 days
6. Execution	Notification meetings, follow-ups, transitions	1–3 days

Kick off RIF planning once your financial health assessment is complete – since a RIF is a result of a strategic company-wide shift, it can’t be planned until you’ve identified your future financial, operational, and talent objectives. The ideal RIF planning timeline depends on when the initial assessment occurs. Common scenarios include:

• During due diligence – PE firms often look for “emergency room” companies that require significant turnaround to become profitable. If an acquisition falls under this category, investors will evaluate the company’s current financial health and its areas of potential to craft a new company strategy. RIF planning begins once those new objectives are determined and ends before the acquisition occurs.  
• In the first 2 weeks post-acquisition – HR “surprises” often surface immediately after an acquisition. If this is the case, identify key employees and finalize/ adjust RIF details as needed within the first month.
• After a new leader is onboarded – new leaders who are brought on to help the company pivot might need a month or 2 to get the lay of the land, decide how the company’s talent strategy needs to shift on an operational level, and determine which teams should be impacted.

Start planning as soon as possible – RIFs go more smoothly when a company is in control of the narrative, instead of scrambling to execute after employees start panicking about whether a RIF might occur. Planning in advance increases the likelihood of retaining critical employees and training managers on talking points, both of which support business continuity.

How do you determine how to structure your layoffs? 

Layoff structure is influenced by strategic, operational, and legal elements
Element		Role
Turnaround business plan		Drives the overall strategy that the RIF is supporting (the “why”)
Financial health (Chapter 7 vs. Chapter 11 v Assignment for the Benefit of Creditors)		Determines the overall structure of the RIF
Function relevance and role redundancy		Identifies the departments and types of roles that will be impacted
Individual performance, skills, and organizational history		Determines which individuals should be impacted
Legal considerations		Adjusts RIF plan to comply with existing commitments and relevant legal requirements

Define the organizational requirements that will support your future vision – clarify the skills and roles that will be necessary to enable the turnaround plan. For example, if you are moving toward a digital-first model, retaining tech talent should be a priority.

Layoffs should be targeted at redundancies and noncore functions – HR and Legal should build a workforce planning model to assess job functions, identify skill gaps, and suggest a new future state org structure.

Retain some tenured employees when possible – retaining tenured employees can support business continuity. For example, a RIF that eliminates all employees with more than a year of tenure risks losing important organizational knowledge or jeopardizing long-standing relationships.

Consider possible discrimination issues before finalizing your layoff plan – companies generally benefit from having multiple points of view represented across their teams. You are also more likely to run into legal issues if you don’t have checks in place to ensure that your RIF is nondiscriminatory. Evaluate proposed post-RIF team composition based on factors including:

• Age
• Gender
• Tenure
• Race/ Ethnicity
• Disability Status
• National Origin
• Parental or Caregiver Status
• Veteran Status
• Religious Affiliation
• Part-time of Flexible Work Arrangements
• Pregnancy or Recent Leave
• Union Membership or Protected Activity

Which legal and compliance factors should be considered when planning a RIF?

Factor		Implications
Geography – different regulatory regimes have legal requirements and protections around layoffs. Individual employees, governmental agencies, state authorities, and federal level entities might be able to challenge the fairness or legality of the RIF depending on company location and RIF context.		• California has robust employee protection laws, a RIF is more complicated and potentially more costly. There’s a higher risk of wrongful termination lawsuits. • States like Texas have fewer regulations and a lower risk of lawsuits.
WARN Act – in the US, businesses with 100 or more employees must issue a Worker Adjustment and Retraining Notification (WARN) 60 days before laying off 50 or more employees from a single site of employment.		• Violating the WARN Act can lead to expensive penalties  • Companies subject to WARN incur delays due to timing requirements. • It applies to remote employees who live within a 10-mile radius of the impacted office, so ensure you have up-to-date address information on employees early in the planning process.
Financial health – a layoff’s legal structure depends on the company’s financial health and (if relevant) the type of bankruptcy they’re experiencing.		• Chapter 11, for insolvent companies,  provides an opportunity to revitalize a company by transforming its structure and may have a more generous RIF policy.  • Chapter 7 requires a company to shut down entirely and liquidate bankrupt business units and may lead to less generous RIFs. • An Assignment for the Benefit of Creditors (ABC) is a quicker, private alternative to bankruptcy where a company assigns its assets to a third party to liquidate and repay creditors.  It’s commonly used by startups and private companies to wind down operations without court involvement.
Collective bargaining agreements (CBAs) – union contracts are legally binding contracts that outline the conditions of employment, including termination procedures.		• Your company might have different notice period obligations for different employees. • Different types of employee contracts might require different types of severance packages.  • Companies with unionized workers might need to negotiate with union leaders before enacting a RIF. This can add complexity and expense and impact the effectiveness of the RIF.  • Failing to comply with CBA requirements could result in financial penalties and/ or worker strikes.
Discrimination risk – companies should always work with Legal to ensure that no discriminatory bias has contributed to the selection of impacted employees.		• Companies can be sued for discriminatory termination practices  • Companies and individuals risk serious long-term reputational damages.

How do you design a severance package for impacted employees?

Employment agreements often make severance package calculation straightforward – the parameters of a severance package are defined in an employee agreement. However, employment agreements are more common in Europe and Asia than they are in the US.

For US employees without employment agreements, severance packages are typically based on tenure – this varies based on the situation that necessitates the RIF, but severance pay is typically calculated as a function of years of tenure and the company’s financial situation. 

Situation	Example Severance Package
Desperate Financial Situation	• None
A Typical US RIF	• 1 week of severance per year of service (potentially more for long-tenured employees) • Vacation days paid out • Some COBRA coverage
A Generous Layoff From a Healthy Company	• 1 month of severance pay per year of service • Extensive COBRA coverage (3-6 months) • Outplacement services • External communication campaign (e.g., posting about laid-off employees to grab attention in the labor market)

Consider how difficult it will be for impacted employees to find another job – in some industries, employees will find new work very quickly. In industries with tough job markets, companies might be more likely to provide additional support and more generous severance packages to help impacted employees, improve morale amongst existing employees, and protect their reputation in the industry.

European severance is usually more generous – if you have employees based in other countries, consider what is considered appropriate in their region. For example, it is not unusual for European companies to provide a half year of severance regardless of tenure.

Note: for RIFs that impact Sales teams, sales compensation structures rarely come into play – many salespeople have complicated compensation structures that rely heavily on bonuses or incentivized income. These rarely impact the cost of a RIF because impacted employees are typically not hitting their thresholds anyway.

How should you think about the total costs of a RIF?

Use a spreadsheet model to calculate severance costs – once you’ve decided who will be impacted by the RIF, you can determine severance package costs based on the number of weeks or months of severance for each employee. Use a consistent formula across the organization to remain fair and legally compliant.

Factor in additional costs – legal and consulting costs should be included, as well as any geography-specific costs, such as mandatory consultation processes.

Post-RIF retention might require additional investment – some companies incur retention costs, which can take the form of enhancing compensation for non-impacted employees to increase the economic advantage of staying.

Who should be in charge of planning a RIF?

Chief Restructuring Officers often spearhead RIF planning and execution – for large-scale RIFs, companies bring in specialists who focus on restructuring the organization to align with the board’s turnaround plan.

HR and Legal provide critical support:

• HR → provides access to org charts, performance information, and employment contracts during due diligence. They should also be present for all meetings in which the RIF is communicated to or discussed with employees.  Oftentimes an HR Turnaround Consultant is the architect of such RIF process. 
• Legal → helps the RIF owner navigate legal and compliance issues that affect the RIF structure and occasionally the employees impacted.

Messaging

How much notice should you provide people who are impacted by a RIF?

In the US, a 60-day notice period is required under the WARN Act.  Even when the WARN Act is not applicable, employers are advised to furnish the maximum amount of advance notice that is practically achievable.

Some regulatory regimes (e.g., Europe) require even longer notice – in Europe, mandated pre-layoff consultation processes can last several months ahead of a RIF.

Align your communication schedule with employee contracts – follow the schedule outlined in your employment contracts or CBAs. RIFs are always disruptive, but layoffs that do not adhere to previously negotiated agreements become controversial.

How do you communicate a RIF to the people who are impacted? 

Timing and delivery are critical – senior leadership should deliver the message alongside direct managers and HR support. This is a difficult conversation that becomes more difficult when it is not handled in an upfront manner.

RIF Communication Do’s and Don’ts
DO	DON’T
Use direct messaging that is empathetic but clear Address critical information, including: What the severance package is What next steps will be Have HR in the room, and make HR available for follow-up conversations / support Tell people face-to-face (in person when possible)	• Try to sugarcoat the news • End the meeting without ensuring that the employee understands the next steps  • Leave impacted employees without clear support • Use email or a group meeting to tell multiple people at once

How do you explain/justify a RIF to those whose jobs are not impacted to ensure retention?

Acknowledge business concerns and the uncertainty employees are feeling – senior leadership and HR should explain their concerns about the business’s current state and trajectory. Focus on the business rationale for the RIF, not the cost cutting measures themselves.

Clearly express the vision of the turnaround – reinforce the company’s commitment to growth and stability, and your vision for how to get the company back on track to become better in the future.

Express appropriate remorse without focusing on the individuals who are gone – leadership must take responsibility for leading the business to this unfortunate point and acknowledge the impact of this reality on people’s lives. This demonstrates accountability while maintaining focus on the path forward.

Train managers to handle difficult conversations – equip managers with talking points and guidance on how to answer questions about the layoffs, how people were chosen, and the implications of the RIF on remaining employees’ future roles, responsibilities, and job stability.

What steps should you take to increase the chances of retaining the employees you want to keep after a RIF?

Ongoing communication is essential – establish a structured internal communication strategy. This includes proactive communications, regular town halls, and weekly updates that keep everyone informed about the turnaround. Typical company strategies use a 3–5-year time horizon, but during a turnaround, you should focus on monthly, quarterly, and at the most yearly milestones.

Set clear expectations when re-onboarding employees into new roles – whether you are transitioning remaining employees to new roles or onboarding new hires, employees should understand their responsibilities, management’s expectations, and the organizational context (i.e., how the RIF impacted the part of the organization they are joining).

The management team should act and communicate in lockstep – alignment is also paramount between management and the board, which is likely to become more involved (and potentially onsite more often) during the turnaround period.

Encourage managers to proactively support employees – failing to support employees can result in disengagement. Provide support to managers who are learning how to guide their teams through a distressed environment.  

How do you present a RIF strategy to the board?

Companies with strong financial reporting should identify issues well in advance – if you review 13-week cash flow projections with the board, they should be aware of shifting company priorities or emerging issues before a RIF becomes necessary. If the organization isn’t able to pivot without a RIF, that conversation should begin once the problem is identified.

Overall

What are the most important things to get right?

RIFs must be aligned with long-term strategic goals – if a RIF’s sole purpose is to reduce costs in the short-term, it probably isn’t the most effective decision for the company. Strategic workforce adjustments enable organizations to more readily realize their medium- and long-term objectives.

Legal compliance and fair severance are non-negotiable – layoffs that are unfair or noncompliant create more problems, disruption, and harm for companies, impacted employees, and non-impacted employees.   

Clear and empathetic communication can determine the success of a RIF – the initial announcement of a workforce adjustment is a critical juncture, capable of either cultivating a positive new foundation or precipitating a significant decline in brand equity and talent preservation.

What are common pitfalls?

Poor planning can lead to disaster – RIFs that aren’t well-planned can lead to confusion and critical errors that, in turn, can have severe operational or reputational consequences.

Inconsistent criteria inform poor decisions – a lack of consistency during the performance evaluation or even role scoping process can lead to discrimination risk and costly errors.

Damaging employee morale can have lasting performance implications – if leadership and mid-level managers are unable to rebuild employees’ confidence in the company’s new direction, you risk facing long-term retention and engagement issues.  

Underestimating RIF costs can undermine your relationship with the board – the necessity of a RIF already indicates that there was (or still is) a disconnect between how the company was being run and how it should be run going forward. If RIF costs are greatly underestimated, the board might lose its trust in your leadership team and/or reevaluate its approach to working with your business.