By HR Brew Staff
less than 3 min read
Definition:
A reduction in force (RIF) is when a company terminates an employee or multiple employees as part of downsizing; also known as a layoff.
Why do employers conduct RIFs?
RIFs are often seen as a last-resort option, stemming not from performance-based issues, but those related to an economic downturn, merger and acquisition (M&A), or reorganization.
How have RIFs evolved?
In the first half of the 20th century, layoffs were seen as “a sign of corporate failure and a violation of acceptable business behavior,” wrote Louis Uchitelle in his 2006 book The Disposable American: Layoffs and Their Consequences. In the 1960s and 1970s, an increase in unionization and tighter regulations in industries like finance, transportation, and utilities also led to the creation of worker protections that made mass layoffs uncommon. This, however, would soon change. In the 1980s, President Jimmy Carter’s efforts to encourage a more competitive, consumer-friendly market resulted in mass layoffs, and President Ronald Reagan’s anti-labor administration resulted in weakened worker protections. Then, in the 1990s, free-trade agreements led companies to move their factories overseas, leading employers including IBM, Sears (then Sears, Roebuck & Co.), and AT&T to slash tens of thousands of jobs, making them some of the biggest private-sector RIFs in US history.
What are some more recent examples of RIFs?
RIFs have accompanied most recent economic downturns, including the Great Recession, when 8.7 million US adults lost their jobs, and the Covid-19 Recession, which resulted in the loss of 20.4 million private-sector jobs.
Can you put RIFs into context?
“It’s probably not coincidental, Dan Kaplan, senior client partner at Korn Ferry…that multiple companies have elected to lay off between 5% and 7% of their staff in recent reductions in force,” HR Brew reported.
