RIF (Reduction in Force) Alternatives

DIAL 911 – COMPANY IN DISTRESS
“Dial 911 – company in distress! The economic climate has driven us to death’s door. We need immediate attention before we go in to fiscal failure. Please send help!”

The aid car was sent and for many ailing companies, the immediate response/cure to the “fiscal failure” was the dreaded RIF (reduction in force). Now many of those same companies are starting to stabilize but are still in intensive care. They want to move out of intensive care and back to a healthy state of being. They are stabilized enough to consider alternatives other than a RIF.

RIF Alternatives

Furloughs
Cutting Labor CostsA furlough is a temporary leave or temporary lay off. They may be mandatory or voluntary. They may be for a few days or weeks. They may be in the form of a lump of days away or one day a week over a period of time. They are usually unpaid. Typically employee service time is unaffected and most benefits can be continued if an employer is proactive in how they structure the furlough. The company benefits by saving payroll dollars and having employees who are already trained and skilled when the company’s health improves and the furlough is discontinued. The employees benefit by maintaining their service time, having a job (some income is better than no income), and having some or all of their benefits continue.

The Washington State Employment Security also supports companies who opt for a furlough approach. The Employment Security Shared-Work Program offers employers an alternative to layoffs by providing unemployment benefits on a reduced scale to affected hourly employees. For instance if an employee is furloughed one day each week, they could potentially receive 20 percent unemployment insurance weekly benefit entitlement, in addition to their regular hourly earning. Employers must submit an application and be approved to participate in this program.

Restructure Employee Benefit Program
Evaluate and redesign employee benefit programs to align with employee demographics and company affordability. Overall, a plan’s richness may be preserved with changes to premium contributions, co-pays, deductibles, and out of pocket maximums. Consider changes such as, increasing deductibles slightly or utilizing health savings plans.

Additional Alternatives

  • Replace company paid fringe benefits with employee paid fringe. For example, employers are replacing company sponsored gym memberships with group discount memberships or on-site massage benefits that the employee pays for.
  • Reduce or eliminate a specific 401(k) match program. Employers can still make matching contributions if affordable at year end.
  • Create dual choice benefit package options for employees to increase employee control over coverage, cost and usage of their healthcare benefits.
  • Consider a voluntary reduced work week schedule program and/or telecommute options.
  • Institute voluntary unpaid sabbatical opportunities for employees.
  • What ideas do you have for RIF alternatives?

What are your thoughts? Let's discuss: