Ripple Effects of RIFS & What To Do Next

Table of Contents

1. Ripple Effects of RIFS & What To Do Next

2. Sequoia’s The Grove Conference 2024: Recap Video

3. Webinar: 2024 Election Impact - Employee Benefits

😶‍🌫️ Ripple Effects of RIFS & What To Do Next

This topic comes directly from a conversation I had recently with a finance leader of a vc-backed tech company. The company was forced to reduce its headcount by nearly 50%.

Following the re-org, the contact I chatted with shared that their main concern was now retention. Those that remain after the reduction in force (RIF) were essentially “selected” by leadership as key team members that will determine the company’s future. The company can’t afford to lose them.

But these RIFs are incredibly difficult to navigate. Employees who remain often experience a mix of emotions, from relief to guilt, and from anxiety to distrust.

As someone who’s been on the receiving end of a RIF, I can recall that day in the office: Checking for the dreaded calendar invite that sealed your fate, sitting in a circle of your colleagues with laptops shut, and security standing by to escort those unlucky enough to have been let go. I survived that round, but the feeling lingered for the weeks that followed.

Remote/hybrid work pose different challenges, specifically the isolation of those working from home.

It’s a tough day, but the effects don’t end there. Here’s what changes for the remaining team members:

Impact to the Employees:

Trust and Loyalty: One of the most immediate impacts is on trust. Employees may feel betrayed or insecure about their future with the company. How did we let this happen? Why didn’t we see it coming? Can we even turn it around? This erosion of trust can lead to decreased loyalty and increased turnover, as employees may start looking for more stable opportunities elsewhere.

Morale and Productivity: The morale of the remaining employees often takes a hit. They may feel survivor’s guilt, increased stress, and a sense of instability. It’s not just colleagues, but often friends that are no longer around. It’s akin to a period of mourning for some. This emotional toll can lead to a decline in productivity, as employees struggle to cope with the new reality and the increased workload that often follows a RIF.

Perception of Leadership: How leadership handles the RIF can either mitigate or exacerbate these negative feelings. Transparent, compassionate communication is key. Employees need to understand the reasons behind the RIF and see a clear path forward for the company.

The Cost of Turnover:

According to SHRM, in a normal business setting, the hard dollar cost of each employee departure is about 33% of that individual’s annual salary. The rest of the impact can be attributed to “soft costs” such as reduced productivity, recruiting time, and lost knowledge.

Considering the employees that are selected to remain after a RIF are meant to be key to the company’s future success, the impact of voluntary attrition can be even worse than the above.

Strategies for Positive Leadership Post-RIF

As a leader, the decisions you make post-RIF will be the more scrutinized than ever by the employee base. Here are some strategies to consider:

1. Transparent Communication

Transparency is crucial in maintaining trust. Leaders should provide regular updates about the company’s status and future plans. Tools that enhance transparency like Total Rewards Statements and benefits guides can help communicate that the company is investing heavily in their talent. Open forums and Q&A sessions can help address employees’ concerns and demonstrate that leadership is committed to transparency and honesty.

2. Benefits & Wellbeing Support

Providing support for employees’ mental and emotional well-being is essential. Offering access to counseling services and mental health resources can help employees cope with the stress and anxiety that often follow a RIF. Making their benefits easily accessible and supporting the personal lives of the team allows them to move forward confidently in their work environment. Continuing to invest in this area, even during tougher times, communicates to your employees that their benefits & wellbeing are still a priority.

3. Rebuilding Trust

Increasing leadership visibility and showing empathy can go a long way in rebuilding trust. Regular check-ins and an open-door policy can make employees feel heard and valued. Recognition programs that highlight and reward employees’ hard work can also reinforce their value to the company. Also, RIFs often mean employees take on additional work, so it’s important to recognize & reward them with the appropriate titles & compensation to reflect the kind of work they’re now doing, especially if they are considered future leaders at the company.

4. Investing in Development

Offering professional development opportunities can help employees see a future within the company. Training programs and clear career paths can motivate employees to invest in their roles and contribute to the company’s success. Also, ensuring that workloads are manageable and providing temporary support can prevent burnout.

🌲 Sequoia’s The Grove Conference 2024: Recap Video

🗣️ Webinar: 2024 Election Impact - Employee Benefits Rundown

Diane Cross, Senior Compliance Consultant, will be joined by James Slotnick, VP, Government Relations at Sun Life as he looks at the 2024 election results and discusses the possible impacts to the employee benefits industry. Join us for valuable insights and Q&A.

During this 45-min webinar, we’ll discuss what the election results could mean for:

• The individual and corporate tax provisions scheduled to expire at the end of 2025

• The future of federal paid leave policy and which states are most likely to pass statutory PFML programs in 2025

• Drug pricing legislation, including the impact on Medicare price negotiations and PBM reform

• Other benefit related items including mental health parity and dental plans 

Please register to reserve your spot. Hope to see you there!

Continuing Education Credits: This webinar is eligible for 0.75 SHRM and HRCI credits.

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