In difficult economic times or when organizations find themselves less profitable or less effective than they should be, a reduction in the total number of team members is sometimes necessary.
When the elimination of jobs involves more than a handful of team members, it is commonly labeled a “RIF,” or a reduction in force.
Budget cuts, restructuring, strategic changes, and other enterprise needs often require leaders to lower expenses by cutting jobs. The planning behind such moves involves a thorough analysis of where resources are most needed and what job functions can be eliminated with the least negative impact.
The choices are never easy, and they weigh on good leaders.
As part of this cost-cutting planning process, how to communicate a reduction in headcount to both internal team members and external stakeholders is hugely consequential.
The When, How, What, and Why of the message can have a profound influence on the morale of the organization and impact the long-term reputation of the enterprise for those on the outside.
Values of transparency, honesty, and respect guide good leaders through this process. The goals of reducing uncertainty while providing timely, truthful, and complete information are critical for the workplace to recover over time.
What is so confusing is why so many organizations announce RIFs through the media, sometimes even before team members learn of the impending changes.
While in many countries, including the U.S., there are legal requirements for larger employers to provide advance notice of large reductions or plant closings which are picked up by the media, it is far more common for publicly traded companies to announce impending workforce reductions publicly to reassure investors about cost-saving measures which can help to stabilize or boost the company’s stock price.
By releasing the information to the media themselves, leaders convince themselves that they can control the narrative, proving to stakeholders that they are taking proactive measures in response to economic pressures.
They reason that this advance notice can counter rumors and speculation that might otherwise harm investor or customer confidence.
These leaders forget that their first obligation is to the long-term sustainability of the enterprise, which depends on the engagement and commitment of team members.
When team members are blindsided by unexpected news of reductions, they naturally feel betrayed, disrespected, and disenfranchised. The short-term impact on stock price and stakeholder goodwill is no match for the long-term distrust that team members are left with.
The question always comes down to what leaders value. In a world with an increasing short-term focus, too many leaders follow the pack and disregard the long-term consequences of negative team morale and distrust.
Good leaders don’t make that call because they value people more than they value short-term gain.
