As companies analyze the effect of the current economy on their business operations, many are accepting the need to bring their headcount back in line with current conditions. Although implementing a "RIF" (Reduction in Force) is never pleasant, it does not need to devastate employee morale or company reputation. The key to this "successful RIF" is in the planning stage.

Planning
When first contemplating a RIF, involve the senior management team in clarifying the objectives. What results are you trying to achieve? Cost savings? Re-alignment of resources? Upgrade of the employee base? Carefully set hard, measurable objectives so that you can evaluate all other decisions against the achievement of these.

Next identify options. Due to the costs of severance packages, legal and other fees, a RIF may not actually net the company the desired savings (at least without cutting the company below "critical mass"). Other options, such as salary cuts for executives, mandated vacation days, job sharing or hiring contractors rather than employees, may actually better achieve your objectives.

If in fact a RIF is the "best" alternative, it is critical to set (and follow) criteria by which to select the employees to be laid off. A standard set of criteria must be defined, utilized to make the selections, and documented for each employee. In order to defend against any action, it must be shown that all employees were treated equitably. This is especially crucial in situations where multiple employees serve the same job functions and only some are laid off.

Preparing
Once the objectives and criteria are set, it is important to prepare thoroughly (and quickly). Many law firms can provide "boilerplate" documents, and internal HR and Finance resources can be augmented with consultants. Think carefully when weighing the "internal vs. external" resource question, as the need to evaluate and process friends while keeping all activity confidential, may prove too challenging for some employees.

Pay careful attention to creating a communication strategy. Not only is it important to clearly communicate the grounds for action to the employees being laid off, but effective communication is also crucial to the ongoing success of the organization. A clear, factual, consistent message must be given to investors, customers, vendors, and partners, as well as employees remaining with the organization. For this latter group, it is also very important to communicate a "vision of hope" for continued potential success.

Implementing . and Recovering
Plan carefully -- and implement cleanly and quickly. Those employees who are staying on will take notice of how fairly employees and treated, and how honestly management approaches this difficult task. If done well, the RIF really can be a sobering (but productive) experience.