What is Reduction in Force, and How Does it Apply to Your Business?

When you’re running a business or department, there generally aren’t enough hours in the day to tackle every task or learn every factor you’d like to. However, after a tough 18 months or so due to a global pandemic and other elements, many organizations are considering having to lay off workers in the near to medium future. 

If you’re in this situation, a reduction in force is likely a term that will get talked about with your human resources team or consultants. Read on for the lowdown on this phrase and how it applies to your venture. 

Reduction in Force (RIF) Explained

A reduction in force, shortened to RIF, is the term used for times when employees are let go from a firm because their position has been eliminated. Workforce planning initiatives, budgetary considerations, and related events can be at play. 

In these situations, the employee is let go permanently and their employment contract terminated. Usually, their roles get disposed of, so there’s very little chance that the worker will ever be asked to return to the company, at least in the same capacity.  

RIF is more of a common occurrence than many people realize and is often used to help organizations get back on budget and stay that way or because the firm’s strategies have changed significantly. A specific office or store may close, or there could be a merger or a location change. 

A reduction in force is not the same thing as a layoff. While many of us use the terms interchangeably, a layoff suggests that an employee could potentially get rehired if an organization’s situation, strategy, or finances change. There’s no option for this to happen with a reduction in force since roles get deleted rather than just becoming unaffordable. 


Some challenges are associated with a reduction in force, apart from the typically stressful and sad part of letting employees know they’re being laid off. For example, a challenge can be how to decide which roles need to eliminating and when to do this. 

Also, the remaining team members may struggle to deal with the news and changes, and you may have low employee morale. Sometimes, when many workers leave a business, key employees may choose to leave, too, because the dynamics change or they’re worried about their own future. 


There are multiple benefits to conducting a reduction in force, too, or firms would never enact them. If your company has excessive expenses and perhaps grew too much too quickly without a thorough plan, an RIF can help you get back on track with your original goals and cut costs significantly and promptly. 

You’ll waste much less money on funding positions that aren’t genuinely needed in your organization and put those funds to better use elsewhere, thus helping the business grow more effectively. Sometimes, too, you think you’re going to need a particular role in your business, but in practice, it turns out you don’t or that it’s cheaper to outsource the work. 

Another benefit of a reduction in force is that it makes you make some tough decisions about who will and won’t be in your team. In turn, you’ll have to think deeply about who brings what to the table and what you’re going to need in the firm over the coming years. By narrowing down on who to keep, you’ll be able to hold onto your best employees, those most likely to keep growing and developing with the organization. 


When implementing a reduction in force, it helps to give employees advance notice that a RIF is coming. By making people aware of what’s to come as soon as you can, you give them more time to digest the news and plan and look for jobs. In turn, this eases their transitions and makes them less likely to talk negatively about your firm to others. 

When conducting a reduction in force, create a clear process for you and other managers to follow so you don’t miss important details or steps. Having a checklist is handy. Prepare well for the meetings where you have to give personnel the tough news, and try to select days and times that will be least disruptive to your team and operations. 

It pays to conduct meetings at the end of the day. Many leaders find that holding these conversations in conference rooms or other more neutral spots, rather than a manager’s office, helps to make people more comfortable, too. 

A reduction in force will never be something you want to take care of, but you may have to in your business at some stage. Educate yourself on the term and how to apply it to help you if and when that day comes.