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Forecasted Layoffs Tough to Avoid

The current economic crisis is clearly having a direct impact on the corporate workforce, with six of ten companies forecasting they will have to trim their workforce, and almost half anticipate additional cuts in the next six months, according to a recent study by the Institute for Corporate Productivity (i4cp). The study found that 58% of polled companies have had a reduction in force (RIF) within the last year, and 39% foresee one coming within the next six months. In addition, of those companies that reported a RIF in the last year, 48% expect another cut in the next six months. The reduction regimen is even more stringent in large companies. The study found that, in the last 12 months, 71% of companies with more than 10,000 employees say they have undergone a RIF, and more than half of companies of that size report their workforce will likely be diminished within half a year. "In this uncertain economic climate, it seems that job elimination is inevitable for many firms," says i4cp analyst David Wentworth. "While studies we conducted earlier this year showed that most companies were doing anything they could to avoid layoffs, it’s clear that not reducing the workforce has been impossible for most companies in today’s climate." In many cases, workers are given no notice that their jobs will be eliminated. Overall, almost 30% of firms say they offer no notice to employees who will be affected by a planned reduction. Furthermore, 20% give a 30-day notice, 18% inform workers two weeks prior to the RIF, and a like number provide 60 days of notice. When considering the pool of employees likely to be targeted in a reduction, 66% of companies say they look at job position, followed by employee performance reviews at 59%. Almost half take the skills/knowledge of the worker into consideration. So how do companies deliver the news to workers? Seventy-six percent of companies say their managers meet face to face with the affected workers to deliver the news. Just over a third of respondents say they conduct group meetings with affected employees, and 24% report the reductions are announced in company-wide meetings. Surprisingly, more than 9% deliver the bad news via e-mail. Regarding severance plans/packages for employees caught up in a RIF action, the 60% of companies offer severance to all workers who are let go and 17% provide severance on a case-by-case basis. On the flip side, 9% of companies polled admit they offer no severance to employees who have been cut. The amount of severance is most often determined by length of service in most companies, with 87% reporting it as the top choice, followed by job position (33%) and percentage of base salary (21%).