RIF vs. Global Engineering

The economy is bad. Your company considers a reduction-in-force (RIF). Geographically, how to do it?

Sort sale regions by anticipated rebound speed. Infra-structure and employees spin up slowly. If a company’s capacity is not ready, it will miss the rebound, a one-time chance.

Middle managers instinctively protect home-base and therefore RIF evenly, like peanut-butter. The economy, however, never recovered evenly. Peanut-buttered previously, the company is ill prepared for the faster regions and wastes capacity elsewhere. Darwinian result ensues; wrong decision leads to non-competitiveness.

If your company did it wrong, seek employment elsewhere. You will have to in several years.

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3 Responses to RIF vs. Global Engineering

  1. Fan says:

    I have asked this multiple times to people but have never got a convincing answer, may by you have a good answer.
    Why is RIF not used by companies as the last option when it comes to cost reduction. After all for technology companies employees are the real asset who provide great value. There are other ways to cut costs, salary reduction could be one such measure. Salary cuts bring immediate relief in terms of costs, as compared to RIF, where there is an upfront cost involved.
    People will not quit because of small salary cuts since the market outside is doing even worse. So is it not better to take salary cut than to lose job.
    The employees are still available when the downturn is over and you are in better shape to take the challenge. Moreover, with salary cut the drop in employee morale is not as much as compared to job cuts. Since the time RIF’s are announced and till the time they are completed, most of the employees are worried and productivity does take a dip.
    Please share your thoughts Sin-Yaw.

  2. Sin-Yaw Wang says:

    @Fan
    For most high-tech, or software, companies, payroll is just about the only thing a company can do for the short-term. Other things, such as debt restructuring, business processes changes, real estate consolidation, out-sourcing/off-shoring, etc. all have a delayed effect.

    Pay-cut v. RIF is a classic debate. Managerial wisdom typically favors RIF, since pay-cut tends to lose your top talents and RIF not.

  3. Fan says:

    Agreed Sin-Yaw, but given the current economic scenario, talent loss due to pay-cuts is pretty much ruled out.
    Ah, HP seems to have taken the pay-cut way to solve the problem : http://www.theregister.co.uk/2009/02/19/hp_pay_cuts/

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