Layoff

Layoff is the temporary suspension or permanent termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary or a business slow-down or interruption in work. Originally the term "layoff" referred exclusively to a temporary interruption in work, as when factory work cyclically falls off. However, in recent times the term can also refer to the permanent elimination of a position.

Downsizing is the ‘conscious use of permanent personnel reductions in an attempt to improve efficiency and/or effectiveness’ (Budros 1999, p. 70). Since the 1980s, downsizing has gained strategic legitimacy. Indeed, recent research on downsizing in the US (Baumol et al. 2003, see also the American Management Association annual surveys since 1990), UK (Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002), and Japan (Mroczkowski and Hanaoka 1997; Ahmakjian and Robinson 2001) suggests that downsizing is being regarded by management as one of the preferred routes to turning around declining organisations, cutting cost and improving organisational performance (Mellahi and Wilkinson 2004 )most often as a cost-cutting measure.

Further euphemisms are often used to "soften the blow" in the process of firing and being fired, (Wilkinson 2005, Redman and Wilkinson,2006) including downsize, rightsize, smartsize, redeployment, workforce reduction, workforce optimization, simplification, force shaping, recussion, and reduction in force (also called a "RIF", especially in the government employment sector). Mass layoff implies laying off a large number of workers. Attrition implies that positions will be eliminated as workers quit or retire. Early retirement means workers may quit now yet still remain eligible for their retirement benefits later. While redundancy is a specific legal term in UK employment law, it may be perceived as obfuscation. Firings imply misconduct or failure while lay-offs imply economic forces beyond one's control.

Reduction in Force common abbreviations

• RIF - A generic reduction in force, of undetermined method. Often pronounced like the word riff rather than spelled out. Sometimes used as a verb, as in "the employees were pretty heavily riffed".
• eRIF – Layoff notice by email.
• IRIF - An Involuntary Reduction in Force - The employee(s) didn't voluntarily choose to leave the company. This usually implies that the method of reduction involved either layoffs, firings, or both, but wouldn't usually imply resignations or retirements. If the employee is fired rather than laid off, the term "with cause" may be appended to indicate that the separation was due to this employee's performance and/or behavior, rather than being financially motivated.
• VRIF - A Voluntary Reduction in Force - The employee(s) did play a role in choosing to leave the company, most likely through resignation or retirement. In some instances, a company may exert pressure on an employee to make this choice, perhaps by implying that a layoff or termination would otherwise be imminent, or by offering an attractive severance or early retirement package.
• WFR - Work Force Reduction.

Unemployment compensation

The method of separation may have an effect on a former employee's ability to collect whatever form of unemployment compensation might be available in their jurisdiction. In many U.S. states, workers who are laid off can file an unemployment claim and receive compensation. Depending on local or state laws, workers who leave voluntarily are generally ineligible to collect unemployment benefits, as are those who are fired for gross misconduct. Also, lay-offs due to a firm's moving production overseas may entitle one to increased re-training benefits.

Certain countries (e.g. France), distinguish between leaving the company of one's free will, in which case the person isn't entitled to unemployment benefits and leaving the company voluntarily in the frame of a RIF, in which case the person is entitled to them. An RIF reduced the number of positions, rather than laying off specific people, and is usually accompanied by internal redeployment. A person might leave even if their job isn't reduced, unless the employer has strong objections. In this situation, it's more beneficial for the state to facilitate the departure of the more professionally active people, since they are less likely to remain jobless. Often they find new jobs while still being paid by their old companies, costing nothing to the social security system in the end.

There have also been increasing concerns about the organisational effectiveness of the post-downsized ‘anorexic organisation’. The benefits, which organisations claim to be seeking from downsizing, centre on savings in labour costs, speedier decision making, better communication, reduced product development time, enhanced involvement of employees and greater responsiveness to customers (De Meuse et al. 1997, p. 168). However, some writers draw attention to the ‘obsessive’ pursuit of downsizing to the point of self-starvation marked by excessive cost cutting, organ failure and an extreme pathological fear of becoming inefficient. Hence ‘trimming’ and ‘tightening belts’ are the order of the day (Tyler and Wilkinson 2007)

Derivative terms

Downsizing has come to mean much more than job losses, as the word downsize may now be applied to almost everything. People describe downsizing their cars, houses and nearly anything else that can be measured or valued.

This has also spawned the opposite term upsize, which means to grow, expand or purchase something larger.

See also

• Compromise agreement
• Furlough
• Office Space (1999 motion picture)
• Outsourcing
• Restructuring
• Severance package
• Unemployment
• Voluntary Redundancy
• Work sharing

References

This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. Please improve this article by introducing more precise citations where appropriate. (July 2009)

This article's citation style may be unclear. The references used may be made clearer with a different or consistent style of citation, footnoting, or external linking. (September 2009)

• Baumol, W. J., Blinder, A. S. & Wolff, E. N. (2003). Downsizing in America: Reality, Causes and Consequences. New York: Russell Sage Foundation
• Cameron KS. 1(994) Strategies for successful organizational downsizing. Human Resource Management, 33: 477-500.
• Cascio, F.W. (2002) ‘Strategies for responsible restructuring’, Academy of Management Executive, Vol.16, pp. 80–91.
• Mellahi, K. and Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.
• Mroczkowski, T. and Hanaoka, M. (1997), ‘Effective downsizing strategies in Japan and America: is there a convergence of employment practices?’, Academy of Management Review, Vol.22, No.1, pp. 226–56.
• Redman T and Wilkinson A (2006) Downsizing, in T. Redman and A. Wilkinson(eds),Contemporary Human Resource Management, London: FT/Prentice Hall, pp. 356-381
• Sahdev, K. (2003) ‘Survivors’ reactions to downsizing: the importance Human Resource Management Journal, Vol.13, No.4, pp. 56–74.
• Tyler M and Wilkinson A (2007) The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.
• Wilkinson, A. (2004) ‘Downsizing, rightsizing and dumbsizing: quality, human resources and sustainability’ Total Quality Management Vol 15 no 8 http://www98.griffith.edu.au/dspace/bitstream/10072/16844/1/34201_1.pdf

Further reading

• Weinstein, Bruce, "Downsizing 101", BusinessWeek magazine, September 12, 2008.

External links

• Layoff Support Network Social Networking, Support and Job Search site for laid off people and their loved ones.
• Layoffmaps.com Self-reported layoffs and layoff news on the map.
• How to Prepare for a Layoff - Article that discusses specific steps to take to prepare for a transition.
• CASE No.: 2001-ERA-19 A case before the U.S. Department of Labor, wherein the terms RIF, IRIF, and VRIF are commonly used.
• APPENDIX D; GLOSSARY OF TERMS A glossary in a U.S. Department of Energy document that includes brief definitions of RIF, IRIF, and VRIF.
• Summary of Reduction in Force Under OPM's Regulations, United States Office of Personnel Management
• UK Redundancy Legal Rights UK specific information on the legal rights of those being made redundant.
• Airline Industry Layoffs - by Patrick Smith
• Furloughed, Now What? - in Cabin Managers.
• Layoff Tracker - listing of major U.S. layoffs since January 1, 2009.
• Most Notable IT Industry Layoffs of 2008
• Job Losses Tracker (UK-based)
• Layoff news and tracker Layoffs news and tracker.