To RIF or Not to RIF: What’s Over the Edge of this Fiscal Cliff?

At the edge of this ominous “Fiscal Cliff” lies a very real concern for many federal employers: will we have to reduce our workforce even more? And by what means?

Aside from attrition (which reeks organizational havoc over a long period of time), there are two ways a Federal employer can reduce its workforce:

  1. The VERA/VSIP option (Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay); and
  2. The Reduction in Force (or RIF) option.

For the organization, there are pros and cons with each option and these are considerations an agency will examine before deciding in what direction they want to go. But let’s not ignore the fact that both of these options present pros and cons to employees as well! And employee considerations are not typically in harmony with those of the organization.

Let’s start with some obvious considerations using the VERA/VSIP option.

  • Like the name says, this option is VOLUNTARY! On it’s face, that’s a “pro” for employees. For the organization however, it can be a “con” since management is not able to predict how many positions will be vacated.
  • If there aren’t enough “volunteers” using this option, management will need to go back to the trough and decide what to do next. After all, reducing one’s workforce is about the numbers! Meeting a ceiling! Getting to a pre-defined number of employees.
  • In addition, the VERA option may offer a monetary incentive but the VSIP will cost the agency money.

Going the other way, let’s look at the RIF option.

  • It gives agencies the predictive power to reduce their workforce by a certain number of positions. That’s a plus for agencies told they must reach a “workforce ceiling” by a certain date.
  • On the “con” side, agencies don’t know what employees will be lost until that last “bump and retreat” iteration has played out. Consequently, this option presents built-in uncertainty and this can leave an agency with the inability to achieve their mission and/or deliver their service.
  • Also, agencies can certainly expect higher costs under a RIF, in that they are obligated to pay severance for every employee who ultimately leaves federal service. Depending on the age and service time of each person who’s RIF’d, this can amount to a full year’s salary in some cases. That’s far more costly than a capped $25,000 per person who “volunteers” under a VSIP.
  • For employees, RIF also presents a LOT more uncertainty, a LOT more stress, and a LOT more concern about whether one will be employed after the last “bump and retreat” options have been exercised.

If you were a management official and you had to make this decision, which option would you choose? This really isn’t any easy question.

Related information:

OMB: Furloughs are a Last Resort

Reduction in Force vs. VSIP, by Robert F. Benson | December 16, 2012

Ask the Experts: VERA/VSIP

A Summary of RIF, VERA and VSIP Under OPM’s Regulations

FACT SHEET: Voluntary Spearation Incentive Payments (VSIP)

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