NFP Workforce Reductions: Plan Ahead for Economic Shifts

No not-for-profit (NFP) leader wants to think about layoffs until it’s too late. But with ongoing economic fluctuations, funding shifts, and rising operational costs, proactive planning is critical to avoid crisis-mode decision-making when facing workforce reductions.

A well-prepared reduction in force (RIF) plan can reduce anxiety for leadership, board members, and staff alike. It ensures legal compliance, protects sensitive information, and upholds your reputation. Most importantly, it allows your organization to navigate tough transitions with fairness and transparency — qualities your donors and community expect.

Don’t wait until financial trouble hits to determine who handles layoffs. Assemble a team now: Executive Director, HR lead, Finance, Operations, and a Board representative. This group can evaluate workforce costs, funding scenarios, and program priorities before hard choices arise.

Before cutting jobs, explore all options: restructuring duties, reducing hours, implementing hiring freezes, or seeking bridge funding. Sometimes, creative solutions can preserve jobs and maintain mission delivery while buying time for recovery.

Be clear about how you’d determine which roles or employees are affected. Factors may include funding sources, program priorities, performance, seniority, or legal considerations. Document your criteria and have legal counsel review your plan to avoid unintentional discrimination or bias.

Draft templates for separation letters, severance agreements, and FAQs ahead of time. Having these ready ensures you can communicate swiftly and accurately. Scripts for managers help standardize how sensitive news is delivered.

If layoffs become likely, share high-level information with staff about the organization’s financial picture and the steps leadership is taking to protect jobs. Transparency builds trust and reduces fear-driven rumors.

Consider partnerships with career counseling or job placement services. Compile a resource guide for affected staff. Clear information about unemployment benefits, COBRA, and retirement accounts will ease anxiety during a stressful time.

Planning doesn’t stop after the layoff. Follow up with remaining staff to answer questions and address morale. Reinforce your vision for moving forward and remind your team of the mission they continue to serve.

No NFP hopes to face a layoff, but thoughtful preparation can turn a reactive crisis into a managed transition. By planning now, your organization can protect its people, its mission, and its good name when faced with tough economic realities.

Need help thinking through a Reduction in Force plan? Clark Schaefer Strategic HR can help. Connect with us today and ensure your organization is prepared.