Reduction in Force vs. VSIP

By on December 16, 2012 in Current Events, Human Resources with 37 Comments

With tons of ink being spilled to discuss the  financial “fiscal cliff” facing Americans as we get ready to start the new year, some readers may be wondering what happens if federal agencies find that they need to reduce their workforce. There are a couple of ways this can be done.

Reduction in force (RIF) and VSIP (Voluntary Separation Incentive Pay) are two orderly, effective ways to shed groups of Government employees.  VSIP is much preferred by management and by employees.  It is fairly obvious why employees prefer VSIP: they have their choice of taking or not taking the offer.  With a RIF, it is not voluntary- when your name is reached for release, you must vacate your position.  True, thru bump/retreat rights, you may be offered another position in the organization, but the one you occupy is gone.

With VSIP, the agency announces which organization/positions are targeted, or offered the buyout money.  Then the affected employees decide whether they will take the offer.  If they take it, they get up to $25,000 and must resign by a specified date.  There is no domino effect.  Simple.

The main disadvantage with the VSIP, for management, is they have no way of knowing, beforehand, how many positions will be vacated.  Of course, they can survey employees in advance and ask what they might decide, but this is not really a dependable method.  If the number of “takers” is not sufficient, it might be necessary to do another VSIP.  However, even though it is not known how many will take the offer, it is known with 100% certainty which jobs are affected.

A reduction in force is highly structured, with management discretion held to a minimum.  Management decides the “competitive area” for the RIF, which is the geographic and organizational limits for the competition.  A competitive level – also known as a retention register – is one job series and grade, e.g.., technical analyst, GS-12, where all persons are on the same work schedule.  Sounds simple, but keep reading.

Conventional wisdom is that virtually all RIF actions are the result of reorganizations. However, the author was in a situation where the RIF threats were many and ominous, over a period of months.  In the end, guess what?  Management decided a RIF was not necessary!  In this case the RIF was used as a bogeyman, probably not the first time such a thing has happened.

For the agency, the problem with a RIF is that affected employees, depending on their seniority, have “bump” or “retreat” rights to other positions, whereby lower rated employees lose their jobs.  But wait!  The lower rated employees also have bump and retreat rights, which must be honored.  There can be more than just two iterations…

What’s the difference between bumping and retreating?  Bumping is displacing a person in another competitive level due to being in a higher group (I vs. II), or a higher sub-group (disabled vet vs. vet, or vet vs. non-vet).  Retreating is having more service time than a person in the same sub-group of a different competitive level.

Retention factors.  There are four that, added together, make up a person’s ranking:

  1. Tenure of employment.  This is temporary vs. career conditional vs. career.
  2. Veterans preference.  Disabled vs. not disabled vs. not vet.
  3. Creditable civilian and military service.
  4. Performance rating.  Higher rating = more years added to employee tenure.

The first two determine the employee’s tenure group and sub-category within the group, while the third and fourth make up the employee’s service longevity, within the sub-category.

Within each retention level, employees are arranged in three groups.  Group III is temps and “excepted” employees, who have no rights at all and are the first to go.  Group II is career conditional, those who have less than three years service, while group I is those with career status.

Each group has three categories: disabled vets, vets, and all others.  Within each category, employee names are arranged from most to least service time.

When employees are released, the sequence is first all group IIIs, then group II non-vets, followed by vets, and, last, disabled vets, according to service time within each category.  Group I is the last to have releases, following the same sequence.

Typically, RIF actions are in two rounds.  First, management places employees into selected competitive levels and groups/sub-groups within levels.  This is a kind of snapshot, if you will.  The second round is where it gets interesting.  Bumping and retreating rights are established, and the changes begin.  Only after the second stage of actions is complete does management know for certain how the RIFed organization is going to look.

One more complication: John may displace Mary, and Mary may, in turn, displace Albert, but John may simply opt to accept the RIF action, meaning Mary would no longer threaten to oust Albert.  In this case, Albert’s job would be saved.

One example of the unpredictability of a RIF is the true case of a Social Security district office where they conducted a RIF and the final result was that one person lost his job.  He was a diabetic, mentally handicapped, GS-4 who operated the copy machine.  His family sued.

If the administrative nightmare is not enough, there is the money.  When a person loses his job thru a RIF he is entitled to severance pay, which can, depending on age and service time, easily be a full year’s salary.  So, in administrative costs and in terms of compensation per position, a RIF is considerably more costly to the agency than simply offering VSIP, which is capped at $25,000 per person.  Add to this the great uncertainty as to how it will turn out, and you have something to be avoided.

The above is a brief sketch summarizing and highlighting some complexities of the reduction in force process, to illustrate why both management and labor abhor RIFs.  In view of the fiscal cliff and its ramifications, this may be the time to start looking into exactly how a RIF works.  A good, detailed explanation can be found at:  http://www.opm.gov/rif/general/rifguide.asp

Author’s website:  here

© 2016 Robert F. Benson. All rights reserved. This article may not be reproduced without express written consent from Robert F. Benson.

About the Author

Robert Benson served 35 years in various Federal agencies, as both a management analyst and IT specialist. He is a graduate of Northwestern University.

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  1. Me says:

    And once the competitive area is drawn, it is still not complete/final.  A few years ago I was working with the FSA when they went through a reorganization.  Although no employees were being RIF’ed or let go, offices were being closed which resulted in managers of those offices being ‘downgraded’ to where they were no longer managers or supervisors (no loss of pay, just loss of responsibility and authority.

    Officies were targeted to close, lines were drawn, competitive areas established, and the plan was announced and suppossedly finished.  I as a Manager was safe in my posititon.  However, at the last minute a lady manager in a close by office which was being closed and who did not want to lose her management authority made a phone call to her senator and the governor … who contacted the State Director, and all of a sudden, when the final plan was released, the competitive areas had been miraculously redrawn overnight and all of a sudden I lost my postition to her.

    Long story short, the author mentions 4 criteria for retention/competition in a RIF.  But he forgot to mention political influence…..  It does make a difference.

    • Japygid says:

      Interesting, but I did not forget to mention political influence.  Political influence was not part of the established process.

      The idea of the article was to mention enough facts about how RIFs work so readers could see what a complex, unpleasant business it is.  The article was NOT supposed to be a primer that covered everything on RIFs.

      • vsip is preselection says:

        so why dont all agencies have VSIPand why only do a select few get this good deal???
        we want to leave so maybe they know that and only give to their favorite friends???

  2. Not sorry I left says:

    Last year a buyout was announced and I received an email stating I was eligble, I investigated this because I had already put my retirement papers in and was leaving Federal service in November, 30, 2011.  I was told I was still going to be eliglbe and able to receive the buyout even though I was leaving in November .  I left service and emailed and spoke to personel involved in this and received a confirmation letter in latter part of December stating that I would not be receiving the buyout money.  So if anyone of you get an email for a buyout and you are planning on retiring, if you want the money, you better stay in your job until you know for certain you are going to get the money. I had all requirements, I was off the books by the stated time, but because I left in November instead of December, they did not recognize me for the buyout. 

  3. Picknaul says:

    What is the difference between “excepted” employees and the “excepted service”?  Does the competitive service and excepted service operate the same way in a RIF?

    • Retired Navy HR Manager says:

      Employees in the “excepted service” are ones who have received “excepted appointments.”  They are commonly referred to as “excepted employees.”  The “exception” is from having to “compete” for their appointment.  There are a wide variety of excepted appointment types, way too many to address.  As an example, someone appointed under a special hiring authority for handicapped individuals would be “excepted.”  All attorney positions are “excepted.’  Some entire agencies are “excepted.”  In a RIF, excepted service employees do not compete with competitive service employees.  So one or all excepted service employees can be separated and none will have rights to any position held by a competitive service employee.   By the same token, competitive service employees cannot “bump” or “retreat” into an excepted service position.

  4. Retired Navy HR Manager says:

    It’s always better to use voluntary means whenever possible.  I had the experience of helping with the closing an organization with 6300 employees.  Over a two and a half year period, by using VSIP and VERA in a targeted way, offering outplacement services, including an aggressive use of the DoD Priority Placement Program, and openly communicating with our employees, we only had to RIF 600 employees at the day of closure; most of the 600 involuntarily separated were simply waiting to draw severance pay.  In the meantime, we were able to continue to accomplish our mission, albeit in a reduced capacity.  Had we simply conducted a series of RIFs, it’s likely we would have lost our capacity to conduct business early on, due to the chaos RIF creates.  It’s tough for many managers to accept that you can make significant reductions without RIF and that using RIF has both short and long-term damaging effects on an organization.  RIF should be considered a dire last resort when no other options are available; and many better options typically are available.

    • Japygid says:

      Well said.  Regarding the RIF at my organization, I attended a meeting with the GS-15 director months beforet the “drop dead” date and she asked me if I had any questions.  I asked her what would happen if the organization staffing level dropped to the desired level (280) and the incumbents in some of the targeted positions were not gone.  She said yes, there would still be a RIF.  So much for management honesty.  (By the way, it is easy for me to remember this, because I was in a targeted position, and to the best of my memory I did not get RIFed!)

  5. HR Manager (Retired) says:

    RIF, VSIP and VERA are programs of last resort when it comes
    to managing the size of an agency’s workforce. 
    Remembering that reductions in workforce size are never “last minute breaking
    news”, agencies should start controlling backfilling vacancies and managing
    their fill rate (how long it takes to actually fill a vacancy) as soon as they
    receive notification of pending manpower cuts. 
    By doing this agencies can better control both impact on their workforce
    and workload.  Yes, this requires some
    thought and action by management, budget and HR but those in these positions
    should remember that workforce management is a significant part of their job.  When an agency immediately jumps to RIF, VSIP
    and VERA it is a sign that these components have filed to react in a timely
    manner.  From experience: VSIP seldom
    works especially when it is difficult to find another job; VERA sounds good but
    in the end it is not what many employees want (remember that the $25K is taxed
    so you do not take home $25K and that it is never in an employee’s best
    interest to make a last minute and time controlled decision about retiring) and
    RIF destroys workforce confidence and morale. 
        

  6. Fed RL Xpress says:

    No-Brainer Solution!!!

    Early-Outs to all eligible federal employees.   There are tens of thousands of eager, anxious, generous, and giving federal employee Early-Out volunteers just waiting for their chance to be able to do their part to help out!    Please make it happen!    Can’t Wait!
    Early Outs = Problem Solved
    Let’s get those Early-Out offers rolling out!     Where do we sign?
    Need to get the Early-Out offers out ASAP!    The quicker the Early-Outs offers get out, the faster all problems are solved!

  7. Jak919 says:

    One huge potential problem with a RIF is that with the possible exception of DOD, there aren’t any knowledgable HR types to run one.  Also any efficient agency or one with a recognized union should have the competitive areas and levels already defined as a part of policy or a labor agreement to preclude any favoritism.

    • Retired Navy HR Manager says:

      That’s a big problem.  In my post-retirement employment, I’ve been exposed to the HR staffs of many small federal agencies.  Many of the HR people I encountered, while possibly bright people, had very superficial knowledge of federal HR.   Large agencies have the luxury of hiring and training interns, though that has fallen off as well.  The people staffing HR offices know the buzz words, but don’t have the depth of knowledge to handle complex issues like RIF.   Worst of all, they don’t know that they don’t know.  You can have a PHR or SPHR certification, and/or an MPA and still be a marginal federal HR person.  

  8. Vickie Shepard says:

    How is the amount of VSIP and RIF calulated?

    • Japygid says:

      For each of the first 10 years you get one week’s salary; for years over 10 it is two weeks per year.  Then there is the age bonus part:  for each year over 40 they add one week to the total payment.  A calculator is at my website (mentioned above).

      • Kathy-upstate NY says:

        If I understand correctly, FERS employees with over 30 years do not get severance pay if they are in a RIF.  Based on that, I chose to take a VSIP last July so at least I would get an annuity and be able to keep my insurances.  (there are very few federal jobs in my area. With hiring freezes, and being a non-vet, my odds of another position were very minimal.

        Now my annuity is hundreds of dollars per month lower than if I had retired at 66. My Social Security will be greatly reduced as well and the annuity supplement I receive is based on taking Social Security at only 62- and I do not get any COLAs until I turn 62 in five years!  This was not a win-win situation, but really a lose or lose even more situation.

        • Japygid says:

          If you are separated due to a RIF, you are eligible for severance pay.  Your retirement system and/or your years of service make no difference.  Unless I’ve got it wrong, it looks like you were given bad information.

          • Kathy-upstate NY says:

            I was told that as I was “eligible” for retirement (with 30 yrs, and 2 months), I would not be receiving severance pay.  Also, I understood that I could not take my health insurance into retirement unless I actually retired.  Are the DoD regulations any different for severance?

          • Manage This! says:

            Kathy – yes, that is correct – you are eligible for an immediate annuity and thus not eligible for the severance pay.  This will help any here who have questions on this point.  (http://fehb.opm.gov/rif/genera
            For the DoD vs the rest of Fed, there are some differences but not at the basic level of service – its still a RIF/VSIP of some kind.  The FEHB (or for AD Mil – TriCare) are restricted to retiree programs in their continuation – so if you take an early out – you loose the insurance at some point in time – depends on the type of separation and if you elect to pay the continuation/transfer fees.  There is little to no agency contribution so these programs become nearly cost prohibitive.

          • ImusJunkit says:

            http://fehb.opm.gov/reduction_… is the correct weblink.  OPM reorganized their website.

          • ImusJunkit says:

            Also http://www.opm.gov/rif/general… is useful for in-depth.  Best to all in the upcomming era of downsizing…

          • Manage This! says:

            FedBens, as you failed to consider any individual who is eligible for any immediate federal annuity or any military annuity is not entitled to a severance pay – I felt it necessary to point out here.
            Also, a severance is not entitled to any military time additions to your retirement calculation – thus, if you had a buyback and they impose this option – you have just lost your payout (double whammy).  Another consideration you did not mention is the loss of the insurance when the individual opts for the severance package – although a waiver of the five year condition can be requested – the agency does not have to approve it.  Retirement – even under MRA is far better than any “Severance” option you can provide to me here.  Getting up to a years salary versus the continuation of an annuity over the remaining years of your life – not even a comparision in values.  Though I feel Kathy’s (and other early outs) pain, taking retirement earlier than you planned for can place a significant burden upon your resources and comforts are often sent out the door.
            It goes back to what I have advised many times in my posts – you “MUST” save as much of your earnings as you can in any capacity you can – so that you will have money to fall back on in the event our representatives in government do not really represent us – which is so much more the case now than it ever was before.
            I’ve been through four separate RIF/BRAC actions while I was in the military – the last one was the last straw for me and I left – knowing full well that my circumstances would have put me in a priority group for last to go – I still may have ended up loosing if I chose not to relocate.  As a 20 yr HR manager with experience in this area – I was hard pressed to justify or support any of the previous actions – there have been so many “substitutions” in the process that corruption and political favortism was even more visible and sickened me so much – my new thoughts are that we should just let this curruption see the light by sending the lot to hell the only way that truely works.  Their contributions are rarely worth the pain they create for others – and they, for the most part – couldn’t care less who ends up getting axed as long as they can protect their favorites and keep that power in their hands.

          • Japygid says:

            Good info – thank you.  I understand that a fed who relies on advice from HR which turns out to be incorrect is out of luck.  He has no recourse.  Can this be true?

            In any event, when there is so much at stake it is always a good idea to have at least two sources for your info.

          • Retired Navy HR Manager says:

            Unfortunately, someone who relies on bad advice is out of luck.  For one thing, the person who receives the advice likely has no proof of what they were told.  Ask for a written response.  While it may still not save you if you followed inaccurate advice, it may cause the advisor to give more thought to their answer if they know it may come back to bite them if they’re wrong.  

          • Manage This! says:

            I like your point on the written response – yes, it has the potential to reduce the advisors response to something more substantial than a quick reply with no foundation in accuracy, but there is not much of a bite if they are wrong, the opportunity to have any decision reversed does not exist as you have lost your employment status and thus cannot use MSPB or MSRB to litigate and OPM will override any decision that is not consistant with LAW or Legislative Direction (policy).  There are some avenues for retirees to obtain impartial hearings – but the outcome remains the same – an invalid action or bad advice does not override the law or policy.
            There is another aspect to it – and you covered that well too – doing your own research – so that when you get the reply from HR, if it does not match the expected result – you can reference and challenge the reply and expect they will be forced into a verification action.  In that regard, you have greater potential for a proper execution of your desires than you would with a simple face to face or a phone call which is undocumented and has a high potential of being inaccurate.  With so many years of HR experience – I’ve found one thing to be true in all situations, mistakes happen and more of them happen when the answers are verbal than do when they are written especially when the responses have references – something you should always request when you are dealing with your future.

  9. grannybunny says:

    Games can be played with defining the “competitive area,” limiting it so severely that there are no employees to “bump,” and the RIF effectively operates as a removal, or — considering retreat rights — a long-term layoff.

    • JG4 says:

      Spoken like you been through a few granny…. I have been through many in our agency and they are never pretty… the latest “reorg” as well as the pay freeze caused me to retire a few years earlier than I had planned… I saw the handwriting on the wall and wanted no part of tearing down something I had helped to succeed..

      • grannybunny says:

        Fortunately, I’ve only watched in horror from the sidelines.  But, it’s very sad to see employees with 39 years’ tenure — close to maxing out on CSRS — scrambling to find any type of job, however much of a downgrade it represents, because their “competitive area” was defined as the facility experiencing the RIF, leaving them nowhere to go unless they were able to get hired into a vacancy in another facility.  Very difficult situation under a general hiring freeze, with special permission required to fill only the bare essential positions.

        • JG4 says:

          I have watched positions eliminated but not the work for years, I have seen folks take the VSIP… myself I didn’t need an incentive to go…

        • Japygid says:

          In my article, I mentioned the threatened RIF that did not take place.  There were a number of employees who left due to the threat, although they did not want to, including a woman in a wheel chair who was obliged to transfer to a different office.

          • grannybunny says:

            Very sad, too; fortunately, she was able to transfer.  I hope to never be subject to a RIF, but — God forbid, I were — it probably would be better to try to reposition oneself, with some control over one’s fate, than to just let the axe fall.

        • Al Doud says:

          Sad, but some people won’t take the hint.

        • P Curley says:

          I can’t see that therw would be too many 39 year tenure employees worried about keeping a job. They would likely be in their 60’s and, unless they had kids still in college, (and they would be the exception at that age) would be ready to jump ship.  let alone be forced to “scramble” for a job.

  10. VSIP for over 55 and 20 yrs says:

    no rif is good so the best is what is offered so far for agencies over the last 3 years to selcet few-offer to more folks so that anybody over 55 with 20 years goes now with VSIP and that way they get the annuity until age 62 along with their annuity-no brainer and ends the problem with a win-win

    • VSIP for over 55 and 20 yrs says:

      Let the politicians see how much they will save by showing how young replacements can move into those jobs and they will work for years and years and pretty soon you do not have this probem agin until 20 years in future\saving a lot and at same time giving young folks a chance to move into better jobs over time/step on gas pedal with this one!  Remember though that it will not work if you do not give annuity until 62 and retirement for these VSIPs.

      • $15300432 says:

        Unfortunately the replacements will be trained by the old hands quickly learning terms like “its not in my PD” “no one has ever shown me how to do that” “that’s not the way we do it” time for your 2 hour lunch 2 1hr breaks and how to get access to play on the internet

    • Mkp0223 says:

      What are you trying to say with this run on thought?

      • Al Doud says:

        I think he’s trying to say that he is over 55, has over 20 years and would like to be offered VSIP but his agency is unlikely to do it.   A national policy that covered his circumstances is needed to remove his agencies descretion in the matter.

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