Reduction in Force vs. VSIP

Reduction in force (RIF) and VSIP (Voluntary Separation Incentive Pay) are two orderly, effective ways to shed groups of government employees. The author compares the two.

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.

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.