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Reduction in Force Can Sometimes Be More Costly to Agencies Than Attrition and Furlough

PEMD-85-6 Published: Jul 24, 1985. Publicly Released: Jul 24, 1985.
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Highlights

GAO documented an analysis of the savings and costs of reductions-in-force (RIF) at eight agencies and provided a methodology for other agencies to use to compare the potential fiscal impacts of RIF and attrition when there is a need to reduce staff. Included are assessments of the extensiveness of downgrading resulting from RIF and a detailed analysis of the effects of RIF on the employment status of women and minorities.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget The Office of Management and Budget (OMB) may wish to consider the following strategy or checklist that agencies could use in comparing RIF with attrition and furlough when faced with the need for reducing personnel levels or budgetary expenditures. Although agencies would be unable to make an exact estimate of RIF savings and costs, they could make the calculations necessary to decide between alternatives. Essential to this assessment is being able to calculate attrition rates for specific jobs series and grades. Once an agency decided which positions to abolish, if it had specific data on attrition, it could estimate how long it would take to lose these positions by attrition and how much in salaries a RIF could save compared to attrition. The next step is to calculate the cost items. At this point, an estimate of the budgetary effect of a RIF could be made by subtracting severance pay, lump-sum leave, and contract costs from the previously calculated salary savings. For a picture of the overall affect, the net total can be further refined by examining the cost of downgrading. In order for a RIF to result in a savings, what remains would have to be sufficiently high to cover the costs of processing and administration, appeals and grievances, job-search assistance, and rehiring.
Closed – Not Implemented
GAO has received calls from federal agencies planning RIF. Their questions indicate familiarity with the GAO report and possible use of the GAO methodology. More formal actions may not be needed.

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Topics

Human Capital
Attrition ratesCivil service retirement systemCost analysisEmployee retirement plansEmployment of minoritiesFederal employeesFull employment budgetsLabor forceLeaveReductions in forceWomen's rights