How to Downsize a Nonprofit Responsibly

When It Matters

Responsible downsizing means reducing staff numbers through a fair, documented process that limits the harm to the people affected. It comes up when an organization can no longer afford its current staff, or when it restructures and some roles disappear.

A grant ends, a grant is cut, or a budget shortfall lands in the middle of the year. In some national systems redundancy counts as a form of dismissal, so treat it as one and follow a fair process.

Rules on consultation, notice and severance vary by country and by contract. The examples on this page come from a few national systems and from international labor standards, and they will not match yours exactly. Before you announce anything, read your national employment rules and each person's contract, and ask a local employment lawyer or labor office if anything is unclear.

How It Works

The order of steps matters as much as the steps themselves.

Check whether redundancy is really needed, and try alternatives first. Restrict or stop overtime, reduce the use of temporary staff, reorganize work instead of recruiting, suspend external hiring, and cut non-staff costs such as travel or training. You can also offer voluntary redundancy, change working hours, or move people into other roles.
Tell everyone affected, early. Hold a meeting for all affected staff, not only those at risk. Explain the risk and why it may be necessary, how many redundancies are being considered, and what happens next, including how people will be consulted. Then give each person at risk written confirmation that they are at risk, whether options like voluntary redundancy or redeployment exist, and an outline of the consultation plan.
Consult. Talk with affected staff and listen. Cover why change is needed, ways to avoid or reduce job losses, the skills the organization will need, the selection criteria, and what support people want. Meet each affected person privately at least once, and let them bring a companion.
Select fairly. Where several people do the same role and fewer are needed, use the criteria you explained beforehand, and record every ranking decision.
Give written notice with a right of appeal. Write to the person proposing redundancy and inviting them to a meeting. Hold it, with a companion if they wish. Consider their final feedback. Then issue written notice stating the last day of service and the right to appeal.
Offer suitable alternative work in writing, if it exists. Show how the new job differs, and make the offer before the old employment ends.
Support those who leave, and talk to those who stay. Time off to find work, recognition of service, and early, honest meetings with the remaining staff. The sections below give the detail.

Key Components

A sound process has these parts.

Alternatives and mitigation. Suspend external recruitment, do not extend temporary assignments, cut non-staff costs, and call for volunteers for early separation. A joint staff and management group, with at least two representatives from each side and a balance of gender and geography where possible, can review the process and recommend measures.
Early information and consultation. Give workers' representatives the reasons, the number and categories of workers likely to be affected, and the period over which terminations will happen, in good time. Consult on ways to avoid or reduce terminations and to soften their effects.
Fair, objective selection. Standard of work, skills, qualifications or experience, accurate attendance records and disciplinary record are defensible. Explain the criteria and timeline before any comparison starts.
Notice and separation benefits. International standards expect a reasonable period of notice or pay in place of it, and a severance allowance or other separation benefits, with national law deciding what is reasonable. Where severance is paid, it should reflect length of service and wage level.
Documentation. If a decision is appealed, your records should show that every ranking decision followed the criteria you communicated.
Support for leavers and stayers. Time off to look for work or train, recognition of service, counseling or mediation, and follow-up for the people who remain.

Best Practices

Keep staff informed from the first day. Open communication should begin when the process starts and continue until it ends. Stay ahead of rumors with accurate information.

Consult as if the outcome is still open. Consultation is talking and listening, with the aim of agreeing actions wherever possible. Use it to look for ways to cut the number of job losses. In one national system, skipping genuine consultation exposes an employer to unfair dismissal claims, and that system requires collective consultation with employee representatives when 20 or more redundancies are proposed within a 90 day period. Below that number it is still good practice.

Use objective, documented criteria. In one national system, selection should not be based on length of service, part-time status, age, pregnancy, or maternity, paternity, adoption or shared parental leave. Check what your own law says about selection before you set criteria. If you offer voluntary redundancy, offer it widely, pressure nobody, and still select fairly so you avoid indirect discrimination.

Do not announce by email. Layoff announcements should not be made to staff by email. Tell the employees directly affected first, then the rest of the staff.

Prepare the managers who will deliver the news. They need to be trained, fully informed about the proposals, able to explain the plan clearly, and handed a questions and answers document.

Plan the handover. Ask departing staff to help ensure an orderly transition of remaining work, and agree with each person what remains to be handed over.

Look after those who stay. Meet remaining staff as soon as possible, ideally the morning or afternoon after the notifications, and set a later meeting on future plans and new responsibilities. Expect anger, guilt, anxiety, resentment of heavier workloads, sadness, absenteeism and confusion about roles. An open door, 1:1 time, listening sessions, anonymous feedback and flexibility about operational changes all help.

Common Mistakes

Consulting after the decision is made. Consult while the plan can still change, and be ready to change it.

Selecting on grounds your law may bar. In one national system, choosing people by length of service, age, part-time status, pregnancy or parental leave is not accepted. Check your own rules, and select on the criteria you explained beforehand.

Announcing by email. Do not announce layoffs to staff by email. Tell the employees directly affected first, then the rest of the staff.

Sparing senior roles or cutting only support functions. Layoffs can go off the rails when they are not equitable, for example when nobody senior goes or every program is left untouched. Look across the whole organization.

Ignoring the people who stay. Their reactions are predictable and they will carry the work. Schedule the follow-up before the notifications.

Asking survivors to do more with less. If cuts are substantial, a program may need to be scaled back or closed. Protecting the morale of remaining staff is essential to rebuilding.

Example

A national health NGO in a low-income country learns that a large share of its project budget will be lost. Before any redundancy talk, it restricts overtime, stops external recruitment and cuts travel. The savings do not close the gap.

The director calls an all-staff meeting. She explains the shortfall, the risk of redundancies, roughly how many roles are under consideration and how consultation will work. Staff at risk receive a letter that confirms their status, says whether redeployment or voluntary redundancy is possible and outlines the consultation plan.

A joint staff and management group, balanced by gender and geography, reviews the mitigation measures. Every affected person meets a manager privately, with a companion if they want, to discuss ways to avoid job losses and the selection criteria. Where fewer people are needed in a role, the NGO uses qualifications and standard of work, and documents each decision.

Affected staff are then invited to a final meeting. After it, the NGO issues written notices with the last day of service and the right to appeal. Departing staff get time off to look for work and are asked to help hand over their remaining work. The NGO also keeps the communities it serves informed about which assistance will be suspended.

The morning after the notifications, the director meets the remaining staff and gives them room to voice their worries. She says that some program activities will be scaled back instead of asking the team to absorb everything. A later meeting settles new responsibilities.

Downsizing responsibly