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Inside Outplacement

Employers are recognizing the bottom-line benefits of outplacement as they restructure and prepare for future growth.

July 1, 2014

Nearly 20 million Americans were either laid off or discharged from their positions in 2013. While it’s a startling figure, it’s still 928,000 less than the total in 2012 and 4.1 million less than in 2008 as the Great Recession hit its peak, according to the U.S. Bureau of Labor Statistics.

While the path toward full-fledged economic recovery is still far from complete and layoffs continue, executives are increasingly recognizing that the ways in which restructuring is implemented and organizations are positioned for growth are directly affected by the way they treat both exiting and remaining employees.

The benefits of offering outplacement services to affected employees — one-on-one career coaching and support that the employer provides to employees leaving the organization because of a restructuring, layoffs or a reorganization — goes beyond the altruistic motivation of helping them get back on their feet. Outplacement can help drive an organization’s productivity, profitability and brand value, as well as support former employees in need at a critical time.

Although a half-century has passed since outplacement services were first initiated, they are increasingly tied to employer brand during times of change. Such branding is of the utmost importance to companies, as it can have a direct impact on attracting prospective employees, driving engagement and overall productivity. In fact, research from LinkedIn Corp. reports that employees are driven by employer brand twice as much as company brand when it comes to seeking new positions. Thinking about a company as a good place to work is becoming as important as knowing about a company’s products and services.

48 Hours

By offering outplacement services
within 48 hours of job-loss notifications, companies will gain positive returns
on investment, as well as an enhanced employer brand.

Timing matters when it comes to protecting your employer brand during restructurings. Whether your departing employees speak highly of your company and recommend it to friends and family, or discuss their terminations negatively, lies primarily on how they were exited and how quickly they were offered outplacement support.

The first 48 hours after being notified of a job loss are critical. Early intervention makes a difference in encouraging individuals to look forward to a new future, rather than look backward angrily at their former employer.

Needless to say, looking backward has a much greater incidence of negativity, litigation and potentially harmful social media exposure. By receiving guidance early on, affected employees can start their new job search with a forward-looking mindset that helps them engage early and often with personalized coaching, assessments and all the tools and technology that can really set their job search apart from others.

As you help exiting employees re-enter the job market easily and quickly, they will be more secure about their futures and be more willing to endorse your company online and in person, and especially among their peers and former colleagues.

At the same time, remaining employees will be comforted to know that even when terminations are happening around them in the workplace, their companyis doing the right thing by taking care of departing colleagues and providing them with the support they need to restart their careers quickly. In the end, timing matters. The sooner you prepare exiting employees for their future careers, the sooner you can reduce your unemployment benefit costs and further enhance your employer brand, both in-house and publicly.

For a noticeable return on investment, enact your outplacement services in a timely manner — preferably within 48 hours of job loss notifications.

—Bram Lowsky

With employer brand becoming a vital initiative, Right Management recently commissioned a survey to examine how organizations make decisions on outplacement. (Editor’s note: The author works for Right Management.) Our survey also focused on how employers assess the benefits of outplacement and how these services can contribute to future growth after times of change.

At face value, top employers choose outplacement to manage their obligation to help exiting employees find new employment. However, in today’s world, where social media can generate both positive and negative brand awareness in minutes, there are additional corporate motives to offer outplacement. Our survey showed that 85 percent of organizations that offer outplacement reported it was either “very” or “extremely important” for them to maintain positive relationships between current and departing employees. In addition, 82 percent believe outplacement is a necessary service to initiate in order to protect their company’s brand during times of change and economic uncertainty.

There’s more than what meets the eye when thinking about outplacement as a benefit to the bottom line. And to learn more about the employer motivations for investing in outplacement services, Right Management surveyed more than 1,700 business leaders and human resources professionals from 10 countries in 2013. The research identified critical ways outplacement services positively affect productivity, engagement and cost reduction.

Companies that offer outplacement services to former employees reinforce their commitment to their workforces, even in the midst of change management, acquisitions, mergers or financial losses. This commitment has a big impact on the employees who remain on staff, as they also must accept new responsibilities and working within a leaner team. The survey found that more than a third of companies offering outplacement services notice an increase in worker productivity within 12 months of a major restructuring.

Outplacement also positively affects employee morale, as workers have more confidence and trust in their employers. As evidenced by the survey, outplacement has a measurable effect on employee morale, which rose for 28 percent of the employers that provided it to transitioning staff compared with 20 percent of employers that did not offer outplacement after announcing a major restructuring or layoff.

At the same time, 38 percent of employers offering outplacement services reported a rise in employee satisfaction within one year of a company downsize, compared with only 14 percent of employers that do not provide outplacement services to individuals leaving the organization.

“At Procter & Gamble we care about our employees, and during times of change we offer outplacement services to those impacted to give them career guidance and support to find new employment and lead successful careers,” said Bruce Williams, North America associate director of employee relations at Procter & Gamble. “What’s more, employees that remain are reassured of our company’s commitment to our purpose and values, knowing that we are being responsible and respectful with our change management.”

Last year, LinkedIn’s Hiring Solutions Insights team conducted a survey of 7,250 LinkedIn users focusing specifically on employer brand. The survey found that respondents under the age of 40 were 61 percent more likely to relate job consideration with employer brand than older employees; furthermore, companies’ turnover rates were 28 percent lower if they had reputable brands, in comparison to companies with weaker brands.

As the LinkedIn survey suggests, the growing importance of employer brand adds a new dimension to HR’s role in protecting and building employer brand during times of change for the organization. By offering outplacement, HR can help minimize the risks of creating negative employer perceptions among future job candidates. 

Ultimately, exiting employees are more motivated to speak highly about their former employers if they receive outplacement assistance, whether they are sharing their viewpoints during in-person conversations or on social media outlets, job boards and employer review websites. When former employees describe companies in a positive light, their employer brands will be protected and promoted, ultimately making it easier to recruit “cream of the crop” employees in the future.

Although a main motivation for offering outplacement is to treat exiting employees with support and respect, and to help them find new jobs quickly, the importance of building relationships and engagement within the organization cannot be overlooked.

The Aberdeen Group, a business intelligence research company, found that 48 percent of surveyed companies, which offer outplacement programs, have mostly “highly engaged” employees — more than 60 percent of their staff members in all. To compare, only 33 percent of companies not offering outplacement had as high of a percentage of highly engaged workers. Moreover, sick days decreased for 28 percent of Right Management’s survey participants that purchased outplacement programs, compared to 18 percent of respondents that did not.

Reduced Exposure to Litigation

Outplacement also can have a positive influence on employees departing from companies, especially with regards to litigation. When offered outplacement assistance, laid-off or discharged employees are typically less discontented with their former employers and tend to focus more on their future careers.

According to the survey, within the Americas, only 34 percent of businesses offering outplacement programs reported lawsuits from former employees, whereas 42 percent of companies that did not offer outplacement services were sued. Litigation is certainly one of the top concerns for companies that discharge or lay off employees. It’s clear that offering outplacement and encouraging exiting employees to participate in the program helps to limit legal risk.

For a wide array of reasons, employee recruitment and unemployment benefit costs often decline when outplacement solutions are in place. Employers can experience significant decreases in turnover, employee recruitment expenses and unemployment costs as a result of outplacement. 

Case in point: 17 percent of survey respondents with outplacement service programs verified their employee turnover diminished ever since they initiated the programs. Our survey also reports that 24 percent of outplacement purchasers in the Americas documented a decline in employee recruitment costs — double the amount of nonbuyers that reported cost containment. And as outplacement accelerates connections to new employment for those leaving the organization, unemployment benefit costs regularly diminish. After all, the total cost of unemployment benefits is directly influenced by the frequency and duration of employees’ joblessness.

Outplacement offerings have come a long way with the advent of job boards and new technologies that accelerate connections between candidates and employers. That said, nothing can replace the value of one-on-one coaching that provides individualized assistance to landing a new opportunity. Right Management data show that career assessment, counseling and résumé support are viewed as the most valued and frequently used component of an outplacement program.

Bring in the Coach

Career coaches provide personalized assistance that helps reset the employability mindset of someone who may be uncertain about how to build a winning job search plan and who may also have low self-esteem and lack of confidence after being laid off. When individualized coaching is combined with new technology, separated employees receive the multiplier effect that enables successful and accelerated outcomes.

• Personal website technology. Personal websites help individuals establish personal brands, clearly communicate strengths and break through the clutter from other job seekers. Increasingly, hiring managers are turning to personal websites when vetting candidates. An outplacement provider should have access to and provide coaching on how to build personal websites for transitioning employees.

• Career fairs. Virtual and in-office career fairs are changing how candidates connect with employers across industries and geographies. New virtual technology bridges the gap between a captive hiring audience of leading employers and skilled professionals looking for employment after a transition. The best outplacement providers offer innovative technologies to connect employers and candidates readily and easily.

• Exclusive job platforms. Insider job platforms that offer access to hidden jobs and hiring decision-makers must be an essential component to any outplacement solution. There’s real value in providing quality, targeted job postings and insights that are not offered to the general public.

• E-learning connections to build skills. At times, exiting employees will decide to pursue new job opportunities within entirely different industries or they simply need to upgrade a particular skill set. To prepare employees for new career opportunities, outplacement experts will provide training options and e-learning courses to help candidates advance their knowledge and/or develop transferable skills to help them land the new job.

Whether companies are shrinking their labor forces to cut costs or readjusting their strategies, outplacement services can help brand image, bottom-line performance and provide needed assistance to employees transitioning to new jobs.

Bram Lowsky is group executive vice president of the Americas and global head of career management for Right Management. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.