Offering outplacement services can take some of the sting out of the layoff process for both parties.
For the employee, it helps make the transition more positive by shifting the focus to future opportunities. Meanwhile, as a business owner, knowing you’ve done your part to help an employee successfully move on may help ease your conscience as well.
But when your business is in lay-off mode, funds for extras like outplacement can be hard to come by.
Is it financially worthwhile to spend money on outplacement services – and how can you be smart about it?
Let’s take a closer look.
What is outplacement?
Calling layoffs “tough” may be the understatement of the year. They can be downright traumatic for both the employer and soon-to-be ex-employee.
In fact, according to the American Psychological Association, some laid-off employees move through the five stages of grief associated with loss when they lose a job: denial, anger, bargaining, depression – and finally acceptance.
Outplacement support helps give employees options and strategies to move forward through a difficult phase, hopefully into new opportunities.
What do outplacement companies do?
Outplacement firms can help you and your human resources team during the layoff process by providing guidance around best practices. They might help prepare a script or even attend the termination meeting.
These companies offer a range of services, with corresponding levels of cost. Options may include providing employees:
- Access to an office
- Résumé and cover-letter writing assistance
- Job search training and advice
- Career counseling/outplacement counseling
- Networking
- Access to job boards
- One-on-one coaching
Depending on the package, outplacement assistance may be offered in person, by phone or online – or a combination of all three.
Generally, the lower-cost services, which may be more appropriate for lower-level employees, are offered in group settings or online. Executives or higher-level employees may receive more personalized, one-on-one attention.
5 benefits of offering outplacement
A 2009 Wall Street Journal survey found that only about 40 percent of laid-off employees take advantage of outplacement services when they’re offered. And the data on whether outplacement services are effective is murky at best.
Yet the same survey found that more than two-thirds of companies going through layoffs offer some level of services to transitioned employees.
Why do so many companies elect to spend on services that may have low rates of utilization or success?
Below are some of the most common reasons.
1. It may be the “right thing to do”
Especially if employees have been there for a long time, you may feel your company has a moral obligation to help them find new paths.
2. The world is watching
Your company’s reputation may well be at stake if you don’t provide outplacement. In this social media-driven era, news travels fast. And it doesn’t even have to be true to be believed. Bitter employees can vent unfettered, and others may well take their side.
3. Your brand hangs in the balance
Providing outplacement services can be a good public relations move. It may go a long way toward helping retain good employees and recruit top-drawer candidates when you’re ready to hire again.
4. Existing employees’ morale benefits
Your current employees are your best advertising. Chances are good they’re friends – or at least “work friends” – with the people being let go. Rumors may be flying, and it’s often not enough to control the message internally. Employees left standing are likely worried they’ll be next, and you don’t want them to start looking for another job just when you need them to be their most productive. Providing outplacement services can show you’ve got your employees’ backs.
5. Outplacement services costs may help save money
Biting the bullet to budget for outplacement now may help prevent litigation by unhappy employees later. It may also lower unemployment claims if laid-off employees are able to return to work quicker.
5 common outplacement mistakes
Avoiding these five commonplace mistakes can help ensure you and your displaced employees a smoother transition.
1. Doing nothing at all
You want laid-off employees to move to their next opportunity with as few bumps in the road as possible. If your budget doesn’t allow for hiring an outplacement company, consider compiling resources that cost little or nothing, like relevant online job boards or a LinkedIn networking group. You could also sponsor off-site brown-bag lunch-and-learn events that feature pro bono career experts as speakers. Just be sure not to attempt onsite counseling. Specialized services are better left to the pros.
2. Assuming that no one or everyone wants outplacement services
Don’t just hand out money for outplacement across the board. Ask employees if they’re interested in outplacement services at the exit interview. Set a deadline to begin services within a month, or some other agreed-upon time frame, after termination. If an employee doesn’t want outplacement assistance, consider offering the cash equivalent of what the services would have cost you as additional severance pay.
3. Taking a one-size-fits-all approach
Outplacement represents an additional expense for your business. You may have to prioritize who receives services and at what level. Executives, higher-paid employees and those who have been at the company for long periods should probably receive more if you have to make such a call. It wouldn’t make sense to offer an employee who’s been with your company three months the same $5,000 worth of outplacement services you provide an employee who’s been with you for 25 years.
4. Setting a rule or policy around what you will offer
Avoid including outplacement promises in employee handbooks, employment contracts or any official documents. Each scenario is different, so don’t paint yourself into a corner.
5. Not trying to negotiate with an outplacement firm
You may have extra leverage if you’re laying off a large number of employees, but make an attempt to negotiate in any case. Besides a discount on price, you may be able to finagle:
- Increased face time with consultants, as opposed to online services and group meetings, for employees
- A consultant dedicated especially to your company’s ex-employees, maybe even someone who knows the industry
- Face-to-face, one-on-one guidance on interviewing techniques, especially for those who have been out of the market for an extended time
- Business cards, office space or phone answering service
The takeaway
When it comes to outplacement services, it’s wise to be proactive in making a plan. A little research and forethought before you have to lay off workers will be time well spent.
In need of some additional resources for making tough human resources decisions? Download our free e-book, 7 most frequent HR mistakes and how to avoid them.