What is Outplacement?

What is outplacement?

Why provide outplacement support?

Redundancy costs can present a heavy, albeit necessary, financial burden. With budgets under pressure and the average time in a role less than five years, organisations may be questioning whether they should add to these redundancy costs by providing outplacement support to affected employees.

Although most business leaders acknowledge that being socially responsible and “doing the right thing” are all valid and noble aims, the rising pressure on budgets means leaders must present a robust commercial business case for all expenditure. The tangible benefits experienced by organisations as a result of offering career transition support are many and varied, resulting in a compelling business case that business leaders ignore at their peril.

1. Improved employee morale, motivation and productivity

Employees remaining with the organisation can be as profoundly impacted as those individuals who lose their jobs. Feelings of insecurity, anxiety and demotivation are all too common and can quickly and negatively impact performance, sickness absence and productivity. Seeing friends and colleagues being let go without adequate support with the knowledge that it could so easily have been them, only adds to the feelings of unease and taints their opinion of the organisation. Employees with these negative emotions and unfavourable views of their employer are unlikely to provide the discretionary effort and collective input organisations need to flourish in these competitive times. In research conducted by the Aberdeen Group, 63% of organisations surveyed cited the desire to improve engagement and retention amongst existing employees as a driver of outplacement initiatives. The same research found that best-in-class companies are 2.5 times more likely to use outplacement services.

Findings by the Centre for Organisational Research (COR) showed that in businesses using outplacement services, both productivity and profitability increased in the 12 months following downsizing, with staff turnover, sick days and lateness remaining the same in the same 12-month period. When comparing businesses using outplacement services with those which did not, productivity increases were twice as common and profit stability or improvement was 50% more likely – evidence that the benefits are tangible, not merely theoretical.

It’s therefore vital that leaders take the following steps to support those who remain:

• Communicate, communicate and communicate some more. Whether it’s sharing a clear vision of the future, clarifying the new business structure, roles and responsibilities or reconfirming how the change can bring long-term stability and growth, regular, honest and open communication is key. Without this, misinformation will spread and the rumour mill will go into overdrive.
• Acknowledge and allow for an emotional response. We spend as much, if not more, time at work as we do at home so it’s normal for survivors to experience a range of emotions. Make it OK for people to talk and ask for help if they need it.
• Offer external support. Whether it’s counselling, an employee assistance programme (EAP) or coaching, leaders can help ensure employees feel supported by making them fully aware of the services available, emphasising that it’s confidential and providing information on how to access the support on offer.
• Offer employees training on managing change. Giving employees the opportunity to explore and understand the emotions around change and learn tools and strategies for managing themselves and others during periods of change can really help morale and motivation.
• Provide career development. Post redundancies, employees need to understand their opportunities for future advancement and how their future career goals are aligned with those of the organisations. Without this understanding or belief, survivors may choose to pursue their career elsewhere at a time when you need them the most.

2. Brand and reputation protection

Social media allows people to share their views to thousands in a matter of seconds. Negative experiences relayed to the masses can quickly damage the employer and customer brand. The speed and high impact this can have explains why our research shows that 71% of participants cited improving reputation and protecting the brand as the key driver for procuring outplacement. However, for the same reasons, positive experiences and opinions can also be shared at lightning speed with huge reach. Providing genuinely useful help to employees going through career transition can therefore help to protect and even enhance the organisation’s brand and reputation.

3. Attracting future talent and shortening the time to hire

We are in the midst of a skills shortage and that shortage looks set to grow in coming years. Organisations are finding it harder than ever to recruit skilled workers, with almost three quarters of businesses struggling to make the hires they need. Combine that with the lowest unemployment rate for 44 years and it’s clear why organisations are in fierce competition for scarce talent. Research by Aberdeen Group shows organisations with formal outplacement initiatives are 81% more likely to shorten the time taken to fill key positions. In fact, they’re two and half times more likely as those without outplacement programmes to indicate that this metric improved by 10% or more. Due to the faster rate at filling vacancies, these organisations are nearly 50% more likely to reduce the cost per hire too.

4. Reduction in legal costs

Providing outplacement support helps minimise and avoid legal risk, a key driver cited by 12% of participants in a recent survey of ours. A study by the Centre for Organisational Research found that legal action reduced by 72% amongst employees using outplacement services with their displaced staff. With legal costs running into the tens of thousands per case, reducing the likelihood of legal action by providing career transition support makes sound financial sense.

With such strong evidence of the commercial benefits that offering outplacement support to employees delivers, HR professionals need to question whether their organisation can afford not to provide it to their employees affected by change. Outplacement support only represents a fraction of the overall cost of a redundancy package, yet is arguably the only part that offers a genuine return on investment.

Cash versus Outplacement

We sometimes get asked by our clients what the best practices are around offering the cash equivalent to outplacement services rather than providing access to the programmes themselves. And whether these recommendations change depending on the profile of the employee eligibility.

In short, we advise that for all employees regardless of seniority or function, the value derived by an outplacement programme is always higher than the cash equivalent, both for the departing employee and their employer. Perhaps you’re thinking that it’s not surprising that a company selling outplacement programmes would advise this, but it’s precisely because we see thousands of people come through our doors when their role has been made redundant and see first-hand the issues they face that we know the cash equivalent is of limited use. Here’s 3 reasons why:

1. Think about the reasons why you offer outplacement support to your employees.

 It may be because you feel it’s the right thing to do. It may be to help protect your corporate and employer brand or to help you attract future talent. It may be to help you manage the employee morale, motivation and productivity of both your “surviving” and departing employees or to reduce the legal risk. Or it may be a combination of some or all of these reasons. Whatever the rationale, these benefits are only derived if the impacted employee is given the support, tools and expertise they need to be able to secure themselves the future that they want, whether that be securing a new role, retraining, retiring or setting up their own business. An employee that takes the short-term appeal of cash is still unemployed and with less tools at their disposal to build the future they want — leaving the organisation at risk of not being able to meet their strategic objectives of supporting employees impacted by change.

2. The importance of speed

We know that people using our outplacement programmes find new jobs on average 65% faster than if they searched on their own. Without this focused support, your employees are likely to be in limbo for longer, increasing the chance of them developing and expressing negative feelings about your organisation.

3. Memory of cash fades as quickly as it is spent.

The job market is changing rapidly. Employees that have been out of job search mode for a while quickly realise how unprepared they are to secure a new role in the world of algorithm-based job boards, applicant tracking systems and immersive assessments. Many struggle to navigate their way through this maze and remain unemployed not through choice long after the cash has gone. At this point, many forget it was their choice not to take up the offer of outplacement support and their anger, blame and frustration towards your company grows and is shared amongst their networks, increasing the damage to your brand.

But it’s not all about reducing risk. There are many positive benefits that organisations gain from offering outplacement support to their employees (see page 19) that cash equivalents simply do not deliver.

Looking at the tangible benefits gained combined with the reduction of the potential risks and it’s clear why best-in-class companies are 2.5 times more likely to use outplacement services and why 71% of UK employers report that they do not offer cash in lieu of outplacement.