5 Ways an Investment in Outplacement is an Investment in Your Company's Future
If you’ve never been through a layoff or a corporate restructuring event, either as an employee or as a member of the HR team, you may not be aware of the outplacement market. Suffice it to say that outplacement, like other benefit and employee programs, comes in a variety of shapes and sizes. While there is a perception among some employers that an investment in outplacement services is money well spent for top executive team members, but not necessary for every displaced employee, that perception is changing — and so are the practices around offering outplacement.
In a recent study, RiseSmart found that a majority of employers offer outplacement services to all employees across job level and tenure, not just to key players or to upper level management. These trends show the growing understanding of the importance of offering outplacement and the belief that offering outplacement is an investment in the future success of the company.
Among those surveyed, we saw a definite trend toward employee fairness, the desire to create positive relationships with employees, and efforts to maintain those relationships even as employees transition within or out of the company. For companies not yet offering outplacement services as a standard practice, there is definite room for growth and an opportunity to improve the future success of some organizations.
If you aren’t yet convinced about the importance of offering career transition services to every employee asked to leave involuntarily, here are 5 ways outplacement has helped employers of choice ensure future viability and success.
# 1 Create a positive company image
In the new Employee Relationship Economy, relationships are no longer finite. Departing employees today become the brand ambassadors, customers, job references, and boomerang employees of tomorrow. Employers of choice already know that what they say must match the action they take. It’s no longer enough to have your company values posted prominently on your office walls. Social conscience and a sense of employee fairness now drive organizations to do the right thing for employees.
The rewards for taking care of employees, even during times of uncertainty are many. While most companies experience a downturn at one time or another — or require a shift in product or services focus in order to remain competitive – most still plan for the future. Part of that planning involves growing and maintaining a positive employer brand through reviews and comments on job review sites, such as Glassdoor, and other social media channels.
#2 Establish a positive workplace culture
Employees displaced by a reduction in force are not the only ones affected when positions are eliminated. While many organizations focus on the transitioning employees, many fail to recognize the impact on productivity and trust among the remaining employees. When companies opt to provide effective outplacement services, the remaining employees feel good that their friends and colleagues are being taken care of in a very material way.
Surviving employees are able to get back to work and return to higher productivity when they are assured that they will also be taken care of, should additional cut backs be necessary. Because remaining employees will be in contact with your transitioning employees to get updates on their progress toward landing a new job, it’s important to choose your outplacement provider carefully.
Gathering information from your alumni employees is critical to improving your processes, maintaining a positive work environment, and protecting the employer brand. Choose an outplacement vendor that can deliver alumni employee sentiment ratings and collect honest feedback from effected employees about their career transition experiences – including their opinions of the organization and your outplacement provider.
Creating and maintaining positive relationships with departing employees opens the door to rehiring those same employees down the road, when the pendulum of business swings up again. Of course, hiring former employees is also a good way to cut future onboarding costs.
#3 Maintain and protect your employer brand
Just because your organization is going through a reduction in force now, doesn’t mean you won’t be hiring in the future. In fact, many organizations are simultaneously conducting layoffs in one division while actively recruiting and hiring in another. Suffering from negative brand exposure will weaken a company’s ability to attract the best talent for current and future positions.
Corporate transparency is at an all-time high with the availability of information through the internet and the popular use of review sites as a standard part of the job search process. If you wait to create, or mend, your employer brand when you’re ready to hire, you’ve waited too long. No matter where the company is in the business cycles of expansion and retraction, creating a public reputation that will help attract and retain the best employees should be an ongoing initiative and priority.
How much does a negative employer brand really cost? In a survey of more than 7,400 workers who had been laid off in the U.S. and Canada, 73% said they would not accept a job with a company that had a bad reputation. The findings emphasize the importance of employer brand and illustrate the point that being unemployed is not motivation enough for talent to accept an offer from a company with a negative public perception.
Overcoming the negative perceptions associated with laying off employees begins with taking care of exiting employees with services that are proven to help them transition easily and quickly.
#4 Limit legal liability
Our recent survey of HR leaders supported our assumptions that many organizations offer outplacement to reduce the legal risks following an involuntary separation program. Historically, companies are viewed as entities that make decisions that are best economically for the company, despite the human capital cost. While that view pervades the public consciousness, organizations around the globe are working hard to change those perceptions through socially conscious business practices that include taking care of more employees during times of business downturn.
When layoffs and restructuring events are handled correctly with the assistance of good legal counsel and effective outplacement services, affected employees are less likely to file a lawsuit. Even if an employee doesn’t leave the building with legal action on their mind, there are plenty of legal groups waiting to help them pursue additional income through the courts. Some of these groups find new business by surfing social media sites looking for disgruntled employees. And when they find them – they’ll explore every possible angle for a lawsuit, including:
- Federal wage and hours laws (Fair Labor Standards Act – FLSA)
- Worker Adjustment and Retraining Notification Act (WARN)
- Civil rights and discrimination laws
Companies can mitigate the risk of legal action by helping employees to focus on the positive. In other words, instead of spending their time and energy looking back at their past employer, workers who are busy engaging in positive career transition activities will have less time and less desire to punish the company who let them go.
#5 Save on unemployment dollars
Depending on your experience rating (the volume of turnover your organization experiences) and how unemployment tax liability is calculated in your state, you may face a rise in your unemployment tax payments for several years after a layoff.
While some unemployment taxes will be unavoidable, the unexpected rising costs of separated employees who linger on the unemployment roster for too long can start to undo the cost savings and financial reasons for implementing a reduction in force in the first place.
As HR departments shift from acting solely as a record-keeping repository and more as a strategic partner, HR leaders are being tasked to show ROI on programs and initiatives and to justify costs, such as an elevated unemployment tax bracket. While a reduction in force may be a one-time event for an organization, the tax liability associated with the company’s experience rating can mean a higher unemployment rate for several years. Since your unemployment insurance rates are based on the number of employees who claim and successfully collect unemployment benefits, you can mitigate your costs by ensuring that affected employees move out of unemployment and into the ranks of the employed as soon as possible.
In addition, companies can protect against excessive taxes by keeping adequate records and offering some alternatives to involuntary separation to their employees before enacting workforce reductions.
Don’t skimp on outplacement offerings. If your organization is stingy with outplacement, or if the outplacement you provide doesn’t satisfy the needs of your employees, you’re no better off than you were by not offering any services at all. Find a contemporary career transitions solution to provide personal, customized programs for your employees and avoid some of the common complaints by outplacement recipients including:
- Impersonal, group settings that don’t address individuals needs
- Lack of tailored networking advice for successful networking efforts
- Templated messaging that doesn’t differentiate candidates
- Insufficient interview preparation for today’s video and virtual interviews
- Absence of professional value proposition development
Employers of choice are looking at ways to increase engagement, improve ongoing relationships, and remain employers of choice. They know that taking care of employees during times of transition is the right thing to do.