The Real Costs of Long-Term Unemployment for Companies (and How to Avoid Them)
In one of the more worrying trends to unfold over the past few years, the number of people who lose a job and then can’t find another one for months—or in some cases years—has remained consistently and disturbingly high.
In fact, the federal Bureau of Labor Statistics’ (BLS) most recent report on the country’s employment picture found that about one-third of all people seeking jobs had been hunting for 27 weeks or longer, which is the government’s definition of long-term unemployment. Although the tally of the long-term unemployed has dwindled by 1.1 million over the past year—thanks largely to an improving economy—there are still nearly 3 million people who meet that 27-week threshold.
The reasons for persistent long-term unemployment are many and varied. But one thing job seekers have come to understand is that the longer they are unemployed the harder it is to get hired. Unfairly, many employers have come to regard the long-term unemployed as somehow suspect or damaged, making it harder for fully qualified and capable people to rejoin the ranks of the employed simply, because they have been out of a job for an extended period. With this in mind, when organizations begin to conduct layoffs, it is vital for both an individual and the company conducting the layoff to take full advantage of outplacement services.
Not Just an Issue for the Unemployed
It is obvious why it is so important for someone losing a job to have access to a robust suite of outplacement services. Beyond emotional support, outplacement provides resources for beating the clock when it comes to getting into a new role faster.
But why does time-to-job matter to a soon-to-be former employer? From a purely financial standpoint, helping an ex-employee find a new job cuts down on costly and extended federal and state unemployment taxes, severance pay, and benefits.
Less Obvious Benefits for Employers
More than just for financial benefits, the main reason many companies supply outplacement services is to “do the right thing” and show that they care about their employees at all stages of the lifecycle, according to a recent survey.
The benefits of doing the right thing are real and compelling, even if not instantly quantifiable: by helping exiting employees quickly transition into new roles, organizations have the opportunity to turn their former employees into alumni and brand ambassadors with potential for rehire or partnerships, recommendations, and employee referrals in the future.
Moreover, helping former employees make a quick and easy transition to a new job is a big morale boost for workers who remain at the company, which is obviously important for productivity. Never forget that the employees who don’t leave the company will be watching to see how their friends and former colleagues are treated, understandably viewing it as a preview to how they will be treated should they face similar circumstances. Engendering goodwill among departing employees is also good for your company’s overall brand, which is increasingly important when it comes to luring and retaining top talent.
Being unemployed for a long stretch of time is devastating primarily for those who are directly impacted. By utilizing outplacement to reduce the chances of long-term unemployment, companies can save money and generate the sort of goodwill that will enhance their own success today and into the future.
For a closer look at why companies offer severance and outplacement, download our 2014 Guide to Severance and Workforce Transition.