At a time of rapid inflation and economic uncertainty, many organizations are being forced to tighten their belts and make difficult decisions about their workforce. Hiring is being put on hold in many companies, and others are even downsizing.
Downsizing your workforce is never an easy decision. Not only does it have a direct impact on the individuals affected, but the way such moves are handled can have a significant impact on a company’s reputation and ability to retain its top performers. To offset this risk, many companies turn to outplacement services to help.
Today, 44% of companies are offering outplacement services for the majority of terminations, according to a 2021 study. That represents more than a 10% increase from 2018. Outplacement is no longer reserved for executives, either. Most of these organizations are offering outplacement services to most employees with benefits ranging up to six months.
What Are Outplacement Services?
Outplacement services are a benefit offered by an organization to employees they terminate or lay off. They may include services such as:
- Resume writing
- Preparing for interviews
- Job search skills
- Career coaching
- Networking opportunities
Depending on the company and program chosen, outplacement may also include online training to develop skills, helping workers stay competitive when they are searching for jobs or one-on-one job counseling services.
The Benefits of Outplacement Services
Outplacement services help ease the post-job transition for terminated employees. They provide help with making a career transition or simply finding a new job.
Sometimes, when workers lose their job, it can shatter their confidence and take an emotional toll. Outplacement services can help rebuild their confidence, though, and empower them to move forward during a challenging time. It helps those affected look forward rather than dwell on the past.
Not everyone knows how to find their next job, so companies can’t assume that people know how to develop a resume, navigate job search platforms, or handle job interviews. Instead, outplacement services help teach displaced workers the skills they need to manage a job search in today’s environment.
Organizations deploying outplacement services see significant benefits, too.
Impacts Existing Workforce
Nobody wants to see their colleague struggle — even if they know that a termination decision was justified or that a layoff was necessary. They want to work for a company that will treat all of their workers with compassion.
A Pew Research study revealed that people quit jobs because of low pay, lack of advanced opportunities, and feeling disrespected at work. Outplacement services, though, show respect for the individual, and this can have a significant impact on the existing workforce.
Employees will often judge a company by how they treat departing employees. If they see others treated poorly, it can reflect poorly on the company and impact retention levels. Conversely, employees will notice when departing employees are treated well. This sends an important message that if changes are needed, the organization will be there to help.
When employees worry about their job or conditions at their company, they may be inclined to look for other opportunities elsewhere even when they shouldn’t worry. Gartner says this is happening more often than ever, forecasting a nearly 20% increase in voluntary turnover in 2022 that is expected to continue at high rates for years to come.
Turnover has a huge price tag, though. According to Gallup, it costs from one-half to two times an employee’s yearly pay to replace and train departing employees. Gallup estimates that turnover costs U.S. businesses about $1 trillion annually.
Fortunately, outplacement services can help ease employee concerns. They know that even if they are laid off or terminated, there is help available to them. Even a small reduction in turnover can reduce overall recruiting and training costs, saving companies money and retaining more of their workforces.
When terminations or layoffs are public, that can damage a company’s reputation. It may send a signal of financial problems or be perceived as a lack of management or oversight. When HR departments offer outplacement services, it helps mitigate these perceptions.
A survey by The Harris Poll showed that 83% of people said they have a higher opinion of companies that offer outplacement services to employees they let go. The majority of those surveyed said it shows the company cares more about its workforce than other companies.
When outplacement services are provided, that may mitigate bad reviews and help protect company reputations. When companies announce layoffs, for example, letting everyone know that they are providing outplacement services to help laid-off workers find new jobs sends a positive message during a difficult situation.
Helps Mitigate Poor Reviews
Terminated workers have a lot of outlets today to express their opinions about companies. Besides their own social media accounts, there are plenty of job sites and company review sites where they can leave poor reviews. Because these sites get a lot of traffic, they tend to show up in search results when people are looking for information about a company. So, poor reviews can have a lasting impact on others, preventing high-quality job candidates from applying in the future.
Layoffs often reflect economic conditions rather than problems with employees uncovered during their performance appraisals. Unfortunately, there may be times organizations have to part even with valuable employees. At such times, outplacement services can help you maintain a positive relationship with employees, which can then help if you want to bring them back into the company at a later date.
Reduces Legal Actions
When HR departments are providing help to terminated or laid-off employees for even a short period, that can help reduce potential lawsuits from disgruntled employees. They may hesitate to take legal action because they are still receiving benefits, or outplacement services may help them find a job quickly. In some cases, they may find a position that they are better suited for, leaving no hard feelings.
Prevents Unemployment Cost Increases
If terminated employees find work more quickly, that will reduce the amount of time they receive unemployment benefits. This may help mitigate potential increases in unemployment insurance costs for organizations by reducing the amount of time that displaced workers need to collect unemployment.
Keeps Employees Engaged During Layoff Periods
Large organizations are required to notify workers in advance of significant reductions in force (RIFs). Specifically, the Worker Adjustment and Retraining Notification Act (WARN) requires organizations that employ more than one hundred workers to give at least sixty days advance notice of any significant pending layoffs. Following such announcements, though, it is often difficult to keep employees engaged — both those that will be losing their job and their colleagues.
Outplacement services help ease the transition for departing employees. When they know that they are getting help finding another job, they are more likely to stay engaged in their current work. The remaining employees, meanwhile, might experience less “survivor guilt,” allowing them to stay focused as well.
Helps When Recruiting New Employees
Many organizations have found that outplacement services can also be a recruiting tool. Committing to outplacement services as part of a benefits package can be an extra incentive to help land job prospects.
The benefits companies offer are an important component in recruiting. In a tight labor market where top prospects have numerous options, offering a competitive benefits package is crucial to attracting the best and brightest.
Organizations have seen a high level of turnover in recent years. The COVID pandemic prompted many to reevaluate their life and career choices, leading to what has been dubbed The Great Resignation. That being said, nearly 70% of employees surveyed as part of the University of Phoenix Career Optimism Index for 2022 said they would think about staying with their current employer if things changed. A big part of these changes includes the benefits being offered.
A McKinsey study shows that the #1 reason people leave their current jobs without another job in hand is that they perceive that their company and company leaders are uncaring. In contrast, offering HR benefits such as outplacement services shows that an employer understands the cost of having to leave a company involuntarily.
Organizations often tell their employees that they care about them but sometimes fail to demonstrate that caring through their actions. Outplacement services, though, can help provide tangible proof that organizations care about their workforce.
How Resourcing Edge Can Empower Your Business
Resourcing Edge is an industry leader in human capital management solutions, offering Professional Employer (PEO) services and a single point of contact to help manage all of your human capital needs. Resourcing Edge can, for instance, help you design an employee management program to control costs, reduce risk, and better manage your payroll, HR, benefits, and workers’ comp insurance.
Contact Resourcing Edge today to learn more about outplacement services or discuss any element of your human resource capital management needs.
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