When an organization makes the tough economic decision to lay off employees, any assistance the company provides is appreciated. A severance package that covers two weeks, or more, of pay for each year that an employee worked and continuation of benefits for a period of time are the most common severance package components.
Outplacement is a rapidly growing component of a severance agreement. Whether outplacement is effective in helping employees find jobs more quickly is up for debate. Experiences of former employees vary and employers appear to do very little vetting or measuring of the results of the outplacement firms they use.
What Services Does Outplacement Provide?
Outplacement is a service that is supplied by companies that specialize in helping employees job search following a layoff or job loss. Outplacement services are contracted for by the employer who is laying off employees to help employees make a swift transition to a new job. People can pay for outplacement themselves but it is a bonus when provided by the employer as part of a severance agreement.
Outplacement normally consists of individual or group career counseling and advising. Since many laid off employees are unfamiliar with current job searching techniques, training in job searching is provided. Outplacement firms help develop resumes and cover letters and even apply for jobs for individuals. Outplacement firms also provide job leads and follow-up counseling and advice.
Outplacement firms supply offices for job searching employees in some agreements and group training in all aspects of job searching and career transition. Increasingly, interactive outplacement services are becoming available online, so an employee does not need to travel to see his or her career coach. Additional outplacement services are provided over the phone, by instant message (IM) and even texting.
Prevalence of Outplacement
According to the Wall Street Journal, in 2009, "More than two-thirds of 265 U.S. employers with layoffs during the past two years offered outplacement, at an average cost of $3,589 an employee, according to a June survey for The Wall Street Journal by the American Management Association and Institute for Corporate Productivity."
The WSJ, in the cited article, says that 58.5% of laid off professionals receive outplacement for 1-3 months. Another 17.7% receive outpacement for 3-6 months. Executives are likely to receive more services for a longer period of time.
The cost of outplacement ranges from a high of over $10,000 for senior executives to $1,472 for hourly employees. The quantity of services is reflected by the range. A company highlighted in an Inc. article, says that their coaching and support last for a year at a cost ranging from $1,000 to $25,000, paid for by employers.
Success of Outplacement
The success of outplacement draws mixed reviews. Participants claim that too many people are served by too few career coaches. Others claim that the advice they receive is trivial and not very helpful in a serious job search. Others are unhappy with the resumes and cover letters that outplacement firms develop and claim that they are boilerplate and embarassing, especially when a candidate is competing with other clients of the same outplacement firm for the same job.
Outplacement recipients also complain about the methods used by outplacement firms to apply for jobs for them. But, the majority of complaints about outplacement seem to revolve around a lack of individual attention and time from career coaches and the quality of the advice, assistance, and application materials.
Why Offer Outplacement
Employers of choice provide outplacement services to assist employees to transition to a new job. They are also constantly aware of the impact of their actions, how they treat laid off employees, on the minds and hearts of their remaining employees.
Pragmatically, employers offer outplacement to protect their reputations as desirable employers, to head off potential lawsuits and, in the instance where a lawsuit is filed, look like good guys, and to minimize their liability for unemployment compensation payments.
In studies done by David Sirota, Ph.D., Founder and Chairman Emeritus of Sirota Survey Intelligence, if employers are doing layoffs most humanely and effectively, they contain three components.
"...Financial assistance, outplacement assistance, and communications. With regard to financial and outplacement assistance, the best companies tend to be uncommonly generous and helpful in what they do for employees. Thus, while a fairly typical severance for lower-paid employees is one or two weeks for every year of service, these companies may offer a month’s pay for every year of service, plus assistance with medical insurance coverage. While it has become the norm in industry to provide outplacement assistance for finding a new position, these companies might provide supplements such as financial consultation and an allowance for retraining costs. They often will actively help employees find other jobs. And, they will usually guarantee laid-off employees priority consideration for rehire when business conditions improve."
Employers can use outplacement effectively to help employees bridge the gap between unemployment and a new job. The key is to utilize an outplacement firm that provides effective services for former employees.
Employers are advised to measure and track the effectiveness of the outplacement firm they use and to gather the opinions and experience of former employees who utilized the outplacement service. There is a reason, according to the WSJ, why around 40% of employees, who receive outplacement as part of their severance, never show up to partake of the services. Some of these employees ask for cash instead of outplacement. But, the percentage of laid off employees who don't use the outplacement services, or quit quickly, is not really a wonder when you consider that outplacement firms, on average, don't even track the percentage of clients who find work before their outplacement programs end.