July 23, 2013
In both difficult and dynamic times, management may find itself faced with having to make decisions affecting roles and changes to its staffing structure, including the transitioning of employees from the company. These decisions and changes require effective planning, organization, and execution of a dignified exit plan. Whether employees leave a company voluntarily or involuntarily, a goal of management should be to reduce, if not eliminate, potentially negative aspects of the termination and subsequent job-search process, with the goal of providing the exiting employee with support, and reducing anxieties for the “surviving” employees.
A major consideration is to provide Outplacement, or Career Transition Services to exiting employees. The benefits of providing Outplacement services far outweigh the cost of implementing a quality internal program. A quality Career Transition or Outplacement Service can be a most important severance benefit, both to the employee and to the company. For the individual, while dollars can help financially during the transition, outplacement enables the employee to make a suitable career transition more quickly and successfully. For the company, outplacement services not only provide benefits that cannot be purchased in other ways, but save resources that may otherwise be expended on organizational and/or legal problems which tend to arise when outplacement is included in the termination package.
The Primary Benefits to the Company in providing Outplacement to employees who are terminated for organizational and/or economic reasons include:
Avoiding Legal Problems
It’s much easier for an objective, third party to help an angry employee move on to the future than for the company to do so. Often, the terminating company is seen as the enemy. Terminated employees who are in contact with Career Transition / Outplacement counsellors about future career opportunities are not speaking with labour lawyers about how unfairly they were treated. Experience proves that discrimination claims can be reduced through professional counselling directed toward future career success.
Maintaining a Responsible External Image
From a public relations perspective, former employees can either damage your company’s reputation or report fair treatment. Which would you prefer? Being perceived as a responsible employer to your markets is part of your reputation that both your customers and your future employees will research. Employees who are treated fairly when terminated are not as likely to voice negative opinions of the company to any form of media. Outplacement supports a positive view of the company by employees and the community.
Preserving the Goodwill of Terminated Employees
Helping a former employee who has helped you for years is responsible management. Regardless of how strong the economy may be, the rules of career transition have changed since the last time the employee made a transition. Let them leave as you would want to leave a company yourself. You may be working with them in some capacity in the future. Maintaining amicable relationships with terminated employees, who may later become employed in positions within a client company or another company with future business links to the company, ensures that future business dealings with them are positive.
Improving Retention and Recruitment
Professional recruiters report that it is much easier to recruit and retain high performers for companies that treat their employees well and that have good reputations. How you handle employee terminations contributes to your long-term image. Employees who stay with the company are also sensitive to how terminations are handled. Once a company has the image of treating people poorly, it becomes extremely difficult to retain current talent, maintain productivity and obtain new talent.
Facilitating Manpower and Succession Planning
Outplacement can free management to make decisions in a more timely manner about individuals who are “bottlenecking” the organization and blocking “fast trackers.”
Improving Morale and Productivity
The least visible and most powerful reason for outplacement is to improve the morale of those left behind. All employees want to be valued. To that end, providing Outplacement services shows that the company has a “conscience” and demonstrates to remaining employees that they are indeed valued. Employees (often called “survivors,”) want to know that their former colleague has been treated fairly. There’s also a latent fear that they could be affected as well, so outplacement goes a long way to demonstrate company commitment during a time when productivity is important.
Reducing Unemployment Claims
Professional outplacement assistance has proven to reduce time-to-placement and reduces employment compensation claims.
The cost of outplacement is consistently offset by the expenses that are avoided, such as the ones above, as well as potential severance savings. Lower recruitment and legal costs combined with higher productivity and retention rates make outplacement cost effective.
It is generally accepted that Outplacement services reduce the risks and increase the speed of changes in an organization’s workforce. Companies who use outplacement are less likely to be faced with separation-related litigation. In addition, treating former employees with dignity and offering them tangible help in continuing their careers sends a powerful motivational message to the rest of the organization. As a result, companies who provide outplacement are more likely to maintain or increase productivity and profitability than those companies that do not provide support. Additionally, from a “bottom-line” perspective, the cost of gaining these financial and psychological advantages generally averages less than 5% of the total costs of separation.