Outfitting Outplacement

With the economy seemingly on an upswing — and dreaded memories of layoffs defined by the recession creeping further from view — outplacement services, or companies’ strategy to manage the transition of workers stripped from the ranks, may not appear to need immediate attention.

But large-scale layoffs aren’t always because of the economy, as Microsoft Corp.’s recent announcement of up to 18,000 planned job cuts shows. Outplacement is a delicate issue, with nuances that extend far beyond the employees walking out the door.

“One of the biggest reasons that companies need to have a strong outplacement strategy in place is to boost the morale and engagement of the employees that are left behind,” said Kelly Kilcrease, an associate professor of business at the University of New Hampshire in Manchester.

While some companies may question the value of having a solid outplacement strategy — namely because of the price tag associated with engaging outside vendors — experts estimate the cost of lost productivity stemming from depleted employee engagement due to poor outplacement treatment as more substantial.

One of the best ways companies can re-engage employees during turbulent times is to demonstrate a well-prepared and thought out outplacement strategy. Experts say there are three big questions talent managers should consider when developing such a strategy.  

How Is Success Measured?
Through his research into companies’ outplacement approaches, Kilcrease surveyed 238 human resources executives from organizations that offer internal outplacement and 168 executives from companies that engage external vendors to provide these services. Regardless of how outplacement was offered, the biggest shortcoming Kilcrease found was that there were almost no metrics reported for how well outplacement services worked.

“There’s just no sense of validity as to whether these services work or don’t work,” he said. “There’s no proof that they’re doing what they say they’re doing, which blew me away when you think about the fact that in HR they’re always measuring everything.”

What’s more, companies that engaged a vendor to deliver outplacement services didn’t yield better metrics than those that used internal resources. Kilcrease’s research found that 78 percent of external outplacement agencies don’t provide success metrics to clients.

“Start tracking right away,” Kilcrease said. “Whether it’s done internally or externally, there’s a cost to providing this service. Make sure you’re getting what you need out of it.”

What should talent managers track? Kilcrease said the amount of time it took displaced employees to find new work is a good place to start, along with what industry they moved to and how their pay and title stacks up with their previous role.

An outplacement strategy should also take a broader look at the layoff’s effect on the departing employee and his or her family. Is psychological counseling offered? In Kilcrease’s research, just 22 percent of external outplacement services and 12 percent of internal services provided any sort of counseling to outgoing employees.

Additionally, a proper outplacement strategy doesn’t attempt to put all former employees in the same box. Many transitioning employees are looking to try something new in the next phase of their career — which often translates to embarking on new opportunities in other industries or, in some instances, starting their own business.

Kilcrease said an effective outplacement strategy recognizes that many employees won’t be looking for the same type of job and, as a result, provides support and resources designed to fit such divergent needs should they exist.

Does the Strategy Reflect the Company’s Values?
An effective outplacement strategy should be aligned to the organization’s values. If organizational transparency and communication are core values, that should hold true for the outplacement approach. For starters, are employees aware a company outplacement program even exists?

“My favorite HR strategy: Tell ‘em what you’re doing, tell ‘em what you did and tell ‘em again,” said Guy Pedelini, a longtime HR executive and director at Elanex Inc., a language translation provider for businesses.

As with any other talent or benefits initiative, companies should aim to be transparent about outplacement. “Don’t hide your outplacement services — they’re a benefit,” Pedelini said.

Also, if part of a company’s value system is to be technologically oriented, that mindset should be applied to outplacement. “The traditional model of outplacement [used to be] more about classroom training, but the way people get jobs has changed, and traditional outplacement hasn’t really kept pace with that,” said Sanjay Sathe, president and CEO of RiseSmart Inc., an outplacement firm based in San Jose, California.

For companies that foster agility and innovation, their outplacement strategy should be no different. “We take a sort of ‘eHarmony’ approach to outplacement that matches job seekers with job providers,” Sathe said. RiseSmart says it gets employees back to work within an average of three months. The average outplacement job gap, according to the U.S. Bureau of Labor Statistics, is about 8 ½ months.

Is Legal Risk Being Mitigated?
One of the hallmarks of a successful outplacement plan — and most other talent management programs — is that it mitigates the risk of a company being sued. “It’s not just about whether former employees get jobs; it’s about the strategy that the company is using to convey to the employee why they’re losing their job,” said Jill Vorobiev, employment lawyer and partner at law firm Dykema Gossett in Chicago.

It is important to let employees know the reasons behind the layoff, whether it is part of an overall downsizing on a specific line of business or department, or a performance issue. “When former employees don’t understand what’s happening or why, or feel a company doesn’t care about them or what they do next, that’s when you have real legal risk,” Vorobiev said.

In essence, an outplacement strategy that minimizes legal risk does more than send an employee out the door with support — it clearly outlines what happened and why. “Everyone involved in the layoff needs to literally have a script as to why these changes are being made and why an employee is being impacted,” Vorobiev said. “The more outgoing employees hear that message, the more they understand the decision and the less likely they are to litigate.”

This means all the critical internal team members must be aligned on the messaging and communications about the layoffs, Vorobiev said. The earlier you can get people aligned on the script, the more clear and transparent that message will be to those affected. “No one is ever going to agree with the decision to be laid off, but if they understand some of the reasons, you minimize your legal risk significantly,” she said.

Most important, avoiding lawsuits is critical to keeping those remaining employees engaged and happy, Vorobiev said. “In layoffs, everyone thinks ‘I’m next,’ and it’s really important that employees who remain see that others are treated well; that there isn’t litigation going on; that the company cares; and that there are mechanisms in place to support departing employees.”

Read the sidebar to this article, "From the Outside In: Considerations When Using an External Vendor."