What is Outplacement in 2023? Definition, Benefits, and Uses
Define Outplacement Services
Are you a manager looking to help employees find work following a layoff or job loss?
Maybe you want to learn more about how to navigate and implement an outplacement support service (career transition)?
Here’s an outplacement guide that answers your most common questions.
Table of Contents:
- What is Outplacement (Outplacement Services Definition)?
- What Is a Severance Package?
- Organizational Benefits of Outplacement
- What Is Reduction in Force (RIF)?
- What Is a Layoff?
- What Is the Difference Between a RIF and Layoff?
- Picking the Best Outplacement Firm
- Cost of Outplacement Services
Laying off employees is a harsh reality no employer wishes to face but most have to deal with.
Layoffs occur when an organization undergoes restructuring, downsizing, mergers, etc. which can lead to the termination of employees. These times can be tough, which is why employers often seek help during the process.
This is where Outplacement Support come in to play.
Outplacement services have become a rapidly growing and almost required component of the severance agreement to help separated employees quickly and effectively find jobs.
Offering outplacement services to an employee is not only the right thing to do, but it serves other business purposes as well, such as reducing the risk of litigation, saving money on unemployment benefits, and protecting the employer’s brand (to name a few).
Are you thinking of implementing an outplacement service within your organization but don’t know where to start? This guide will take a look at everything you need to know about the process and how to handle it.
What Is Outplacement? (Outplacement Definition)
Downsizing and terminating employees is common within companies of all shapes and sizes. When businesses struggle or the economy takes a turn for the worst, organizations are often forced to terminate employees in order to keep the business running properly.
Downsizing is a difficult decision for any company to implement because it means rendering loyal colleagues, friends, and family jobless.
Fortunately, organizations have come up with a more helpful solution when they are forced to terminate/downsize. This solution is referred to as Outplacement Services (or programs).
Outplacement Service is job placement assistance that organizations provide to their employees through a third party at no cost to the employee (covered by the business/organization).
When a company/business is restructuring or laying off workers, outplacement services step in to help!
This third party helps navigate the transition process, providing general training, interview prep, career coaching/counseling, and resume writing services, just to name a few.
What Is A Severance Package?
A severance package is an agreement between an employer and employee about how much pay and benefits the company is willing to continue beyond the employee’s last paycheck.
Every company is different, but a typical package includes one week’s pay for each year of service, a limited continuation of healthcare benefits, and outplacement services (which the majority of US companies opt into).
How Do Employers Benefit From Providing Outplacement Services?
Organizations and businesses are embracing outplacement services because they think it is the right thing to do (along with making business sense). This says a lot about a company’s culture!
Outplacement shows that a business cares about departed employees, portraying them to be employee-minded. It can be difficult for people to find new and desirable jobs in today’s work world, but outplacement makes the transition faster and easier.
Why Would A Company Provide Outplacement Assistance To An Employee?
- Reducing the pain for laid off employees
- Termination is painful for both the employer and the employee.
- With outplacement services, you can provide professional career transitional care to minimize this pain (hopefully cutting down on the hardship and tough situation they were put in).
- Protecting the employer’s reputation
- Companies, especially established ones, make news headlines when they implement terminations and layoff policies. Such stories can rub off the wrong way on potential clients, giving the company a reputation for being impersonal even when the terminations were necessary.
- With outplacement services, you can soften the bad news through the optimistic voice of your laid-off employees (who are hopefully now satisfied advocates).
- Boosting the loyalty and morale of the employees left behind
- Successful companies today recognize their people are the biggest brand advocates and sources for attracting new talent.
- Termination and layoffs can affect the employees who are still with the company. Your reason for laying off employees is likely justifiable, but if you don’t provide the departed with some kind of help, you may lose the support of those that remain. Such an environment is unhealthy for a successful business to properly run.
- With outplacement services, your current employees can feel assured they will be taken care of if anything like this happens in the future.
- Helping the terminated employee land a new job faster
- While you may think that terminating an employee helps reduce your labor costs, it may actually cost you more than you think if not properly executed. This is because you have to pay the employee unemployment compensation (if your company has this set up) and any other costs associated with their package.
- When an employee quickly finds a new job, they will start receiving their new paychecks, which will reduce the unemployment compensation costs.
- Protecting you against legal claims
- Some unsatisfied terminated employees may choose to sue their former employers for wrongful termination and end up getting a large paycheck in return.
- When you provide outplacement services and the employee takes advantage of it, you reduce the risk of getting sued.
The federal reserve bank of Chicago published a study that projected an organization with 1,000 employees who were laying off employees could avoid losing roughly $1.4 million in wrongful termination lawsuits through offering outplacement services. – Velvet Jobs
What Is Reduction In Force Meaning(RIF)?
Reduction in Force (workforce), or RIF, is a permanent elimination of a position. It is a separation from employment brought about by lack of funds, lack of work, redesign, elimination of a position, or reorganization.
When a RIF is implemented, it’s not likely or expected that the employee will be recalled to the job. A reduction in force is typically a permanent reduction in employee headcount.
What Is A Layoff?
Sometimes, businesses are pushed to a point where they have to eliminate employee positions because of budgetary reasons, personal management errors, or general business needs.
A layoff occurs when an employee is relieved of their position, duties and responsibilities.
This can be a temporary suspension or permanent termination. A permanent layoff is also referred to as a redundancy.
What’s The Difference Between Reduction In Force And A Layoff?
A layoff and a reduction in force (RIF) are usually used interchangeably. While the end result is similar in that an employee loses their job for reasons out of their control, there are differences between the two.
Layoffs usually come with an expectation that the employee might be rehired if an employer has more work or their financial condition improves.
On the other hand, RIFs don’t have such expectations. Once an RIF is implemented, it usually means the position is gone for good.
Layoffs and RIFs are legal, but discrimination based on gender, race, age, religion or any other characteristic would be grounds for a lawsuit (and downright wrong). Contact your local HR or lawyer before moving forward.
As an employer, the choice between RIFs and layoffs is up to your discretion. There are times when the former is necessary, especially when restructuring a business for more profitability. In such situations, a consolidation of responsibilities will definitely lead to the elimination of some positions.
In other cases, your company may be down for just a moment and then bounce back, so a temporary option (layoff) would be more ideal. Making a decision between the two depends on the overall health and vision of your business.
When you’ve made the decision and brainstormed how to implement the strategy, it’s time to find a third party that can provide the terminated employees with outplacement services.
How To Select An Outplacement Services
There are quite a few outplacement options on the market today. Here are some tips on what to look for when selecting an outplacement firm specific to your needs:
- Customized: Choose an agency customized to meet the needs of your organization. Every business has its own needs and no single solution is going to work for everyone.
- Results: Find an agency that gives your former employees the best shot at landing a solid job. It will help build your reputation as an employer that cares.
- Value/Cost: Select a firm that offers value at an affordable cost. The idea of terminating employees is to minimize cost, so you don’t want to spend too much on an outplacement firm. However, you need to think about the value you are getting for your money. Great value at a good cost will do the trick.
- Technology: Select a firm that integrates technology into its services. For example, since outplacement firms offer career coaching, they should use webinars and other technology to deliver coaching content. Such technologies place the outplacement firm and former employees ahead of the curve.
- Training: Choose a firm that also provides services to the employees who remain. For example, they might offer career advice and training tips to help develop the employees.
- Flexible: Select a flexible firm willing to adjust their own preferences according to the needs of your former employees.
The Cost Of Outplacement Services
The cost of outplacement varies depending on the firm. Some may charge as little as $750 per employee while others may charge up to $10,000. The difference in the price emphasizes the services each firm will provide along with the level of employee they are helping.
Certain outplacement firms may require some kind of retainer.
The best way to determine if the price is worth the investment is to see an overview on the services provided by the firm. If you would like to move forward with a particular firm, you can come to an agreement on an ideal price based on the number of former employees and their level within the work industry.
Fortunately, technology has cut down on the costs of outplacement services. As time goes by, the costs may continue to drop!
Wrapping Up | Outplacement Support
Businesses and organizations alike will face a time when downsizing is a necessary tactic. When that’s the case, outplacement services will be there to help.
Providing this service to employees who have been laid off will enable them to secure another role faster and shows the remaining employees that you are an organization that cares about its workers.
This in turn will boost employee loyalty and hopefully drive positive results moving forward.
Here’s a list of the best outplacement services to help get yourself started. Best of luck with your business!
Title: The Outplacement Guide | Definitions, Explanations, and What You Need to Know
Category: Employer Resources
Tags: outplacement, reduction in force, what is outplacement, Rif, reduction in force meaning, laid off employees, outplacement of terminated employees, executive outplacement services cost
Author: Reid is a contributor for theJub. He’s an employment and marketing enthusiast who studied business before taking on various recruiting, management, and marketing roles. More from the author. | Author Profile