Navigating Change: The Value of Outplacement Services for Organizations and Employees

Agile organizations must consistently reassess their business strategy and, consequently, their talent strategy, including restructuring and downsizing. With this comes difficult solutions that affect individuals and the entire organization, such as suspending hiring, offering furloughs, and executing layoffs.

Employees face a loss of income, benefits, and the identity and community they’ve developed within their jobs. The employer is responsible for the unpleasant tasks of deciding who will be affected and delivering the bad news. Even the employees who keep their jobs have to deal with the uncertainty and their own turmoil. It is crucial for organizations to handle these situations skillfully and with compassion.

Two organizational psychology professionals’ research discovered that appropriately handling downsizing can ease the stress experienced by both departing and surviving employees—a finding further reinforced by SparkEffect’s study. This is where career transition (aka outplacement) services come in—a term we prefer for its humanity and empathy over outplacement.

What are Career Transition Services?

Career transition/outplacement services support people who are experiencing job loss due to a layoff, downsizing, or reduction in workforce. Employers offer this benefit to impacted employees to assist them in managing the emotions of job loss and developing effective strategies for securing new career opportunities.

This guidance can include the following tools to usher people into the next chapter in their professional lives:

Career Coaching
Mentoring
Digital professional brand presence (such as on LinkedIn)
Resume and cover letter writing assistance
Job search strategies
Interview Preparation
Networking advice
Salary negotiation skills

Experienced career coaches are equipped to guide individuals in clarifying their passions and identifying how their skills, work styles, and strengths align with current market demands. By providing focus and direction, career transition services empower individuals to overcome the ambiguity and uncertainty that often accompany job loss or career changes. Through this process, individuals gain a clear sense of direction and a renewed sense of confidence and purpose that can propel them forward in their careers.

Why Offer Career Transition Services?

While career transition/outplacement services directly benefit displaced employees, employers often realize the benefit to the organization is just as significant. Many HR and business leaders recognize that outplacement services can generate a meaningful return on investment for organizations.

HR professionals and senior-level executives regularly share with SparkEffect the noticeable benefits of implementing career transition solutions impacting their broader organization. These often include, but are not limited to:

Protecting culture and productivity
Preventing a talent exodus
Benefiting crucial talent recruitment
Supporting employer brand reputation
Mitigating risk

Let’s take a closer look at these five advantages of outplacement services.

1. Protecting culture and productivity

Even in the best workplaces (in fact, more so), layoffs can have a lasting and detrimental impact on the remaining team, affecting commitment and productivity. According to a Bizreport survey, 71% of surviving employees report declining work motivation following a layoff, and 61% say they are hesitant to tell job seekers that the company is a great place to work.

Layoffs can negatively impact the ‘psychological contract’ employees tacitly have with their employers. Consequently, employees fear that their employers are not as employee-centric or friendly as they previously believed. This perception is attributed to the trust employees place in their leaders to conduct ethical, compassionate business and the discrepancy they feel when life-changing employment decisions occur.

Offering outplacement services or career transition assistance is an increasingly important way that HR leaders seek to affirm to both displaced and retained employees that even in the unfortunate case of layoffs, the company continues to focus on the success and engagement of its talent.

Providing displaced employees with a career coach and other services and demonstrating a “how can we help you?” attitude following their exit will positively impact company culture for retained staff.

Outplacement ROI on this dimension is typically measured by closely tracking productivity and performance metrics among remaining employees following a layoff. Some leaders utilize control groups or compare current versus prior layoff scenarios without these services.

2. Preventing a talent exodus

Despite the intention behind a layoff to save money and increase productivity, a University of Wisconsin study has revealed that layoffs often have the opposite effect. Downsizing causes anxiety for the remaining employees, who tend to assume that more layoffs are coming.

The study showed a correlation between layoffs and subsequent voluntary terminations, demonstrating that one undesired result of a reduction in workforce is the voluntary resignation of the remaining high performers. Namely, turnover increases by 30% on average following a layoff.

The threat this poses to the company is significant:

Employees choosing to leave the company voluntarily may be hired by competitors, changing the employer’s market position.
Client relationships suffer and may not survive the transition, especially during critical points in the buying process.
The remaining employees face increased workloads and decreased engagement with the company culture impacted.
New staff recruitment and onboarding have costly financial implications for the company.
Critical roles need to be filled and retained to survive events precipitating layoffs.

If employees see that layoffs are handled respectfully and accompanied by career transition support, surviving employees will respect the organization and feel more secure in their own future. This can keep them from believing they have no choice but to jump ship.

Data from the Wisconsin study showed that employers who demonstrate a lower correlation between layoffs and a following departure of employees are often those who exhibit fair and just practices and encourage employee engagement through benefits that support work-life balance. Outplacement resources serve this purpose well.

3. Benefiting crucial talent recruitment

Outplacement services also serve as a peace-of-mind benefit for employees, making it a valuable recruitment tool. When employers advertise the inclusion of career transition services as a part of their benefits package, candidates have increased motivation to consider the offer as it:

Reflects the company’s investment in its employees’ professional development and physical, emotional, and financial well-being, indicating a desirable company culture.
Decreases the risk associated with changing jobs.

Adding career transition services to the recruitment package can have a lasting and far-reaching impact on the company. Great benefits make finding the right person for the open role easier and improve the company’s chances of landing top talent for the position. The results may include ongoing savings due to innovation, productivity, competitive edge, retention, etc.

4. Supporting Employer Brand Reputation

Today’s digital culture offers numerous platforms that collect information and have an extensive reach to affect public perception of your employer brand. How employees are treated throughout the employment lifecycle impacts whether they express positive or negative feedback on these sites.

Disgruntled employees, often those who have lost their jobs involuntarily, can quickly damage a company’s reputation and its ability to attract talent. According to the employment website Glassdoor, 86% of job seekers research companies by reading their employer reviews before applying for a job.

Career transition/outplacement services and support express that employees are valued and set up for success. When the employment relationship ends amicably, it protects the company’s reputation and decreases the likelihood of an employee leaving the company with anger and hostility. This will go a long way in reducing the number of undesirable offboarding experiences shared on social media and Glassdoor/Indeed employer reviews.

Guarding the company’s formal and informal reputation can indirectly protect revenue and simplify recruitment. For example, word-of-mouth has been shown to improve marketing effectiveness by up to 54%, and 64% of consumers say they won’t do business with a company if they hear it treats its employees poorly.

5. Mitigating Risk

Emotions run high during layoffs. Displaced employees often feel they’ve been wronged or discriminated against and may want to seek retaliation through the legal system. Showing employees respect and compassion with career transition benefits can make them less inclined to slander the organization or pursue legal action.

Knowing that they have support in finding another job and possibly a new career field can channel employees’ emotions to keep them from feeling resentful and vindictive. This maintains a healthier work environment, diminishes reputation damage, and avoids the time and expense of litigation.

There is also the issue of unemployment insurance tax when it comes to laying people off. Many factors determine the impact on rates. These include how long employees will collect unemployment, the number of previous layoffs, and the total funds in the employer’s state unemployment trust fund. Outplaced employees are likely to be reemployed faster than they would be if left on their own, limiting the employer’s unemployment insurance liability.

Successful Career Transition Services Delivery

Implementing layoffs without the safety net of outplacement is risky. Providing career transition assistance is an ethical investment in the employer-employee relationship that will reap future value.

To make the investment worthwhile, HR must meet employees’ career consulting needs by partnering with a career transition/outplacement service provider that delivers value and results. The firm should know its way around the current job market and offer personalized plans, experienced coaching staff, and a proven track record of experience and client satisfaction. Impacted employees should have access to in-person or virtual coaching and education and be furnished with optimized LinkedIn profiles and resumes that can navigate application tracking technology.

SparkEffect CPI (Career Partners International) has a long history of providing exceptional career transition services that equip employees and employers to withstand the storms of uncertainty, move forward, and thrive in their next chapter.

Key takeaways:

Layoffs impact everybody, not just the departing employees. 
Layoffs can cause more financial burdens than financial gain if not handled appropriately. 
Outplacement services have a consistently high return on investment in all industries for impacted employees and those who remain with the organization. 
Employers/HR leaders must ensure the efficient delivery of outplacement services across the organization to maximize the benefits gained.