WHAT DOES OUTPLACEMENT REALLY COST? YOU WILL BE SURPRISED.
The staff at The Center for Leadership Excellence recently studied the various costs and benefits of outplacement services. The study included the financial cost to the organization, the reasons why organizations don’t provide outplacement, the values the individual receives when outplacement is provided as a benefit, and the non-financial cost to organizations that do not provide this benefit.
Criteria Used in Evaluating Outplacement Program Services
The study looked at outplacement programs that included:
- Coaching the manager responsible for conducting the termination meeting skillfully.
- A certified Personal Career Coach that provides much-needed emotional and psychological support during this challenging time.
- Coaching on navigating the job market and understanding the nuances of the job market.
- Most importantly, coaching support of the individual until they are successfully re-employed (no time-restricted programs).
What Is the Financial Cost To An Organization For An Excellent Outplacement Benefit Program?
The financial criteria that were included in the study were:
- The annual salary of the individual being transitioned out of the organization
- The workday salary of that individual
- The cost of high-quality outplacement services
- The cost of this benefit based on salary cost per workday
ANNUAL SALARY/WORKDAY SALARY – OUTPLACEMENT COST – BENEFIT COST IN WORKDAYS
- $50,000 $192/day $1,500 8 days of salary
- $75,000 $288/day $2,500 7 days of salary
- $100,000 $384/day $5,000 13 days of salary
Note: Surprisingly, the financial cost of this very valuable benefit was rather low. This benefit only cost an organization between 7-13 days of additional salary.
Why Don’t Some Organizations Provide This Benefit?
A recent Mercer Survey reported only 44% of organizations provide outplacement services to individuals they transition out of their organization.
If this valuable service has such a low financial cost, why don’t all organizations see this as a prudent investment? The following are some of the excuses found during our study:
- “We are cutting cost – budgets are tight”
- “The job market is very good – they won’t have a hard time finding a new job.”
- “They were here only a couple of years – it is hard to justify.”
NOTE: Our researchers also found that some managers and/or less experienced HR Professionals may not fully understand the value that outplacement services can bring to both departing employees and the organization itself. There may be a perception that once an employee leaves, their journey is no longer the company’s concern.
Why Outplacement Is a Benefit An Employee Needs Most When They Lose Their Job
If an executive is basing their decision not to provide outplacement as a benefit solely on financial cost, they are missing the potential bigger-picture cost to the individual!
Let’s start with the “cost” to the individual. When an individual loses their job, it’s normal for them to feel hurt, angry, vulnerable, or even betrayed. Work is more than just making a living for most individuals. Beyond the loss of income and a stressful experience, losing a job can mean a loss of professional identity, diminished self-confidence, and the loss of one’s social network as well as the end of a familiar daily routine.
A professional career transition coach not only provides much-needed emotional and psychological support during this challenging time but also is adept at understanding the nuances of the job market and can provide invaluable insights into how to position oneself effectively. With their support, job seekers are often able to shorten their job search time and secure positions that align better with their career aspirations.
Why Outplacement Is A Very Prudent Investment For The Organization
- A Harris Poll reported that 83% of Americans said offering outplacement services to laid-off employees would improve their opinion of the organization.
- That same survey revealed that 82% felt that employers who provide outplacement services care more about their employees than those who do not.
- Organizations, large and small, can protect and enhance their brand reputation with employees by demonstrating, to both existing and departing employees, that the organization cares about its people, even beyond their employment with the organization.
- Current employees – Change can be potentially traumatic for the employees who remain, just as it is for those who are terminated. They need to understand what happened and how it might impact them
- Legal Risks – Providing outplacement services can mitigate potential legal risks associated with layoffs or terminations by demonstrating good faith efforts to assist departing employees.
Conclusions
Outplacement services represent a valuable opportunity for companies to support their employees during challenging times while also safeguarding their own reputation and long-term success. While cost concerns and misconceptions may deter some employers from offering these services, the potential benefits in terms of current and former employee morale, reputation, and legal protection make a compelling case for their inclusion in a comprehensive employee benefits package. By investing in outplacement services as a benefit, companies not only assist individuals in their career transitions but also reinforce their commitment to ethical and responsible business practices. It’s time for more companies to recognize the hidden value of outplacement service as a benefit and embrace them as a beneficial investment in their employees’ future.
Learn More about how The Center For Leadership Excellence’s Career Transition Services is a prudent benefit investment for your organization. Visit our website at www.cleindy.com/outplacement or contact Jane Richardson, at (317) 652-1681 or jrichardson@cleindy.com.