Outplacement for Everyone. Five Strategic Advantages of Universal Outplacement. CareerBeam

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1 Outplacement for Everyone Five Strategic Advantages of Universal Outplacement CareerBeam

2 Introduction At some point, you re probably going to have to terminate one or more employees. With business and economic cycles now in a seemingly constant state of flux, the potential for dealing with employees in transition has never been more of a distinct reality. Nobody likes thinking about it, but everyone should have a plan. To help better prepare for the likelihood of both single terminations and larger-scale reductions in force (RIFs), many employers have proactively identified outplacement solutions services aimed at helping former employees transition into new jobs so that these solutions are ready to deploy immediately in the case of a termination event. Organizations generally see real value in offering more than a pat on the back and well wishes on the way out the door when they do have to let someone go, helping to cushion the often painful blow of a termination. It s no surprise, therefore, that a number of organizations rely on outplacement services in these difficult situations. 1

3 Historically speaking, outplacement services have typically been reserved solely for executives and other upper-management positions a move that makes sense, given the generally high costs of traditional solutions. On average, outplacement services built on traditional models can cost thousands of dollars per employee, often because they rely on brick-and-mortar locations and extensive personal counseling. Employers looking to maximize their investment in these solutions offer such services to those employees with the highest profiles, most extensive social networks, and, correspondingly, the most power to inflict damage to a carefully cultivated employment brand. Ironically, these very large social and professional networks of transitioned executives are what have led to the underutilization of traditional outplacement services. In most cases, upper management employees have well-established careers and personal contacts they can easily leverage to find their next career opportunity. According to an industry survey, only 22 percent of employers believe executives would benefit the most from outplacement services over entry- or mid-level employees. 1 Yet, fewer than 45 percent of organizations offer any form of outplacement services to hourly employees. 2 So why should employers continue to offer outplacement services if the traditional model isn t really necessary for its most common beneficiaries? After all, it doesn t seem to represent a wise allocation of usually limited financial resources. But what if there were a way to offer cost-effective outplacement to employees at every level of your organization employees who don t typically have the assets to help them land their next job, like the deep experience and extensive professional networks of their upper-management counterparts? If there were a solution available that allowed you to offer universal outplacement across your organization, what would be the strategic advantages of doing so? Would better understanding the positive benefits of universal outplacement be enough for you to shift your thinking on how to use it to drive real business results? This white paper will describe five strategic advantages to using universal outplacement, and demonstrate why it s in your best interest to consider a similar program for your organization. 1 CareerArc Group Outplacement Survey. October Aberdeen Group. Outplacement Builds Its Value on Engagement. June To view the report, go to 2

4 Strategic advantage 1: Reduce litigation risk Fighting a claim against wrongful termination can be a long, costly battle for an organization, diverting scarce resources and capital from other strategic projects. That s why, for many employers, the most evident strategic advantage of using outplacement services is the ability to reduce the possibility of litigation following a termination or RIF. Offering outplacement to transitioned employees may only be one part of a severance agreement, but it s a critical one. In addition to the supplemental compensation and benefits that can help ease the short-term pain of sudden unemployment, outplacement offers a reliable path to easing the long-term pain: finding a new job. A good severance agreement one that entices an employee to sign so as to reduce your legal liabilities should have components that address both the shortand long-term needs of the employee. Severance agreements that offer outplacement services, therefore, can ultimately help soften the often painful experience of a termination. When an employee believes that his or her long-term prospects are being considered by a former employer, it could work to counteract immediate negative feelings. Taken together, a signed severance agreement and an employee whose perceptions of being wronged have been mitigated can be a powerful preventive measure against litigation. With traditional outplacement, though, you may be unable to offer outplacement to all of your employees, given its often a considerable expense (see Figure 1). That means, for many of your employees, you re leaving an important part of the job transition out of the equation. Costs of Traditional Outplacement Level of individual Percentage of companies that have offered outplacement Average duration (in months) Average cost to the organization (U.S. dollars) Executives (VPs or above) 66% 9.77 $ 6,841 Directors or Managers Salaried Employees Hourly Employees 63% 63% 44% $ $ $ 3,875 2,902 1,417 Figure 1 Traditional outplacement costs thousands and is delivered to fewer people as you move down the organizational chart. n = 48 Source: Aberdeen Group, June 2011 When your organization doesn t do everything it can to make sure most or all employees are assisted with their transitions, potential issues can arise. Whether that means fewer people sign a severance agreement a major red flag or that they sign one but still threaten litigation later, unnecessary expense and distraction may result. 3

5 Strategic advantage 2: Contain unemployment costs Another major benefit provided by universal outplacement is that it can better rein in the sometimes hidden costs to an organization following a termination event. In most states, employers fund (or significantly share) the cost of their employees unemployment benefits, and the costs of funding fluctuate based on your employees post-employment track record. The faster your transitioned employees locate a new job, therefore, the better your potential for lower contributions to unemployment accounts. While organizations with low turnover obviously have the lowest costs, even employers with higher turnover rates can contain costs by making sure employees don t stay on the unemployment rolls for very long. Because outplacement can reduce the time it takes for an individual to locate a new position, it can help manage an organization s unemployment costs. The 30-week Unemployment Difference No. of Weeks HireRight CareerBeam User Average Among Unemployed Figure 2 According to the Bureau of Labor Statistics, it takes an average of 38 weeks for an unemployed person to get a new job. 3 For users of HireRight CareerBeam, a universal outplacement solution, it took them an average of eight weeks to start their new job. 4 So why does universal outplacement make a substantial difference? In traditional outplacement, upper-level management may only be on unemployment for a few weeks. And that s if they even file for it. For those exceptions to the rule where an upper-level manager might be on the unemployment rolls for a long time the cost of a few upper-level employees on unemployment will not be as great as many more hourly employees on it. As you add more employees to unemployment, your costs can significantly rise. And if you re downsizing because of changes in economic or market conditions, the last thing you want is more expenses. Being able to offer outplacement to every employee, regardless of job title, can ensure that you ll reduce the length of time they re unemployed. The cost of long-term unemployment is more than just an item on the balance sheet; it can impact the perception of your company as an employer and your ability to hire new people. 3 U.S. Department of Labor, Bureau of Labor Statistics (BLS). Average Weeks Unemployed (LNS ), May 2012 to April Internal research performed the week of May 20, 2013, by CareerBeam users by reviewing their LinkedIn profiles. 4

6 Strategic advantage 3: Protect your employment brand Universal outplacement can positively impact an organization by helping to safeguard its employer brand, something that is often carefully controlled and curated. As mentioned earlier, organizations have historically focused on offering outplacement services to upper-level managers and executives because these individuals have, until recent times, posed the most potential to damage an organization s employment brand. Typically, such employees have extensive influence in their community, serving on nonprofit boards or as members of exclusive golf or country clubs. Additionally, upper-level employees often have large professional networks, often within their organization s industry. As a result, they represented an enormous threat to employers in the wake of a termination, potentially bad-mouthing the organization both socially and professionally. This looming risk represented perhaps the biggest threat to an employment brand, and offering traditional outplacement was one of the only ways to combat it. Responding to social media branding challenges Even the best intentions and actions can still leave brand detractors unsatisfied. When that difficult situation arises, a few simple steps can help diffuse it: 1. Engage the detractor. You care, not just about your brand but the fact that the situation isn t optimal for anyone. Express empathy publicly, and don t be defensive. 2. Move offline. If possible, move the discussion offline. Involve key stakeholders when necessary and try to come to a solution that satisfies everyone. 3. Acknowledge disagreement. If you can t come to a solution, acknowledge the disagreement without being defensive or revealing details. Take the high road and stay positive. Even the best employers can have negative Glassdoor reviews. The key is to make sure bad experiences don t happen frequently and that when they do, you respond politely and positively, regardless of fault or the particulars of the issue. The advent of social media has fundamentally changed that landscape. While you still don t want your upper managers speaking poorly of your organization after they have been let go, any one of your employees can use social media to vent and influence thousands of potential employees (not to mention potential customers). According to a poll conducted by Spherion Staffing, 47 percent of job seekers believe that an organization s online reputation is just as important as the final job offer when deciding whether to take a new position with an employer. 5 Websites like Glassdoor exist specifically to rate employers anonymously, and when candidates are researching your organization, they ll often turn to these kinds of resources. When someone you let go has a poor experience, it s possible that he or she may turn to Glassdoor to express frustration. Maybe the employment experience up to that point was a positive one, but, unfortunately, that last sequence of events can really color the ultimate perception of an organization. In the event of larger-scale RIFs, negative reviews can multiply and drive down an employer s overall rating. Outside of sites dedicated to employee reviews, more general social media sites like Facebook, Twitter, Tumblr, and YouTube can also all be sources of pain when it comes to employer branding challenges. Posts on any of these sites can easily be found when people research your organization and sway their opinion. With universal outplacement, you can assist all of your employees in transition and reduce the risk that they ll negatively impact your employment brand. In the best-case scenario, they can even become positive advocates for your organization. 5 Spherion Staffing. Latest Emerging Workforce Study Discovers New Workplace Realities and Significant Employer/Employee Disconnects. Jan. 30, To view the report, go to 5

7 Strategic advantage 4: Recruit, retain, and return employees to your organization It may seem a little non-intuitive that recruiting, retaining, and returning past employees to your organization are also part of the strategic advantage of universal outplacement. After all, the talent acquisition/management function and termination events represent polar ends of the employee life cycle. But a termination or RIF can definitely have an impact on your recruitment and retention efforts, either positively or negatively, depending on how it s managed. Universal outplacement can bolster recruitment efforts. Job candidates know that with the current challenging economic cycles and rapidly changing market conditions, any organization that they join may resort to a layoff. Knowing that a potential employer provides transition assistance in such a situation could actually be a powerful impetus to join an organization. Universal outplacement demonstrates a strong commitment to the employee and is a positive indicator of an organization s overall culture (see Figure 3). Drivers of Outplacement Initiatives Percentage of Organizations 75% 60% 45% 30% 15% 0% 71% Need to maintain the company s image and reputation 63% Desire to improve engagement and retention among existing workers Note: Respondents selected up to two responses Source: Aberdeen Group, June % Need to enhance company brand as an employer of choice 17% Cost of posttermination legal claims Figure 3 Along with branding, retention and engagement are drivers of outplacement initiatives. n = 48 Source: Aberdeen Group, June 2011 Another consideration for universal outplacement centers on the referral process. If you consider employee referrals to be one of the most important recruiting sources, perhaps you should also consider the referrals of past employees nearly as important. With past employees, their perception of what it was like to work at your organization can be seen as both an honest look at the organization and possibly an even more authentic view than that held by an existing employee. Imagine the message it sends a job candidate if someone you have let go actually recommends your organization to friends and family. Conversely, a negative termination experience could disrupt your hiring efforts. When examining universal outplacement, employee retention is an issue that is often overlooked but is still incredibly important. Your employees are typically connected with each other outside of work. When you let someone go, that individual still has a network of people within the organization with whom he or she may keep in touch. If your organization hasn t done enough to ensure a successful transition for a terminated employee, then word can leak back to the organization and negatively influence existing employees. 6

8 At the very least, a RIF could create anxiety and uncertainty among non-transitioned employees, and trigger them to look at their own careers and consider proactive change. Rather than wait out a process where they may not even get basic help to regain employment after a layoff, they may seek to make a change on their own terms. But simply knowing that outplacement services are available in a RIF situation could help calm worries and minimize the exits of valuable employees. Therefore, if your employees know they will be taken care of, even when the worst happens, they will be less likely to leave and they will be more engaged. Finally, smart organizations know that especially when organizational cuts are due to strategy shifts or changing financial conditions returning alumni can be a routine exercise. Assuming you separated from each other on good terms, returning an alumnus to your payroll can be an advantage. Since the amount of relearning of systems, protocols, contacts, and culture will be minimal, these are people who can hit the ground running. But that can only happen when you transition them out of your organization with the right tools to continue their growth and development. Of course, none of this matters if you only offer outplacement services to a select few in your organization. The recruiting and retention value of outplacement only spreads as wide as you use it in your organization. Strategic advantage 5: Do the right thing Finally, offering outplacement to everyone is simply the right thing to do. While such altruistic objectives may not be the foremost consideration for every employer, exercising good moral values can actually produce tangible benefits for your organization. Treating employees the right way throughout the entire employment experience, from the very beginning to the very end, can be viewed as one distinctive hallmark of a progressive organization. Positioning your organization this way, as one that understands what is exactly at stake when it comes to how you treat employees at all stages of the employee life cycle, can promote a better image to customers, potential employees, and the general public. Most organizations wouldn t consider offering a job without health benefits anymore. It makes sense to take care of your employees health, if not just for ethical reasons but also for the competitive ones. The same case should be made for universal outplacement services, which help ensure that employees will transition to their next job with ease. Additionally, offering an affordable universal outplacement program for all employees in your organization is one way to stand out from that cynical view of the employer/employee relationship. While you might not specifically address it in recruiting materials, the tone you set for the organization is one of trust, an important factor in a fully engaged workforce. And with all of the other benefits of universal outplacement reduced litigation risk, lower unemployment costs, a better employment brand, and better retention and recruiting advantages doing the right thing has never been this easy, either. 7

9 Conclusion Outplacement is never easy to think about, but it s smart to consider it in advance and evaluate all possible options. Organizations that implement universal outplacement reduce legal threats and decrease the employer cost of unemployment by placing transitioning workers in new jobs more quickly. They also preserve their reputation as an employer of choice, enhancing their employment brand and avoiding the risks associated with RIFs. Universal outplacement can help retain and return employees to the organization, even when a layoff becomes necessary. Finally, it s the right thing to do for your employees, not just for their benefit but also for the benefit of your organization as a whole. Even with all of these things in play, you can only offer universal outplacement if it makes sense for your budget. That s why HireRight CareerBeam makes so much sense. We offer: Full-service outplacement in a virtual format Lower costs compared with traditional outplacement solutions The ability to offer outplacement to everyone in your organization Assistance to employees as they move through career transition Built-in skills assessments for employees Integration with social networks to help employees find a job more quickly Now that you know the strategic advantages of universal outplacement, learn more about HireRight CareerBeam by visiting our website. About HireRight CareerBeam Today s progressive organizations integrate outplacement services into their strategic talent management initiatives. With HireRight CareerBeam, organizations can take advantage of a proven outplacement services solution that helps transitioning employees gain new employment. HireRight CareerBeam s solution is transforming the outplacement industry by providing best-of-breed assessments, resume tools, search strategies, and research databases in one location for recently transitioned employees. HireRight CareerBeam can deliver customer-focused solutions that provide greater efficiency and faster results. To learn more about HireRight CareerBeam, please visit 8

10 CareerBeam Outplacement for Everyone Five Strategic Advantages of Universal Outplacement Intelligence to move forward. SM These materials are provided for general informational purposes. They are not intended to be comprehensive and should not be construed as legal advice. HireRight does not warrant any statements in these materials. HireRight s products and services are provided under the terms and conditions of HireRight s screening services agreement. Please contact HireRight for more information. Copyright 2013 HireRight, Inc. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is prohibited. Certain Altegrity companies provide investigative services. State licensing information can be found at HireRight CareerBeam WP PR