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The ROI of Outplacement Services

An increasing number of employers are providing outplacement services for employees. These services assist the employee after a layoff or termination by helping them manage the emotions they experience following the job loss, identify other options along their career paths and assist with equipping them for these opportunities. While outplacement services are designed to provide a benefit to employees, employers often find that the benefit to the company is just as significant.

Growing numbers of HR leaders are recognizing that outplacement services can generate meaningful return on investment for organizations. HR professionals we’ve spoken, to have shared some of the tangible benefits of implementing career transition solutions that impact the wider company. These often include, but are not limited to: 
  1. Culture and Productivity Protection
  2. Preventing post-layoff exits that can cost organizations
  3. Recruitment benefit for key talent
  4. Employer Brand Reputation Management

Culture & Productivity Protection

Even in the best workplaces (as a matter of fact, moreso in the best workplaces), layoffs result in a lasting and detrimental impact on the remaining team. According to a Simon Fraser University study, layoffs in companies often result in a costly decrease in commitment and productivity among the employees that remain.

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

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 is still focused on the success of the workforce.  

The study revealed that providing displaced employees with services and assistance, and demonstrating a "how can we help you?" attitude - following their exit, positively impacts 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, with some leaders utilizing control groups or comparing to prior layoff scenarios when these services weren’t provided.

Exodus prevention

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. The study revealed a correlation between layoffs and subsequent voluntary terminations, demonstrating that one undesired result of a layoff is the voluntary resignation of the remaining high performers. To better understand the relationship between the two, consider this statistic: turnover increases by 30% on average following a layoff.

The threat this poses to the company is significant:

  • employees leaving the company voluntarily may be hired by competitors, changing the employer's marketplace positioning
  • client relationships suffer and may not survive the transition, especially during critical points in the buying process
  • remaining employees face an increased workload and decreased engagement; company culture suffers
  • the need to recruit and onboard new staff has financial implications for the company

Data from the Wisconsin study showed that employers who demonstrate a lower correlation between layoff and a following exodus 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.

Ease of recruitment

Outplacement services 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:

  • Outplacement services reflect the company's investment in their employees' physical, emotional, and financial well-being and give indication of a desirable company culture
  • Outplacement services decrease the risk associated with changing jobs
  • This addition to the recruitment package can have a lasting and far-reaching impact on the company. Great benefits not only make it easier to find the right person for the open role, but improve the company's chances of landing top talent for the position. This can result in ongoing savings due to innovation, productivity, competitive edge, retention, and more. 

Reputation management

Finally, outplacement services protect the company's reputation - both formal and informal, which indirectly protects revenue and simplifies recruitment. Word-of-mouth, for example, has been shown to improve marketing effectiveness by up to 54% and half of all job seekers review the company's reputation on websites like Glassdoor before making a decision.

Disgruntled employees - often those who have lost their job involuntarily - can quickly damage a company's reputation. However, outplacement services and support decrease the likelihood that an employee will leave the company with anger and hostility and instead, allow the employment relationship to end amicably and protect the company's reputation.

Key takeaways:

  • Layoffs impact everybody, not just the employees being terminated
  • Layoffs can cause more financial burden than financial gain if not handled appropriately
  • Outplacement services have a consistently high return on investment in all industries
  • Employeers/HR leaders must ensure the efficient delivery of outplacement services across the organization to maximize on the benefits to be gained

 

Download the eBook: A Strategic Approach to Career Transition for HR Leaders