Outplacement ROI Summary
While assessing hard-dollar costs is key to a good ROI analysis, it is important to remember that focusing on quantitative
criteria in no way diminishes the importance of the qualitative benefits of outplacement services. Less quantifiable benefits
like protecting the reputation of a company’s brand, employee morale, mitigation of legal risk, etc. are just as important.
Within the context of the insurance industry, how do you quantify the ROI on D&O, fire, life, or other types of liability
insurance? The concept with outplacement ROI is similar. It is difficult to quantify, but the need and benefits are very
real. Because it covers 100% of an employer's workforce, Job Hunter Pro's subscription-based outplacement provides the best
Here are some of the more often cited features of outplacement ROI.
Shorter Searches = Lower Unemployment Costs – Not only does your workforce gain the benefit of swift
reemployment, but your company also saves money on unemployment and improves its experience rating, resulting in on-going
savings. See http://jobhunterpro.com/Features-and-Benefits/Unemployment-Impact for details and savings.
Rapid Reemployment = Fewer Premiums – Companies can pay health benefits for up to 18 months for released
employees. Irrespective of when the new employer takes on the burden of health benefits, the sooner they find work, the
sooner the previous employer’s obligation ends.
Improved Morale = Reduced Absenteeism – After a staff reduction, the remaining employees are understandably
upset. Their lower morale has a measurable impact on productivity. According to one study, the average absence rate of 3.2%
has been shown to increase by as much as 2.3 times following a major downsizing. Surviving employee reactions to downsizing
is significantly influenced by how the company treats its exiting workers.
Secure Survivors = Decreased Turnover – Turnover multiplies in the employee population that survives
a poorly managed workforce reduction. Job insecurity, sagging morale, heightened stress, and declining company loyalty contribute
to this phenomenon. Employees identify with their peers and what happens to them. This concern lingers long after released
employees leave. Lower turnover also translates into lower training costs.
Improved Employee Productivity – This is achieved by keeping lines of communication with remaining employees
open, and by demonstrating the support being given to employees leaving the organization. When employees perceive their
employer cares about them and their families, they are less inclined to feel resentment or stress in their jobs.
Protect the Organization’s Brand and Mitigate Reputational Risk – The right outplacement support will
help to promote goodwill towards the organization, and assist in keeping its positive public image intact. Outplacement
can also reduce the disclosure of "trade secrets" and adverse publicity by former employees. A company's reputation is valuable.
Offering career transition services is will improve how employees and the community view the organization. This shows people
that the company is professional and generous.
Winning the War for Talent – Being an employer of choice is the goal of many organizations as they attempt
to build a brand to attract new staff and retain existing staff. The way separations are handled sends a strong message
to the marketplace that this is, or is not, a great place to work.
Customer and Shareholder Goodwill – The business and general media is replete with negative stories
of organizations that have poorly handled a situation or not looked after their staff. Employee separations are often the
target as they have such a significant impact on people's lives. Such negative press hurts an organization’s reputation
in the eyes of their customers with subsequent impact on sales.
Reduced Legal Risk – A quality outplacement program is a relatively inexpensive component of a litigation-avoidance
program. Terminated employees can feel wronged, upset, and angry. Thus, it is not uncommon for such people to sue their
former employer. By helping employees improve their chances of a successful transition to their next employment, outplacement
can help to minimize and even avoid litigation. Wrongful termination suits can easily cost the employer $50,000+ in fees
and settlement payments. Litigation costs alone can exceed $100,000. One study showed a 42% reduction in employee lawsuits
when outplacement is utilized. Secure employees and employees who perceive fair treatment are also less likely to file questionable
workers’ compensation claims.
Keep the Company Door Open … especially for returning “boomerang” employees – Sometimes, former employees
decide to return to their previous organizations in different capacities, or a company may want to re-hire an employee due
to an upturn in the marketplace. When this happens, rehired employees enter their new roles already familiar with company
culture and practices, which is a profound benefit for your organization in terms of employee engagement and productivity.
It can also have a positive impact by reducing training costs.
Nurture Collaboration and Minimize Sabotage – If a company helps former employees find future employment,
it could mean great rewards in the future. The former staff member could build important network connections and even collaborate
with the company later on. Additionally, outplacement services protect the group from sabotage later on down the line. After
all, this employee may have inside information about how the group conducts business, among other sensitive information.
Helping people find jobs means they will be less likely to turn against the organization later on.
It's the Socially Responsible Thing to Do – The best managers practice what they preach. Thus, if a
workplace is really a family or community, then this does not cease or end just because an employee is terminated. Supervisors
or managers can show their staff that they are true leaders by helping former staff members find gainful employment. This
instills important life lessons in the office and will build loyalty both inside and outside of the office.
Facilitating Human Resources and Succession Planning – Outplacement can free management to make decisions
in a timelier manner about individuals who are "bottlenecking" the organization and blocking "fast trackers." When professional
outplacement services are available, company leaders are less likely to feel guilty about releasing executives and managers
who no longer fit into their organizations. Consequently, personnel decisions are made in a more objective and expeditious
Outplacement Supports the Marketing Function – Competition to attract outstanding employees is fierce.
Notices of wrongful termination lawsuits can show up on 10K filings and on D&B Reports. In an incestuous industry, the
word easily spreads through the grapevine. How does one put a cost on the downgrading of the company in the eyes of employees,
prospective employees, and existing or prospective customers?
Productivity and Profitability – For organizations that used outplacement services, post-layoff productivity
and profitability were higher when compared to companies that didn't use outplacement. Public companies using outplacement
services were more likely to find that their stock price increased or stayed the same in the six months following a downsizing.
Reduced Stress and Workload of Line Managers and Business Owners – When a business anticipates the need
for a workforce reduction, even senior HR managers approach the task with apprehension. No one relishes being the source
of bad news – it’s uncomfortable, it’s difficult and it can be traumatic.
Spreads Risk – Subscription-based outplacement spreads risk among many employers, thereby minimizing
adverse impacts from workforce reductions, lowering costs, and easing budget impacts.