What is Outplacement,
its Cost, and ROI?
How You Can Benefit from Outplacement and Transition Services
Outplacement is a service designed to help employees who are separating from their jobs get reemployed. The terms outplacement
and transition services are often used interchangeably, although transition services suggests a somewhat broader scope.
While outplacement can cover voluntary and involuntary separations, its use is more common in cases involving involuntary
separations. Examples include layoffs or downsizings associated with downturns in business, reorganizations, mergers and
acquisitions, and similar causes of workforce reductions.
Feeding the Unemployed is Good —
get Reemployed is Better
Services associated with outplacement can include a wide range of tools, forms, support, training, coaching, printed
and online content, and other means aimed at helping job hunters get reemployed. Likewise, a wide range of job search topics
are covered, including career planning, resume and cover letter preparation, job targeting, networking, interviewing, job
offer negotiation, new job transition, and more.
Outplacement is usually sponsored by employers, hence there would typically be no cost to employees for these services.
However, some outplacement services are provided to individuals on a "retail" self-pay basis.
While outplacement services can be delivered in one-on-one or group formats, it is usually delivered via electronic means,
including Internet portals, video, and telephonically. Virtually all major outplacement providers now have comprehensive
web portals to support their users. Providing job hunters with 24/7 access to curated eLearning opportunities fulfills a
de facto expectation among today's digitally savvy workforce.
There can be limits on how long outplacement services are made available to displaced employees, e.g., 12 months or so.
However some providers extend services for as long as needed for job hunters to get reemployed, while others allow their
alumni to access certain services whenever a future need might arise.
Outplacement services can be provided through a variety of channels. Some outplacement providers focus solely on outplacement,
while other organizations may include outplacement as a part of their broader HCM services portfolio.
Outplacement's Evolving Form
The term "outplacement" and the beginnings of its popularity originated in the 1960's. For decades, the primary triggers
for its use were layoffs and business downsizings. Due to cost considerations, the utilization of outplacement was episodic
and coverage was typically focused on displaced professional and executive level employees.
Mainstream adoption of the Internet spawned "virtual outplacement" which started appearing in the 1990's. Virtual outplacement
heralded electronic content and falling costs. Outplacement continues to morph and things keep getting better.
What is Ultra-Outplacement?
Newer models of outplacement that cover 100% of the workforce, regardless of reason for separation, have evolved. Ultra-outplacement
models offer all the benefits of traditional and virtual outplacement, but also include full- and self-service options,
as well as zero-cost, branded, and flexible custom options. The episodic nature of traditional outplacement services will
be tested as organizations discover new uses, broader applicability, economies, and strategic business contributions made
possible by ultra-outplacement solutions.
ULTRA-OUTPLACEMENT — DEFINING CHARACTERISTICS
- Ultra-ownership — Can be provided directly through employers or any HR service provider
- Ultra-coverage — 100% workforce coverage regardless of position, tenure, or any other factor
- Ultra-applicability — Use any time, for anyone, and for any purpose ... 100's of uses
- Ultra-control — You decide who, what, when, where, why, and how it's used
- Ultra-flexibility — Self- and full-service, generic, branded, custom
- Ultra-easy — Cloud/web-based, on-demand 24/7/365, subscription option
- Ultra-low cost — Lowest cost outplacement model (can even be zero cost)
Scope and Uses
The most common trigger event for the use of traditional outplacement services was layoffs. Layoffs can range from as
little as one person to tens of thousands. In today's global economy, some companies have announced layoffs exceeding 100,000
employees. The ability to cover such large numbers of displaced employees for little or no cost using ultra-outplacement
is not a trivial matter.
Universal coverage, regardless of position or reason for separation, has greatly expanded the potential
uses for outplacement services. Ultra-outplacement models, for example, can be very effective in managing unemployment compensation
costs and economically covering massive numbers of seasonal workers in the retail sector. Read more:
Among traditional outplacement companies, costs vary substantially. Many outplacement firms are reluctant to publicly
disclose their costs, hence it is difficult to get detailed information. A recent look at published rates provides some
At the low end for traditional firms, there are a few who are advertising rates of around $500 - $800 per employee. These
rates are typically for non-management staff. Rates generally increase for higher level positions. For example, for director
level and above, rates of $2,500 or more per employee are being found. If large numbers of employees are being outplaced,
it's reasonable to expect discounts from published rates.
Changing Markets — Changing Costs
Changes in competition, technology, coverage, and user preferences are putting downward pressures on
outplacement costs. Ultra-outplacement introduces full- and self-service options, including the addition of
. The outplacement cost landscape is changing rapidly, We periodically update this information
as trends in published rates occur. Check back for updates.
Outplacement Benefits and ROI
The benefits and return-on-investment for outplacement services are significant. Some are more measurable than others,
but all are important. Here are some examples.
Shorter Terms of Unemployment = Lower Unemployment Costs – Not only do displaced employees gain the
benefit of swift reemployment, but your organization also saves money on unemployment compensation (UC) costs. An improved
UC experience rating results in on-going yearly savings.
Facilitate Human Resources and Succession Planning – Outplacement can free management to make decisions
in a timelier manner about individuals who are "bottlenecking" the organization or blocking "fast trackers." When outplacement
and transition services are available, company leaders are less likely to feel guilty about releasing managers and others
who no longer fit into their organizations. Consequently, personnel decisions are made in a more objective and expeditious
Former Employees as Ambassadors - Displaced employees are likely to talk about their former employer
with family, friends, colleagues, and members of organizations with whom they are affiliated. These people, in turn, may
share what they hear with others. A displaced employee may not be your biggest proponent, but you certainly don't want them
as your worst enemy.
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 – Business and general media are loaded with negative stories about
organizations that have poorly handled a situation or not looked after their staff. Employee separations are often the target
of new stories since 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 or services.
Reduced Legal Risk – A quality outplacement program is an inexpensive (or zero cost) component of a
litigation-avoidance program. Terminated employees can feel wronged, upset, and angry. Thus, it is not uncommon for them
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 potential “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 business. When this happens, rehired employees enter their new roles already familiar with company culture
and practices, which is a significant benefit for your organization in terms of employee engagement and productivity.
Nurture Collaboration – 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
Reduced Risk of Workplace Violence – Employees being discharged for cause or any other reason can feel
angry and bitter. They may face social, economic, and mental strains, and even a sense of desperation or hopelessness. Providing
discharged employees with outplacement services demonstrates the employer is concerned about them and has empathy for their
predicament. It helps the discharged employee visualize a path to a better personal situation. By offering help and hope,
the employer can mitigate the risk of an angry or violent response by discharged employees.
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 – Studies have reported that turnover costs vary between 50% and
100% of the separating employee's salary. 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.
Minimize the Potential for Sabotage – Outplacement services help protect the organization from sabotage.
Former employees may have trade secretes or 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.
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, existing or prospective customers, or shareholders?
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.
Easier Workforce Realignment with Reduced Stress – When a business anticipates the need for a workforce
realignment, 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. Outplacement makes it easier for HR and other members of management
to realign talent, manage/replace ill-fitting employees, and accommodate mergers and acquisitions.
Preserves the Dignity of Displaced Workers - Providing a valuable service to assist displaced employees
in becoming reemployed helps preserve their dignity and self-esteem. They are less resentful and more motivated to actively
seek new employment.
Easier and More Humane Employee Actions - A quality outplacement program adds an extra layer of humanity
to potentially adverse employee actions. Employee appraisals, progressive discipline, probations, and suspensions tend to
be more realistic knowing there's an option for a "softer landing" should adverse actions be required.
Ultra-Outplacement — Broader Coverage Lower Cost, Better ROI
The above ROI summary is representative of typical traditional and virtual outplacement plans. It does
not reflect the broader coverage, zero cost, and increased ROI you'd get with the more modern ultra-outplacement framework.
For example, to see how Job Hunter Pro differs from traditional outplacement firms, here's a side-by-side comparison:
Compare Outplacement Features and Benefits
Follow us on LinkedIn:
Share on LinkedIn: