Choosing an Outplacement Package (Everything You Need to Know)
September 21, 2017 by Josh Hrala
Shopping around for an outplacement package to offer your outgoing employees can be tricky. There are, after all, a lot of things to consider and a lot of different firms to choose from.
To help you choose the right outplacement group, we put together this easy-to-use guide that goes over everything you should consider when shopping around so that you can know that your exiting employees are in good hands.
Before we jump in, though, we want to mention that if you’re currently looking for an outplacement provider, you can see a demo of how the service works here:
Okay, let’s get into it.
The Layoff Meeting and the Outplacement Package
The first step for any company undergoing a reduction in force is to notify those whose jobs are affected.
While this is obvious advice, it’s vital that this notification meeting goes off without a hitch because it sets the stage for everything else that comes later.
Basically, you need to explain to the employee that their role is one of the positions affected, tell them their last day of work, explain how they will get paid, what their severance package will look like, and then, after all of that, get into the outplacement package.
This can be a really weird, emotionally-driven meeting to hold – one that neither party likes to have. Because of this, we recommend using a layoff script to keep on track and also to remember that it’s okay for your employee to vent – within reason – about the news.
If you don’t have a layoff script handy or you want to make sure yours is up to date, you can download ours for free here:
We also recommend – if possible – to have the outplacement group on site for larger layoffs. By doing so, you allow your employee to get straight into the job market, a process that – even for the most qualified – can be a long, daunting process.
We can’t stress enough that the layoff meeting needs to go smoothly because if it doesn’t, you can end up with a really resentful employee on your hands and that is one of the many things that severance payments and outplacement services are supposed to negate, which begs the question:
Do I Really Need Outplacement?
We get this a lot. Do you really need to provide outplacement of terminated employees or is it just something that’s trendy?
Honestly, outplacement does far more for your business than you might think it does. Consider this: when a person is laid off and out of work, who do them blame?
Despite all of your best efforts, this is a fact.
No matter what you do, your now ex-employee will be rightfully upset that they now are unemployed. The key here is to make sure they don’t resent you for it because if they do, they can turn your surviving staff against you and seriously hurt your corporate brand by swaying the general public who already look at layoffs as a bad sign.
No matter what triggered the RIF to occur, the general public will see a layoff event as a sign that something went wrong in your company. This means that not only will they side with the staff who were displaced but they will also question your overall business.
This can even impact customer retention, too.
“Laying off employees can have a significant negative effect on customer retention. Every customer is an asset to any company, and the employer must find ways to retain each of them,” Leanes Lowrie reports for Chron.
“When a company lays off its employees it sends out a message to customers that it is undergoing some sort of crisis. Fewer employees could mean delays in the delivery of goods and services, further alienating customers.”
In other words, layoffs – even if they were preemptive and you handle them the best way possible – don’t look good from the outside. Having a bunch of resentful staff members who were just thrown out on the street certainly won’t help.
Besides saving your image, outplacement services firms and outplacement groups can seriously help reduce stress across the board.
The best way to describe this is to put yourself in the employee’s shoes. How would you feel if you were laid off and didn’t know where to turn for work?
Probably pretty lost and definitely stressed out.
Just because an employee was let go because of a layoff doesn’t mean your company should suddenly not have their back. After all, a severance payment – which typically lasts only a few months – can only go so far and isn’t a permanent fix to the problem. Don’t just take our word for it, either. Here’s what the Harvard Business Review says:
“The question everyone asks after a layoff is, “What do I do now?” Few people have a resume at hand and a job-hunting network mobilized. Outplacement helps them land on their feet. You’re offering help at a high-stress, emotional time. It sends a signal to them and to the remaining employees that you’re treating the ex-workers as people, not as line items on a budget.”
On the other hand, using an outplacement package can also reduce stress inside the company, too. Your surviving staff members will be less likely to jump ship if they know that they will be supported if they were the ones getting let go.
“Nothing can poison employees’ morale faster than watching their former colleagues be shown the door abruptly and disrespectfully,” says Michael J. Canavan, a labor and employment attorney with Pepper Hamilton LLP, told Nancy Mann Jackson from Entrepreneur.
“In a small company, layoffs can be a much more personal thing. There’s often not a corporate HR department to handle it. Generally, the people doing the layoffs work with those who are being laid off.”
There’s a third thing to consider, too: yourself. As a HR leader, you are tasked with processing all of these transitions and it can weigh heavily on you. Providing a support system and doing all you can to make sure your employees – some of whom you may have known personally – are in good hands, can make the job a whole lot easier.
Not to mention that providing outplacement is a great way to ensure your outgoing staff will not take you to court, which goes back to them feeling resentful of their termination.
All in all, there are many, many reasons to provide outplacement services to your staff that go far beyond the service itself.
What Services Do Outplacement Firms Offer?
Okay, so now that you know the importance of offering outplacement, what should you expect the service to provide your staff?
Though it varies from company to company and firm to firm, outplacement is traditionally a service that offers assistance to get your staff members back to work as quickly as possible, taking into account the type of job the staff member wants.
Let’s start by defining the service as a whole. We really like how the Society for Human Resources Management (SHRM) boils it down:
“Outplacement is a benefit offered by the employer to displaced employees that may consist of such services as job counseling, training and job-finding assistance. Outplacement is typically a feature of downsizing plans (voluntary or involuntary) as well as separation agreements and is generally provided by third parties that contract with the employer,” the organization writes.
“The goal of outplacement benefits is to ease the disruption of termination of employment for the affected employee while at the same time benefiting the employer through decreased risk of liability and enhanced reputation for social consciousness.”
It’s safe to say that – with all of those goals in mind – outplacement probably looks the same no matter what firm you choose. There’s definitely some truth to that, however, when you look closely you’ll find that there are actually huge differences that can make or break the firm.
Here’s how the typical outplacement service plays out:
Career Transition Coaching
The first step of the outplacement process is to get the employee in touch with the firm’s career transition coaching team so that they can be paired up with an expert in their field.
This coach will help the staff member update their resume, create and update social accounts like LinkedIn, and also help them figure out what the next step in their career can and should be.
That last bit is important because some people get laid off and see it as a chance to try something new. Coaches should be able to help the client through that process by figuring out if making a career move to a new field is the right path to take.
Think of these coaches as more of expert guides who know the ins and outs of the job market, how to use technology to get noticed, and how to handle the whole process from applying to accepting a role.
Coaches are also the most flexible part of the process, adapting to the needs of the client while also keeping them focused on helping them make the right call.
Platforms and Learning
While career transition coaching is the human element behind the outplacement package, some firms also offer a wealth of career knowledge in the form of online databases, tools, and other resources.
This allows the employee to research their next job and come up with new strategies to get that job on their own time. For example, if a person picks up a part-time job while they hunt for a permanent place to put down roots, they can spend their evenings figuring out what they need to do to make the move or any other time that suits them. This is another way that a technologically-driven outplacement can be flexible based on the client’s needs.
At the same time, they will have access to the coach who can help and guide them through this phase.
As this is all going on – and once social accounts are created, resumes updated, and job boards joined – the staff member can apply to jobs and write cover letters, a process that – with or without outplacement – takes up a lot of time.
The outplacement group will then continue this process until the person is placed in a new, fulfilling role (if they do not use term limits, that is. We’ll get to that shortly.)
By providing this level of support, the employee will be able to get back into a new job without completely exhausting their severance check, reducing their stress levels and protecting your company in the process.
“When downsizing or restructuring with a reduction in force, many employers offer outplacement services to departing workers, which can aid the employees and the employer. Helping laid-off workers find new jobs can have a positive financial effect on the company and yield other benefits that are more difficult to quantify.”
So, now that that’s covered, here’s what you should look for when shopping around for an outplacement group:
Finding the Right Outplacement Package For You
While all outplacement providers want the same thing for their clients – to get them back to work as fast as possible while also making sure that job is one that they actually will flourish in – the approach varies quite heavily from firm to firm.
This can be a lot to take in so we’ll break down each aspect that you should look for.
Term Limits: Be Wary
The first and most important thing you should pay attention to when picking the right outplacement group is to examine their term limits.
What is a term limit?
Well, like many services out there, outplacement providers typically have a timeframe for companies to use their service. If the desired result isn’t met within that timeframe, the service is canceled.
This is all well and good when it comes to certain things but outplacement isn’t one of them.
Let’s do a thought experiment.
You get laid off and are offered the typical severance package which explains your benefits, what happens with your health care, when your last day of work will be, and a nice lump sum payment to hold you over until you find new work.
Your company also provides outplacement services from a traditional firm who uses term limits. This all sounds great, right? Everything is in place for success.
Not really. Say it takes you longer than expected to find a new job even while using outplacement. The typical firm will only work with you for about three months. After that term is over, you are on your own to navigate the job market.
At the same time, your severance check is almost used up, meaning that you now have two problems: your bank account is running low and you have no support system to back you up.
If you were in that situation you’d be pretty stressed and upset. In fact, you could argue that you’re now in a worse spot than you were when you were first let go even if though you had outplacement training.
So how do you get around this?
It’s simple, find an outplacement group that is willing to work with you staff members until they are placed in a new role or have term limits that are long enough to give adequate time.
At Careerminds, we believe that firms should work with clients until they are placed regardless of how long that journey might be. We know that our service works and are willing to put our money where our mouth is, giving clients the boost they need during one of the most stressful times of their life.
See, when firms want to stick with strict term limits, it’s a red flag – an indicator that the firm doesn’t believe they will be able to place your staff member. It’s also a sign that they care way more about their bottom line than they do when it comes to the task at hand.
This brings us to our next point:
Retainer fees are a great way for an outplacement group to make money without doing much work, which is great for them and bad for you.
Outplacement, as a service, is needed from time to time when your company is going through some reduction in force. It stands to reason that you should want to keep a firm around for these exact moments. However, it doesn’t make much sense that they charge you an arm and a leg for the privilege of their company.
Instead, outplacement groups – who typically offer way more than just an outplacement service – should be strategic partners in that they work with your company for no retainer fee because you use their skills when it comes to many things, such as leadership development, retirement lifestyle planning, and workforce planning.
Basically, any time an employee has to make a transition in their career, your outplacement group should be able to handle it because outplacement training is only one of a variety of skills offered.
Outplacement firms shouldn’t rely on retainer fees that make them money for doing no work. They should instead expect you to see their offerings, test them out, and come to the realization that they are thought leaders in the HR space who are ready to aid you in a multitude of ways.
So, you should be wary of retainer fees. Take a good hard look at what it costs you to keep an outplacement group around and ask yourself if outplacement training is enough for that price tag.
Side note: At Careerminds, we do not use retainer fees at all. We believe that outplacement is an important process that all companies should offer and retainer fees shouldn’t get in the way of such a mandatory service.
A Technologically-Driven Approach
Another thing you should consider when comparing outplacement firms is how they handle technology.
Over the course of the last couple of years, tech has taken over many aspects of the job market. Gone are the days when you can search a local newspaper for a job, the days when you could ‘hit the pavement’ and come home with a new gig. It’s all online now and it changes rapidly.
Think about the last five years. Job boards are becoming the newspaper listings of the digital age while LinkedIn is virtually ‘hitting the pavement’ to make a great impression.
If your outplacement firm cannot keep up with the shifting sands of technology, they are probably not going to be the best at providing successful outplacement of terminated employees. After all, if they can’t navigate the digital world, it would be just like your employee going it alone.
This aspect is often overlooked because many people believe that everyone is up to date on these trends, but that’s sadly not true. If you have an employee who has worked at your company for, say, the last decade, the job market is going to look unrecognizable to them today.
You need an outplacement group who is on the cutting edge – one that doesn’t just know about the current market but the market of the future and how to prepare for it in case something starts to change.
This goes right into:
Like we mentioned above, outplacement services firms should be more than a tool that gets your staff back to work and protects your business in the process. These firms should be thought leaders in the HR space, keeping up to date on all of the current trends happening in HR across multiple sectors.
If your firm is technologically-driven and connected to the HR landscape, they can and should be a bastion of HR knowledge that you can lean upon to make sure any of your transition needs are covered in the best way possible.
For example, a current HR trend is the shifting generational workforce where Baby Boomers are starting to retire, causing a wave of vacant jobs while at the same time – depending on the industry – some Baby Boomers are reluctant to retire. What do you do here? Both of these situations need addressed, right?
This is an example of a workforce transitioning issue at play right now in the real world that any outplacement firm worth their salt is providing solutions for. At Careerminds, we handle it by providing retirement lifestyle planning to aid those who are unwilling to retire while also helping organizations develop talent to fill the roles left behind, which typically involves finding innovative ways to retain and develop Millennials.
Here’s Careerminds CEO Raymond Lee discussing the topic to give you a better example of what thought leadership looks like:
Side note: If your company currently has workforce planning needs, check out our planning guide here:
And that’s just a taste.
As the days tick by, new problems arise, and HR managers – who are tasked with running the day-to-day operations of the business simply do not have time to find proper solutions. This is where outplacement services firms come into play because they should be intimately aware of these issues and already have a plan to get your company through them.
If your current provider is not paying attention to the trends, they will not be a strategic partner for your company and, therefore, are not worth their retainer fee because how do you know they will even be able to do the actual placement you hired them to?
How to Find the Right Outplacement Provider For You
Okay, now that you understand all of the things to look for when shopping for an outplacement group, where do you actually look for one?
This is where the whole thing gets a lot trickier because it can be tough to see what exactly an outplacement package offers.
An outplacement firms directory or other listing is only going to show you traditional firms – for the most part – and traditional firms, like we mentioned above, are stuck in the past when it comes to thought leadership and technology.
The best way to search for a firm that meets your needs is to forego the directory of outplacement firms and talk with the various firms by seeing a demo.
If you think Careerminds might be a good fit, by the way, you can sign up for a 100 percent free demo here:
A demo is the best way to dig through all of the outplacement services firms around, weeding out the ones who have strict term limits, costly retainer fees, and aren’t providing services that go beyond outplacement.
In the end, you want to find a firm that fits into how your company operates and one that will be willing to work with you long into the future to ensure that all of your workforce transitioning needs are met.
It all comes down to doing your homework. If you spend the time and find the right provider, you will reap the rewards and if you don’t, you’ll likely lose money in the end.
Let’s wrap this all up.
Outplacement Services: A Round Up
We covered quite a bit here. The main points are that outplacement firms should have a proven path to getting your employees back to work.
If they are successful, your employee will get to move on to a new job before their severance check is spent, saving your company’s reputation while reducing the levels of stress across the board.
A top notch outplacement group will utilize career transition coaching alongside digital platforms to ensure your outgoing staff member will have all of the tools needed to find a new, fulfilling job at another company.
Outplacement training shouldn’t be a chore for your employee. By using digital platforms, virtual coaching, and the power of the internet, your staff member should be able to find a job from wherever they are and at any time they want.
Outplacement of terminated employees shouldn’t be the only service offered by the firm. They should be thought leaders on the cutting edge of technology who research and find solutions to upcoming HR problems.
At the same time, the firm shouldn’t charge ridiculous retainer fees just to keep them around while only providing one service. They also shouldn’t use strict term limits that severely reduce the chances of your employee getting placed elsewhere. If they do, it might set up your employee for failure and that is the exact opposite of what you want.
Shopping for outplacement should involve seeing demos of services instead of relying on some aggregated outplacement firms directory that doesn’t give all of the details.
After all, this is a big deal. Not only do you want your staff to be in good hands, you also want your company to be in good hands as well with a strong support system behind it that is there whenever you may need it.
In need of outplacement assistance?
At Careerminds, we care about people first. That’s why we offer personalized talent management solutions for every level at lower costs, globally.