HR Topics        

Hidden ROI Benefits during Restructure




10-Nov-2016
Which Outplacement Scenario Will You Find Yourself In?

As companies restructure, it’s natural for budgets to tighten. This might make outplacement services seem an unnecessary spend, however making the investment reaps ROI in multiple areas. “By offering outplacement support to your exiting employees, your company demonstrates your commitment to your people,” says Fred Schwarcz, Vice President of People Solutions at IMPACT Group. “This establishes trust with your remaining staff and protects your brand in the community during major changes.”

A lifeline of support for everyone involved – managers, separated employees, and remaining employees – has the power to change the outcome of a difficult situation. Consider these two scenarios: 

Scenario #1: When Outplacement Support is Forgotten

Joe is a Production Manager who has been with your company for 15 years. When Joe’s position is eliminated due to an acquisition, he doesn’t receive outplacement support to help him land a new opportunity. He leaves your organization angry, disappointed, and with a bad opinion of your business practices.

As Joe stews over the situation in the following weeks, he bad mouths the company to family members and friends and shares negative remarks on social media. Joe contemplates ways he can get even with your company, and considers contacting an attorney to discuss legal action. Since Joe did not receive support for his job search, he is out of work for more than 27 weeks.* Your company is exposed to increased unemployment tax experience ratings, potentially affecting the tax rate the state charges for ALL of the payroll that is generated.

In the weeks and months that follow the downsizing, morale at the office takes a significant hit. Surviving employees constantly worry about their friends, wondering how long it will take them to land on their feet and using work time to help them network or watch for opportunities. They are insecure about the future of your organization. Rumors spread that more cuts are on the way. Management is quiet about the situation and does nothing to confirm or deny the rumors floating around the water cooler. Some of your most valuable employees turn in their resignation slips, staying ahead of the next rumored layoff. 

Scenario #2: When Outplacement Support is a Priority  

Becky is a Quality Control Director who has been with your company for seven years. When Becky’s job is eliminated due to a product line becoming obsolete, she receives outplacement support to help her secure a new role quickly. She is shocked and saddened by losing her job, but she is hopeful knowing she has support to get her career back on track.

After Becky takes time to process the news, she engages with a career coach to start her job search. Her career coach helps her accept that your company had tough business decisions to make. Together, they create a plan to inform loved ones and professional connections of the news. Becky completes a career assessment and determines she wants to refocus her career on product development. She tells her family members and friends how grateful she is for the extra support.  

By using a job search program, Becky lands a new position is just 14 weeks – half the time of the national average. Compared to Joe’s organization, your company reduces your exposure to the amount charged to the state unemployment account, therefore potentially reducing the effective tax rate.

At the office, managers receive training so they properly handle difficult conversations and address low morale. They learn how to support surviving employees so they feel secure and confident with the company. Employees frequently meet with their managers to discuss their concerns, which allows them to be heard and minimizes the rumor mill around the office. 

As you can see, outplacement support goes further than supporting separated employees – it saves your company’s brand reputation, minimizes unemployment taxes, and boosts employee morale at the office. “Losing a job is frightening. Extra support is crucial to ensure the employee gets his/her career back on track and your company moves forward as soon as possible,” says Fred. “For a small investment upfront, your company can reap ROI benefits from multiple areas, leading to a brighter future for everyone.” 

To learn more on creating the best scenario during a difficult downsizing, watch our RIF Planning Webinar today

*Bureau of Labor Statistics, Average Weeks of Unemployment as of Aug 2016  

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