Nearly every organization is faced with making employee cuts or downsizing at one point or another. Layoffs and downsizing were common occurrences among businesses in the mid-1980s and 1990s, and complete division shutdowns brought about more problems for employers during the 2008 recession.
New laws were put into place, mandating that employees receive advance notice of layoffs and have access to community resources for job retraining and placement support. A responsible company will offer a wide range of employee benefits, including outplacement services for departing workers.
What Is an Outplacement Service?
An outplacement service is an agency that provides specialized career support to employees who are leaving a job through no fault of their own. This is generally a service that a company offers as an employee benefit when a layoff is about to occur.
The company contracts with an outplacement service to provide this support at no cost to departing employees. The outplacement service is usually a recruitment firm that has experience and solutions to help employees re-establish a job as soon as possible. It might place them through a network of other companies and career-related services.
The agency provides a variety of benefits and on-demand services to affected employees, including but not limited to:
- Resume and cover letter development and writing
- Career assessments and personality tests for the best employment match
- Interview scheduling and preparation
- Professional networking and community help
- Career guidance sessions and coaching
- Matching skills with area employers
- Access to career retraining and education
- Employee benefit information and support
Purpose of Outplacement Services
It’s important that employees don't feel abandoned or lost, whether the layoff is small or an entire section of a company is being eliminated. They can begin panicking from the moment they receive notice that their employment relationship is being severed by the company. They wonder where their next paychecks will come from, how they'll be able to continue receiving employee benefits like health care and retirement savings, and what to expect in the following weeks and even months.
At the very least, companies should look at outplacement services as a lifeline extended to their employees, helping them make a seamless transition to a new career without all the stressors commonly experienced without this support.
Handling a Layoff the Right Way
An organization can prevent costly lawsuits and avoid the negative impact on operations by taking the following steps.
- Make carefully determined employee selections: It's important that the criteria used to decide which employees stay and which go aren't covered by specific protected classifications. Never choose terminations based on age, gender, national origin, health, or marital/parental status. Avoid making decisions based purely on salaries or positions within the company. Evaluate each department to determine available skills, knowledge, and value to the company.
- Give required notification under the WARN Act: The Worker Adjustment and Retraining Notification Act (WARN) was enacted in 1988 to provide affected employees with companies of 100 or more workers with at least 60 calendar days of notice in advance of a mass layoff event. Smaller companies often do this as well with a mini-WARN notice. You must advise employees if the termination will be permanent or temporary, of the expected separation date, and if the employee might be recalled or eligible for future employment opportunities. The written WARN notification must be sent out in advance, and area community employment agencies can be sent copies as well to support job placement of departing employees. You should do this in addition to issuing a standard employee termination letter.
- Review employee benefits and separation packages with older workers: Older workers are often eligible for Medicare, so it's critical that you review not only regular employee benefits but also those specifically provided to older employees. The Older Workers Benefit Protection Act prevents age discrimination in terminations. You're required to give workers over the age of 40 additional time to decide if they would like to pursue and take advantage of age-related benefits or a more generous separation package.
- Advise of severance pay and benefit options: Provide detailed information for terminated employees as to what to expect concerning severance pay, bonuses, and employee benefit options. Do this as soon as possible. This includes information about how employees can continue to receive group health coverage under COBRA. You might also give employees the option to terminate early for less severance pay if another employment opportunity is offered before the final termination date. This can be coordinated between your company and the outplacement service.
- Refer employees to the outplacement service: All terminated employees should receive written information and instructions on how to reach out to the contracted outplacement service vendor. This includes contact information, as well as instructions on how to access any online services the vendor offers. Managers should make sure that all impacted employees make an immediate appointment with the outplacement service to provide their resumes and updated skills. The outplacement service can then match individuals to careers within their network.
- Conduct the layoff sessions privately: A layoff is a traumatic event, and all employees should feel supported and respected during this transition. The outplacement service can be instrumental in supporting private and small waves of terminations so employees can experience the change in a more gradual, positive, and hopeful way.
- Notify the remaining workforce: Notify the entire company of the status when the bulk of the layoffs have been completed. Outplacement services will continue to work with terminated employees, but they can also provide support for realigning employee job descriptions and tasks with the new objectives of the organization in mind. Some of the terminated employees might be eligible to return and the outplacement service can help by bringing people back in strategic roles.
Assemble a layoff committee and appoint an HR lead to act as the decision-making point of contact for departing employees and to follow up with outplacement services.
Choosing the Best Outplacement Services
Every organization is different, but some factors can make for a more positive and productive relationship with an outplacement provider.
- Adaptability: An outplacement service must be able to adjust protocol to meet the needs of each organization. Don't expect a one-size-fits-all solution. Choose a provider with multiple levels of support that can be customized to your company. Choose flexible and scalable solutions that can grow with your organization over time.
- A seamless transition: Using an outplacement service should be a seamless experience from start to finish for all your employees. It must be simple to access, and live support from caring people should be in place. Virtual outplacement can be a good option for companies that have offices in multiple regions.
- Dealing with complaints: Ensure that your outplacement service complies with all local and state laws. This helps to reduce any risk to your organization. It can be very difficult to deal with a wrongful termination lawsuit on top of everything else if all the laws aren't carefully followed and actions aren't documented.
- Be upfront: Employees who are either on the chopping block or those who will be left behind need to hear it from leadership. An outplacement service can help leaders craft a message to dispel potential fears. No one needs to be left to their own devices during this transition. There's help and support available for employees and the companies they work for.
The Bottom Line
Many employees turn to social networks and company review websites to share their work experiences with the world. They're more likely to create a better image for the company they're leaving if they have a positive experience in a bad situation.
This investment in helping departing employees with their future career needs isn't just a goodwill effort. It can help build a solid industry reputation for your company that can lead to better employee relationships in the long term.