How valuable is outplacement as a tool to help my laid-off employees find new jobs?
Outplacement is an exceptionally valuable tool for aiding employees who have been laid off and who are looking to find new work as quickly as possible. Outplacement is a $1 billion industry that has grown over the past few decades because of the unprecedented number of corporate mergers and acquisitions, usually accompanied by outsourcing, restructuring, and downsizing, which has impacted the lives of many American workers. Companies have recognized the key benefits of employing outplacement firms, including:
- Promoting a favorable, caring image of the company despite its need to lay off workers
- Helping to maintain the loyalty and productivity of the remaining employees
- Reducing the amount of time necessary for displaced employees to find new work
- Minimizing a company's exposure to litigation resulting from company downsizing
What exactly do outplacement firms do for your displaced workers? That will vary depending on the type of package you buy for impacted workers, but executive career transition consulting services and re-employment strategies include:
- One-on-one career consulting
- Entrepreneurial development
- Resume preparation
- Mock interview role-playing and video feedback
- Secretarial/PC/Internet/fax support
- Office space/telephone coverage
- Distribution of resumes to executive search firms
If one-on-one executive career transition support appears to be too expensive (see Question 111), then group outplacement services may make sense. Group programs include one- to three-day career retraining workshops that cover many of the same topics, just at a more generic level and in more of a lecture format. Still, individualized resume preparation and mock role-plays are usually a part of group services as well.
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Some companies provide their employees with a choice between electing outplacement services or accepting cash instead. It is highly recommended that you avoid this option. Although it appears beneficial to employees at first glance, many workers will, for fear of the unknown, select the cash. That's a big mistake: Even if a large severance is part of employees' separation agreements, it won't diminish the importance of getting their career searches off on the right foot. Therefore, help your employees focus on their future career endeavors, rather than on the short-sighted benefits of cash in hand.
There's another benefit to employees who elect outplacement services over cash: Cash is taxable to the employee; outplacement services normally aren't. Companies can structure outplacement services in a way that minimizes the chances that the IRS will construe those services as taxable benefits by simply showing that the outplacement services primarily benefit the employer, not the employee. Here's how: It's common for companies to require terminated employees to sign a waiver of rights to sue in return for additional severance consideration. Since outplacement is a benefit above and beyond the severance benefits provided by companies in their employee handbooks and policy and procedure manuals, a clause can be added to a standard release that describes the exact nature of the benefit (see Appendix V). In this way, two goals are achieved: First, the company will have demonstrated that outplacement was a primary benefit to the organization, not to the individual, minimizing the chance that the employee will be taxed for the value of the outplacement services received. Second, because the outplacement serves as consideration in exchange for a full release of all claims as part of a separation package, liability associated with wrongful termination, age discrimination, and the like is eliminated.
