Outplacement refers to company-supported initiatives that help terminated employees cope with their termination and find reemployment. These initiatives are often conducted by outplacement firms hired by organizations undergoing downsizings or staff reductions, although some companies provide outplacement assistance internally. Outplacement has become a common business practice, with millions of employees receiving outplacement over the last few decades. The outplacement provided to employees is often part of their severance packages.
The outplacement process typically entails several stages. In the first stage, outplacement counselors attempt to help individuals cope with the shock, anxiety, and stress associated with their recent job loss, often by employing active listening techniques and stress reduction exercises. During the second stage, outplacement specialists help displaced employees evaluate their career interests, skills, and goals. A variety of career-related tests are often utilized at this stage along with in-depth conversations about career plans and strategies for career development. In the final stage, outplacement specialists help clients develop effective job search activities, such as resume writing, networking, and interviewing. Finally, many outplacement firms and sponsoring organizations follow up with terminated employees to inquire about their job search and to assess their satisfaction with outplacement services.
Although limited in quantity, research has begun to examine the scientific basis for various components often used in outplacement. For instance, one line of experimental research has demonstrated that job search programs that provide job search assistance and social support result in higher earnings and foster easier job acquisition than those that do not provide such assistance and support.
Types of Outplacement
The type of outplacement assistance offered to employees varies widely. For instance, basic assistance programs may consist of single, half-day workshops that focus exclusively on resume writing and job search activities. In contrast, more in-depth programs might consist of elaborate testing and evaluation, unlimited one-on-one counseling, comprehensive job search support, and unlimited use of facilities and technologies at the outplacement firm. Although there has been little research testing the effectiveness of various outplacement programs, James Westaby’s research, utilizing a large sample of displaced managers and executives, has found some evidence to support the use of comprehensive programs in comparison to less comprehensive programs. After controlling for past salary, severance, and demographic variables, this longitudinal study found that displaced managers and executives participating in comprehensive programs with high levels of outplacement support had a greater likelihood of reemployment and received higher salaries in new jobs than individuals participating in programs with lower levels of outplacement support. Results also indicated that the participants in comprehensive programs also took more time to find reemployment. Thus while comprehensive outplacement may result in longer time to reemployment, the outcomes for displaced workers are advantageous. More research is needed to examine the reliability of these findings across various outplacement firms, as well as the degree to which other factors, such as the quality and experience of staff in the outplacement firm, influence outcomes for displaced workers.
Knowledge and Skills of Outplacement Specialists
Outplacement specialists often need to have multidisciplinary knowledge and skills to deal with the complex set of issues involved in the outplacement process. For instance, specialists often need to have knowledge, skills, and abilities related to individual counseling, career development, social and organizational psychology, job search technologies, financial planning, human resource management, labor law, and labor markets. Outplacement counselors also need to be cognizant of a variety of issues facing their clients such as potential financial strain, psychological pathology, coping patterns, social support, family interactions, job search motivation, expectations about the outplacement process, and self-efficacy toward acquiring quality reemployment. In addition to helping displaced workers develop and implement concrete job search plans of action, outplacement counselors are often well served by continually showing support, encouragement, and empathy to displaced workers. In addition to building trust between the counselor and displaced employee, this helps repair self-esteem for many individuals experiencing shock as a result of losing their jobs.
From a macro perspective, many organizations engage in staff reductions and downsizings to cut costs or to survive difficult business conditions. To assist in staff reduction processes, many companies partner with outplacement firms because of their expertise in managing the complex set of issues associated with such transitional periods. For instance, not only do outplacement firms have systems in place to help displaced workers find reemployment as quickly as possible, but they also provide recommendations to management about how to handle related issues, such as dealing with communications and severance payments to departing employees. Many companies also report additional benefits of using outplacement assistance, such as boosting the morale of employees surviving the workforce reduction, reducing costs of unemployment insurance, lowering the incidence of wrongful discharge litigation by mitigating perceptions on unfair treatment, helping preserve a positive reputation in the community, reducing stress on managers responsible for implementing organizational changes, and feeling as though they acted in a socially responsible manner. However, despite these potential advantages, providing outplacement to displaced workers entails financial costs. The fees for providing outplacement services to displaced employees can range from 10 to 20 percent of an employee’s compensation. However, the costs would be reduced for less in-depth outplacement options, such as group workshops. More research is needed to evaluate the return on investment associated with the use of outplacement not only from business perspectives but also from sociological and psychological perspectives.
Outplacement activities are designed to help terminated employees find reemployment in a timely manner while buffering the repercussions of job loss. The type of outplacement provided to displaced employees varies widely across companies, depending on the type of individuals being displaced and the budget available for outplacement. Several studies have shown a number of beneficial outcomes of outplacement services for terminated employees, both subjective and objective, although future research is needed to further explore the validity and utility of outplacement for serving the diverse needs of displaced employees and their sponsoring organizations.
- Caplin, R., Vinokur, A. D., Price, R. H. and van Ryn, M. 1989. “Job Seeking, Reemployment, and Mental Health: A Randomized Field Experiment in Coping with Job Loss.” Journal of Applied Psychology, 74:759-769.
- Leana, C. R. and Feldman, D. C. 1992. How Individuals,Organizations, and Communities Respond to Layoffs.New York: Macmillan/Lexington Books.
- Pickman, A. J. 1994. The Complete Guide to Outplacement Counseling. Hillsdale, NJ: Lawrence Erlbaum.
- Westaby, J. D. 2004. “The Impact of Outplacement Programs on Reemployment Criteria: A Longitudinal Study of Displaced Managers and Executives.” Journal of Employment Counseling, 41:19-28.