Why outplacement should be an essential in every HR toolbox

Redundancy anxiety is prevalent across the globe, and it’s no wonder. We have seen substantial redundancies announced by multinational organisations such as Google and Microsoft – conducting rounds of redundancy as part of their strategic move to downsize their workforce in the face of ‘macroeconomic conditions and changing customer priorities’. We have seen the likes of IBM, Amazon and Accenture in Australia and Xero in New Zealand announce similar plans and it is likely more Australian companies will follow suit.

When employees face redundancies, they need support but what exactly is ‘empathetic’ outplacement?

‘Empathetic’ outplacement is not just a buzzword. It’s an asset in an employer’s toolkit. Why? Rather than simply providing a job search platform, outplacement offers tailored solutions including focused support, coaching, and networking opportunities.

Further, these services recognize that being laid off is an emotional experience that can have a lasting, traumatic impact. Treating employees with respect and dignity during the outplacement process can lessen this.

Why should employers care about outplacement?

As well as simply being the right thing to do, supportive outplacement can also hold benefits for employers. Let’s break it down:

Preserving brand reputation

Reputation is critical in attracting and retaining talent. Potential applicants have access to real-time employee experiences from sites like Glassdoor and social media, that can impact applications. In fact, a Glassdoor survey showed that half of active jobseekers wouldn’t join a company if its reputation was bad – even if they were paid more than their previous role.

How a company handles redundancies is particularly important for brand reputation with 62% of consumers saying it’s important to them that brands offer a transparent explanation in the wake of redundancies or organizational restructures. Here’s an example:

In 2022, Twitter laid off half its workforce, with some employees taking to social media claiming they had received no severance offer after two months. Several suggested that their notice of redundancy came after they had been locked out of several key working platforms. This has the potential to seriously damage the brand’s reputation as an employer and affect the way consumers and advertisers engage for years.

Reducing legal and financial risk

Poor outplacement practices may result in legal action which is costly, time-consuming and can damage a company’s reputation. Handling the process with empathy not only demonstrates ethical responsibility but also mitigates legal and financial risks associated with redundancies and restructuring.

From a financial perspective, it may seem illogical to invest in people who will no longer be working for you, but in many jurisdictions, employers have legal obligations to support their employees when they are laid off. In some cases, these obligations continue for the duration of the time that the employee remains out of work. Not only does this represent a higher cost to the employer over time, but a failure to provide this support may result in legal action.

Without proper support from an outplacement service, displaced employees may find it hard to navigate the job market and find a new position, which costs the employer more, and may lead to further claims for damages related to the displacement, lost income, and even emotional distress.

Fostering positive company culture

Redundancies significantly impact company culture, with remaining employees describing a 41% decrease in job satisfaction overall and increased feelings of anxiety and distrust at work. Not only does this affect productivity, but the employer may also find that the consequences of redundancies extend beyond the displaced employees.

Even a layoff of 1% of the workforce can drive a 31% increase in employees voluntarily leaving the company, leading to increased stress for those that remain.

By using outplacement services to ease the transition for displaced workers and communicate change effectively, companies can preserve their culture and help their remaining employees to adapt.

Supporting displaced employees

Perhaps the most crucial reason for investing in outplacement services is the importance of supporting displaced employees. When 14% of the Stripe workforce was made redundant in November 2022, the CEO apologized for the situation, and offered outplacement services to each affected employee. He offered a clear reason for the redundancies and explained how the company would adjust its processes for the remaining employees.

Even when handled well, job loss can be a traumatic experience, and without proper support, employees can struggle to find new employment opportunities and feel the financial effects of a layoff for a long time. They are twice as likely to develop depression as remaining workers, and four times more likely to develop a substance abuse problem.

Using empathetic outplacement practices, can provide the support, networking opportunities, and guidance necessary for a faster transition to a new career and mitigate risk for displaced employees.

Organisational wellbeing

Empathetic outplacement is a crucial component of responsible business practices. By investing in laid-off employees, employers can mitigate legal risks, protect their reputation, and maintain their culture. They can help provide structured guidance and get displaced employees back to work. In today's rapidly evolving business landscape, empathetic outplacement is not just an option, but a necessary investment in the wellbeing of both employees and the organisation.

If you need to consider redundancies or restructuring, make sure you include empathetic outplacement services in your plans. Your employees – and your bottom line – will thank you for it.