Cash vs outplacement

Kerry Simmons Article 3 mins

Cash is King…..except when it comes to outplacement

We sometimes get asked by our clients what the best practices are around offering the cash equivalent to outplacement services rather than providing access to the programmes themselves. We also get asked whether these recommendations change depending on the profile of the employee eligibility.

In short, we advise that for all employees regardless of seniority or function, the value derived by an outplacement programme is always higher than the cash equivalent, both for the departing employee and their employer.

Perhaps you’re thinking that it’s not surprising that a company selling outplacement programmes would advise this, but it’s precisely because we see thousands of people come through our doors when their role has been made redundant and see first-hand the issues they face that we know the cash equivalent is of limited use. Here’s 3 reasons why:

  1. Think about the reasons why you are offer outplacement support to your employees. It may be because you feel it’s the right thing to do.It may be to help protect your corporate and employer brand or to help you attract future talent. It may be to help you manage the employee morale, motivation and productivity of both your “surviving” and departing employees or to reduce the legal risk.Or it may be a combination of some or all of these reasons.Whatever the rationale, these benefits are only derived if the impacted employee is given the support, tools and expertise they need to be able to secure themselves the future that they want, whether that be securing a new role, retraining, retiring or setting up their own business.An employee that takes the short-term appeal of cash is still unemployed and with less tools at their disposal to build the future they want-leaving the organisation at risk of not being able to meet their strategic objectives of supporting employees impacted by change.
  2. The importance of speed. We know that people using our outplacement programmes find new jobs on average 65% faster than if they searched on their own. Without this focused support, your employees are likely to be in limbo for longer, increasing the chance of them developing and expressing negative feelings about your organisation.
  3. Memory of cash fades as quickly as it is spent. The job market is changing rapidly. Employees that have been out of job search mode for a while quickly realise how unprepared they are to secure a new role in the world of algorithm-based job boards, applicant tracking systems and immersive assessments. Many struggle to navigate their way through this maze and remain unemployed not through choice long after the cash has gone. At this point, many forget it was their choice not to take up the offer of outplacement support and their anger, blame and frustration towards your company grows and is shared amongst their networks, increasing the damage to your brand.

But it’s not all about reducing risk.  There are many positive benefits that organisations gain from offering outplacement support to their employees that cash equivalents simply do not deliver.  Here’s a few:

  • Findings by the Centre for Organisational Research (COR) showed that in businesses using outplacement services, both productivity and profitability increased in the 12 months following downsizing, with staff turnover, sick days and lateness remaining the same in the same 12 month period. When comparing businesses using outplacement services with those which did not, productivity increases were twice as common and profit stability or improvement was 50% more likely - evidence that the benefits are tangible, not merely theoretical
  • Research by Aberdeen Group shows organisations with formal outplacement initiatives are 81% more likely to shorten the time taken to fill key positions. In fact they’re are two and half times more likely as those without outplacement programmes to indicate that this metric improved by 10% or more. Due to the faster rate at filling vacancies, these organisations are nearly 50% more likely to reduce the cost per hire too.

Looking at the tangible benefits gained combined with the reduction of the potential risks and it’s clear why best-in-class companies are 2.5 times more likely to use outplacement services and why 71% of UK employers report that they do not offer cash in lieu of outplacement.


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