Five reasons why SMEs should offer outplacement

More SMEs are having to deal with a larger volume of redundancies as a result of the pandemic. While many larger companies have experience in managing departures, SMEs may be much less familiar with all the consequences.

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UK SMEs will play a huge role in the economic recovery once pandemic conditions begin to ease. In the UK SMEs employ 44% of the workforce and account for 50% of revenue.

But there continues to be uncertainty around the survivability of many of these businesses as restrictions continue. This is supported by McKinsey research at the end of 2020 that showed that over 50% of those surveyed would be out of business within 12 months if trading conditions did not improve. 

That means that SMEs are going to have to deal with redundancies. And while many larger companies have experience in managing departures, SMEs may be much less familiar with dealing with the volume, scale and consequences.

The departure of just one employee can have a significant impact on any business, regardless of size. So if an SME is needing to making a larger percentage of their workforce redundant, an outplacement strategy and partner is vital to ensure the wellbeing of the employee and the integrity of the company is protected.

What is outplacement and why should you offer it?

Outplacement is a service offered to employees who have lost or will be losing their job, to help them quickly find a new path. This may include landing a new role in the same organisation, a similar job in the same industry, or retraining for a whole new job. Some people who are made redundant may use this chance to start a business. An outplacement programme supports redundant employees with a comprehensive service that will help them smoothly move on in their career. This would include career coaching, CV writing, interview preparation, skill development, referrals to hiring managers, and targeted job leads.

Here are four reasons why SMEs should consider offering outplacement to employees who may be affected by redundancy:

1. Give your employees the support they deserve 
Many employers invest in outplacement because it is the right thing to do and they often have a personal connection to ensure that those leaving the business are given the best opportunity to successfully move on in their career. 

2. Improved employee morale, motivation, and productivity
Employees who remaining with any SME can be deeply affected by redundancies. The relationships in SMEs are typically more deeply felt, and feelings of insecurity, anxiety and demotivation are very common. Seeing friends and colleagues being let go without adequate support, coupled with fear that “they could be next,” can tarnish their opinion of the organisation while eroding productivity and engagement. Career Transition partners have solutions to help the “survivors” in SMEs maintain their focus in the wake of redundancies.

3. Outplacement is a great opportunity to engage reskilling
With a global shortage of skilled talent, reskilling has grown in importance with employers seeking to fill skill gaps from within. Outplacement programs are increasingly relying on the same types of reskilling initiatives to dramatically reduce the amount of time a person is unemployed following an involuntary separation. SMEs that invest in reskilling, both for remaining and departing employees, not only protect their brand as an employer of choice but also benefit from faster candidate placement and lower costs per hire. Candidates who participated in reskilling as part of their outplacement programs find new jobs, on average, 65% faster than if they searched for a job on their own.

4. Brand and reputation protection
Social media allows people to share their views to thousands in a matter of seconds. Negative experiences relayed to the masses can quickly damage the employer and customer brand. This is true regardless of whether the organisation involved is a huge multinational, or a SME. However, for the same reasons, positive experiences and opinions can also be shared at lightning speed with huge reach. Providing support to employees going through a career transition, and those left behind, can help protect and even enhance any SMEs brand and reputation.

5. Reduction in legal costs
The legal costs of a badly managed redundancy can be costly, time consuming, resource heavy and distract employees from their core responsibilities. Offering outplacement can help make an employee feel more supported, valued and if the employer is seen to be helping them transition in their career, less likely to try and sue them. More than 70% of respondents in our recent 2020 redundancy benchmarking survey said they invested in outplacement support specifically to reduce the likelihood of litigation. With outplacement support only representing a fraction of the overall cost of a severance package, it is arguably the only part that offers a real return on investment.

Badly managed redundancies can hurt many stakeholders – the people being let go, the organisation and the people who are left behind. This is particularly important in SMEs that often see their employees more as “family” and less as cogs in a machine.

When there is no other alternative other than a redundancies, then it makes good business sense to get help from an experienced career transition partner. The cost of not engaging that help can be crippling.


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