Team Management

Here’s How Outplacement Services Can Help in the Termination or Layoff Process

J.J. Starr  
Two nurses talk at a desk

Is your company navigating the choppy waters of layoffs or other downsizing? Then you’re probably looking for ways to protect your company’s brand and the remaining employees’ confidence, while also providing comfort and help to transitioning employees. Outplacement services (aka outplacement solutions) are a great way to accomplish these goals. 

Whether you’re an HR professional or the person who handles the bad news, this article will equip you with the information you’ll need to: 

  • Understand what outplacement services are
  • Evaluate an outplacement service provider
  • Budget for the cost of outplacement services

Let’s get started. 

What are outplacement services?

Outplacement is a career transition service offered to departing employees, most often used during downsizing, layoffs, or another reduction in force (RIF) event. It is offered as part of a severance package. The service can be provided either in-house or by hiring a professional outplacement service provider. Most companies outsource outplacement services. 

The purpose of outplacement is to create a smooth transition for the former employee. That may mean finding a similar position at a new place of employment, or a larger career transition. The type of service most needed will depend on the industry, the job market, and the employee. 

How do outplacement services work?

Every outplacement firm will do things a bit differently, but here’s how many operate. When you choose your outplacement firm, you’ll be assigned a point of contact with the company. This person will be able to answer your questions and keep you informed about how your former employees are doing with their job transition. Outplacement services begin shortly after the employee is let go from an organization. 

Each transitioning employee will be assigned an outplacement coach and given a career assessment. Based on that assessment, the coach and client will create a roadmap that may include strategies for self-care during a job loss, outlining career development goals, identifying skill gaps, and creating an action plan. Ideally, at the end of the process, the exiting employee has found a new position and is happily employed. 

But, not all outplacement services are equal. There are many factors that can make an exiting employee’s transition easier and just as many factors that can hinder it. Your job is to choose the best team possible. 

What services are included with outplacement support?

If the goal of outplacement is to provide a former employee a pathway to a new role, then the services offered to the employee should be tailored to the employee’s industry, job functions, and skill set. When dealing with larger layoffs, outplacement services should help people in group settings while also creating opportunities for individualized planning. 

Services typically offered during outplacement include:

  • Career coaching
  • Cover letter and resume writing
  • Social media services (mainly LinkedIn)
  • Interview preparation
  • Network building and networking skills
  • Personal branding
  • Skill gap identification and training
  • Job search assistance

If you are evaluating outplacement services, you should review the number of services the company provides, how valuable those services will be for your former employees, and how effective those services have proven to be. The company should be able to produce testimonials and (even better) white papers or other research detailing effectiveness. 

What is the difference between outplacement and career transition?

Sometimes the terms “outplacement” and “career transition” are used interchangeably. However, there is a difference between the two. Outplacement services focus on finding a new job that is either the same role as the previous position or within the same family of roles. For example, a sales associate who wants to find a sales position either as an associate, manager, or something similar. 

Career transition services focus on re-orienting the employee toward a new career path based on their skills and preferences This is a more complex service that may require career counseling, job training, and learning a new job market. If layoffs occur because a job function is becoming obsolete, career transition services may be more suitable. 

How much does it cost to get outplacement services?

The cost of hiring an outplacement service provider will vary depending on the location of your company. Employers in New York City can expect to pay more than those in Indianapolis, for example. But costs are most dependent on the involvement needed to get the employee to their next position. 

That being said, here is a general overview of what you can expect to pay for outplacement services. 

  • Basic Services are around $1,000 to $1,200 per person. In some markets, the cost could be as low as $500 per person for general (as opposed to customized) services. The duration of basic services is generally four to six weeks. 
  • Intermediate Services range from $1,500 to $2,000 per person. These will likely include support for a longer duration than the basic service and partially-tailored plans. 
  • Advanced Services are $2,000 and up. Costs depend on the job function and industry.  Services will be highly customized and may last as long as six months.

As a general rule of thumb, expect to pay one to five percent of the laid-off employee’s salary. Any way you cut it, outplacement isn’t cheap. And it doesn’t have a direct impact on your business’s bottom line—so how do you know if the services are worth the cost?

Is outplacement worth it?

For many businesses and organizations, outplacement is worth it. There are many benefits to using outplacement services, which we will outline below. But it’s important to remember that services are only worth the cost if they are rendered by a knowledgeable, empathetic, and effective team—and if they fit the job function and industry appropriately. What fits a highly-specialized worker is different to what fits a generalist. 

Benefits of Outplacement Services

Though outplacement services focus on what can be delivered to employees, there are plenty of advantages for employers. Here are some to consider.

Top benefits for the employer:

  • Boosts morale and retention of the “survivor” workforce by showing them that employees, even when laid off, are valued. 
  • Reduces the risk of wrongful termination lawsuits and other related legal action.
  • Aligns with company values and reinforces company culture. 
  • Protects company brand reputation.
  • Maintains a positive relationship with outgoing employees who you may want to welcome back to your company in the future. 

The main intangible benefit that outplacement provides an exiting employee is an empathetic safety net. Losing a job is one of the most stressful situations a person can encounter. Additional benefits include:

  • Provides care, comfort, and support during difficult and stressful times. 
  • Builds resiliency and rebuilds confidence. 
  • Sets up employees for success in their next job.

Drawbacks of Outplacement Services

For employers, the main drawback of using outplacement services is the cost. Because these services are most used during layoffs, budgets are already tight. But considering that even one wrongful termination lawsuit could cost as much as outplacement services, there may be little benefit in forgoing services in the long run. 

For employees, the main drawback of outplacement services is dependent on the service provider. If there is a mismatch between the needs of the employees and the breadth and depth of the services provided, then outplacement services won’t be effective. 

Of course, an ineffectual outplacement program hurts the employer as well. Goodwill gained from offering outplacement services won’t go far if those services don’t deliver well-paying and meaningful employment. That’s why it’s pivotal to choose the best provider for your workforce. 

How to Choose an Outplacement Service Provider

You should plan to invest plenty of time into finding the right provider for your team. It’s a great idea to make a checklist of what you’ll need from the provider you choose to work with. You want one with experience serving your industry and at the cutting edge of their industry. The company should offer customizable and accessible services. 

Is the value worth the cost?

One outplacement firm may offer a lower price, but with significantly fewer bells and whistles. Another firm may be more expensive overall, but may also offer more benefits. You can always discuss ways to lower or spread out your costs, such as opting for group training when appropriate. 

Choose a provider who can stick around for a while. Job loss is like any other major loss— there needs to be time for grieving in order to get to the other side stronger and more resilient. Opt for a program that spaces coaching out over a few months rather than an intensive “boot camp” style. 

Are they professional and easy to work with?

Do a deep dive on the company’s website to find out about their company culture. Reach out to customer service and interview your point of contact at the company. Are they easy to get ahold of? Are they pleasant or dismissive? Are they able to answer all of your questions? 

Don’t forget to read reviews and message boards to see what past clients have to say. If you can, speak with past clients—employers and job seekers. Get the full picture of what it’s like to work with them. 

Does the company inspire confidence?

The bottom line is this: any company worth their salt should make a job seeker feel valued, seen, and taken care of. Look at the service provider through the eyes of someone recently unemployed. Do they seem like the kind of people who can and want to help you? Do you feel this company respects your innate dignity? If you don’t get that feeling from the provider, they’re probably not worth the right fit. 

Updated: May 24, 2022

J.J. Starr
J.J. Starr J.J. is an educator, personal finance writer, and former registered banker. She's helped dozens of small businesses set up and manage their day-to-day expenses, secure business loans, and develop financial plans.

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