I recently received a call from a HR Executive asking me for advice on how to influence their new CEO to keep their outplacement program and budget. In today’s global economy, companies are being merged, acquired, taken over by private equity, sold, spun off, etc which result in new CEO's stepping in who have a completely different view of the world and how people and HR are managed. Most of the time, new CEO’s step in and the first order of business is to clean house and bring in a completely new team of executives and employees which result in layoffs. At the same time, they typically instruct their leaders to question all spending across the board to the point that managers need to justify spending in specific areas. Sound all too familiar?
HR programs and outplacement programs are generally a target all too often. It seems this occurs more often in small to mid-size companies primarily, although the larger companies appear to be significantly shrinking the amount of outplacement benefits employees receive, as reported by a recent article published by the Wall Street Journal. So, how should HR influence CEO’s and the business to keep outplacement as a standard benefit in employee severance agreements? Below are a few starters on how to influence your CEO to keep outplacement.
Litigation- A good outplacement program focuses the participant toward the future and away from the past. It replaces recrimination with optimism and channels the terminated employee’s energy towards positive action. An ex-employee who is excited about the future is less likely to sue, disparage, or sabotage his or her former employer. An outplacement program for less than $1000 can save your company thousands in litigation cost.
Social Media Nightmare- Now is the time to introduce your CEO to Glassdoor.com. Glassdoor is the place job seekers are turning for information about organizations, CEO approval ratings, and overall employee satisfaction of a company. Glassdoor holds a growing database of 6 million company reviews, CEO approval ratings, salary reports, interview reviews, office photos all determined by the people who worked for them — their employees. Low scores and reviews will affect your ability attract, recruit, and retain employees, particularly if you are a small to mid-size company.
Morale of existing employees- “Survivor syndrome” can be a very negative force inside an organization. Too many companies came through the massive downsizings of the late 80s, early 90s and 2000s, and recently 2009 with their surviving employees guilty, paranoid, demoralized, overworked, underproductive, and waiting for the other shoe to drop. Using outplacement demonstrates to your employees that layoffs are not capricious bloodbaths undertaken on a whim, but, rather, a necessary part of the company’s strategy for change and growth. Outplacement also demonstrates that compassion, fairness, and consistency remain a part of the corporate culture, even after a layoff.
Reduce the stress-level of managers involved in layoffs- All too often, the manager who “does the RIF notification” in a termination or layoff is the most stressed-out of all the parties involved. The assistance of outplacement consultants in planning and executing a layoff can make the process significantly less painful. In addition, access to outplacement services makes managers more willing to terminate marginal employees and lay off excess employees.
Unemployment Cost- There is a direct cost to state unemployment rates when an employee collects unemployment for a full term. A good outplacement program shortens the time an employee collects unemployment when they reenter the workforce faster. These figures are based on state SUTA rates, so consider working with your CFO to help build the financial business case.
The last reason most companies use outplacement is for corporate image and a genuine desire to do the right thing. Depending on your CEO's personality and style, perception and doing the right thing may not be the best angle to take. Make sure you build the business case and how removing the outplacement program can affect employee engagement, morale and productivity of survivors, legal risk, and social exposure. Also, it is critical you prove the effectiveness of your existing outplacement program by sharing engagement rates, utilization of outplacement services, participant feedback, and testimonials. Lastly, be prepared to offer a lower cost alternative that is a win-win for you, your company, the displaced employee and the CEO.