Although outsourcing outplacement services is not mandatory, it is advisable to do so because most studies on the cost benefit analysis of outsourcing outplacement services support this course of action.
Outplacement services cost varying amounts depending on what you are looking for in a provider. However, it's always a good idea to outsource the work because it allows HR leaders to focus on workforce planning and all other day-to-day tasks needed to keep the business working properly.
Side note-- make sure to download the pricing information for our outplacement programs:
First, What is Outplacement and Why Do You Need It?
In short, outplacement services are used to assist employees who have lost jobs due to redundancy, mergers, downsizing, and other cost-cutting related measure. The mail goal of every outplacement provider is place these individuals in new, meaningful jobs.
While that is the main focus, here are some benefits that come along with the service that you may have overlooked:
- It's a morale booster. When existing employees see their former colleagues getting help with their career transition, it reassures them that they are working for a company that cares about them, which can boost productivity and lead to a higher retention rate.
- It minimizes lawsuits. Disgruntled employees may decide to sue the company over their termination. Whether they have valid grounds or not, lawsuits eat up time and money, two resources that business' don't want to expend, not to mention the bad publicity that always follows public legal battles. Using an outplacement firm is a great way to mitigate that risk.
- It enhances your corporate image. Being known as a company that offers job hunting assistance to employees who no longer work for you is a definite PR booster A company with a good public image attracts more business and better employees. Outplacement is one of the best services to use if you want to build and protect your brand and image.
How to Save Money on Outplacement Services Cost
Having established the benefits of using the services of an outplacement firm, how can you save money on outplacement services cost?
That's a good question. Let's take a look at a few options.
1. Hire the Right Company for Your Needs
Choosing the right outplacement firm is the most important factor that determines whether you will get value for your money. Start by seeking referrals and build a list of 5-10 outplacement firms, and research each of them.
Ideally, go to their websites to see what they offer, review their brand missions and visions, read their blog posts, and generally try to figure out if they are thought leaders in the HR space.
A company’s website and social media pages will give you a feel of what to expect once you use their outplacement services. After creating a large list of potential firms, analyze each of them and create a shortlist consisting of one or two firms.
Next, check out each company’s reviews to connect with what their past clients feel about them. Do they have experience handling people in distress? Did the clients get placed in a new role? How were the coaches?
Another important thing is to get an outplacement firm with good experience handling similar issues that your company is facing, even if it is charging a little more. For example, does it have experience with executive level outplacement? Basically, you want to establish which outplacement firm has a record of getting people back to work faster. That’s the ultimate way to save on outplacement services cost.
Hint: Getting the right outplacement services firm is the first step in saving money. Getting the wrong firm might mean switching later on, making your spend more.
2. Use Tailor-Made Programs That Work
The longer your ex-employees stay out of work, the longer you might have to keep paying for out of work benefits, such as health insurance.
Some outplacement services firms have package programs that concentrate more on ticking off a checklist than on the individual needs of the person. Such a package includes giving a resume and cover letter template - leaving the worker to fill it in by themselves - giving one phone consultation, and sending job postings on email and other low quality services. Such a detached outplacement program is not helpful and ends up costing much more in the long-run.
The process is frustrating for someone who just lost a job who may end up getting more stressed and give up on the program altogether, meaning that the company spent money for nothing.
A study by a Columbia University Organizational Psychologist, James Westaby, found that executives who participated in programs with higher level of support had greater likelihood of reemployment and earned higher salaries than individuals in programs offering low levels of support. In other words, you need to pay for a quality program if you want the service to actually work.
3. Cheap Becomes Expensive
Do not go for the cheapest outplacement services firm out there right off the bat because cheap is often expensive in the long run.
What do we mean?
Well, a cheap program might be attractive in the beginning, but a lack of results means you must keep paying for the same thing. Often, the term of such cheap programs expires with no tangible results.
Also, be wary of companies that use grouping to perform their service. If they try to offer a blanket solution to everybody without concentrating on individual needs and goals, the employee can find themselves not getting the level of support they need. Instead, opt for a company that is fairly-priced but offers one-on-one consultation so that they can tailor the service to the individual, making the job hunt way easier.
4. Question Retainer Fees
Traditionally, companies would use a contract for outplacement and pay a retainer, too. In return, the company would be able to use the firm's services whenever they need to.
Such an arrangement often comes with a term limit of three or six months, which means that even if your ex-employee does not get a job in the stipulated time, the help available to him/her is cut off and your company continues to pay retainer fees.
The business environment has changed drastically and it is important to do away with older methods that are not effective. The best outplacement firms pride themselves in offering assistance to your employees until they can get a job while also not charging and arm and leg for retainer fees.
5. Read the Small Print
It may sound simple enough: you contract an outplacement services firm with the aim of getting laid off employees back to work. However, not all outplacement programs are equal.
Before you sign on the dotted lines, make sure you understand exactly what you are paying for, such as how many employees are covered in the program and for how long? What specific services are being offered? Do they use one-on-one coaching or is it a group seminar? Does the outplacement firm have a mechanism to reach workers in remote areas such digital platforms or VOIP teleconferencing? What is the fee structure like? Does it call for a retainer or charges for individual requirements? Reading the small print is essential if you want a good deal.
6. Keep Tabs on Performance
According to an article on The Wall Street Journal, “Few employers track whether outplacement works.” This means it’s difficult to know whether your ex- employees are taking advantage of the service, which is particularly important because executives estimate that 40% of workers offered outplacement services don’t show up. This is an alarming pitfall that must be avoided, otherwise, why pay for something no one is using?
Most importantly, if the paying company does not keep tabs, the outplacement firm has no pressure to go out of its way to offer help, thus watering down the quality of services offered to those who actually show-up. Any of the above scenarios translate to lost money.
How to Save Money on Outplacement Services Cost: The Final Say
As outlined above, offering outplacement services to workers is mutually beneficial for the company and the employees. A company can save money on outplacement services cost by getting the right firm that uses tailor-made programs and by not jumping on the cheapest bandwagon, questioning payment terms, reading through the small print to understand what they are paying for, and keeping tabs on the outplacement firm’s performance.
Want to learn how much you can save with Careerminds? Schedule a demo here: