ROI on High Touch Outplacement?

By Ellie Eckhoff

Investing in the future of an exiting employee may seem counterintuitive, particularly if the layoff is part of an initiative to cut costs across the business. However, since the early 1960’s, when outplacement services began to take hold, there is enough compelling evidence that suggests that this investment is not only socially wise, but also one that has a positive fiscal impact.  Below are a few quantifiable reasons to invest in Outplacement:

1. Consider the Costs Associated with Disengagement

A 2015 Gallup poll surveyed 80,000 employees and found that 50.8% of them were “not engaged,” while another 17.2% were “actively disengaged (defined as those that let their unhappiness show in words, attitudes and actions). Estimated annual costs associated with disengagement to US business is $450M, certainly a figure to capture one’s attention.  When staffing reduction are made, the morale and engagement can decrease dramatically due to a rise in workload, loyalty towards lost colleagues and fear of future job cuts. Since high touch outplacement provide exiting employees with the consulting support and skills to successfully land in a new role, the likelihood of an increase in disengagement is minimized, resulting in greater productivity and discretionary effort from the remaining employees.

2. Pay less in Unemployment Taxes

The longer an individual is unemployed, the higher the cost of unemployment tax.  Employees that are extended quality outplacement support land in a new role approximately 50% faster than those without it.  According to the Department of Labor, the national average of re-employment is 28 weeks, at ClearRock our average is 14 weeks.

3. Reduce the likelihood of Litigation

Employees who feel that their former employer treated them unfairly during a termination have a higher likelihood of pursuing legal action to settle their grievance. 2014 data showed that $40K is the average cost for a settlement out of court, with 10% of cases costing the employer over $1M.

4. Your Brand is Priceless

Your former employees carry your name on their resume for the rest of their lives.  They will work in your industry, they will talk to your job candidates, and they will engage with your vendors.  Doing the right thing for your employees when they are exiting is more than just good PR – it’s a business strategy that will protect your brand for years to come. 

If you’d like to learn more about ClearRock‘s Outplacement Services, we’d love to hear from you.