What is Outplacement in 2023? Definition, Benefits, and Uses

By Reid - August 24, 2022

Define Outplacement Services

Are you a manager looking to help employees find work following a layoff or job loss? Or maybe you want to learn more about navigating and properly implementing an outplacement support service.

Here's an outplacement guide to answer the most common questions and provide an overview of these vital services.

Table of Contents:

What is Outplacement (Outplacement Services Definition)?
What Is a Severance Package?
Organizational Benefits of Outplacement
What Is Reduction in Force (RIF)?
What Is a Layoff?
What Is the Difference Between a RIF and Layoff?
Picking the Best Outplacement Firm
Cost of Outplacement Services

Laying off employees is a harsh reality no employer wishes to face, but most have to deal with it.

Layoffs occur when an organization undergoes restructuring, downsizing, mergers, etc., which can lead to the termination of employees. These times can be challenging, which is why employers often seek help during the process. This is where Outplacement Support comes into play.

Outplacement services have become a rapidly growing and almost required component of the severance agreement to help separated employees quickly and effectively find jobs.

Offering outplacement services to an employee is not only the right thing to do, but it serves other business purposes as well, such as reducing the risk of litigation, saving money on unemployment benefits, and protecting the employer’s brand (to name a few).

Are you thinking of implementing an outplacement service within your organization but don’t know where to start? This guide will look at everything you need to know about the process and how to handle it.

What Is Outplacement? (Outplacement Definition)

As we had previously mentioned, the termination of employees is common within companies of all shapes and sizes. When businesses struggle or the economy takes a turn for the worst, organizations are often forced to terminate employees to keep the business running properly.

Downsizing is a difficult decision for any company to implement because it means rendering loyal colleagues, friends, and family jobless.

Fortunately, organizations have come up with a more helpful solution when forced to terminate/downsize. This solution is referred to as Outplacement Services (or programs).

Outplacement service is job placement assistance that organizations provide to their employees through a third party at no cost to the employee (covered by the business/organization).

This third party helps navigate the transition process, providing general training, interview prep, career coaching/counseling, and resume writing services, to name a few.

What Is A Severance Package?

A severance package is an agreement between an employer and an employee about how much pay and benefits the company is willing to continue beyond the employee’s last paycheck.

Every company is different, but a typical package includes one week’s pay for each year of service, a limited continuation of healthcare benefits, and outplacement services (which most US companies opt into).

Why Would A Company Provide Outplacement Assistance To An Employee?

Reducing the pain for laid-off employees
- Termination is painful for both the employer and the employee. With outplacement services, you can provide professional career transitional care to minimize this pain (hopefully cutting down on the hardship and the challenging situation they were put in).
Protecting the employer’s reputation
- Companies, especially established ones, make news headlines when implementing terminations and layoff policies. Such stories can rub off the wrong way on potential clients, giving the company a reputation for being impersonal even when the terminations are necessary.
- With outplacement services, you can soften the bad news through the reassuring voice of your laid-off employees (who are hopefully now satisfied advocates).
Boosting the loyalty and morale of the employees left behind
- Your reason for laying off employees is likely justifiable, but if you don’t provide the departed with some help, you may lose the support of those that remain. Such an environment is unhealthy for a successful business to run correctly.
- With outplacement services, your current employees can feel assured they will be taken care of if anything like this happens in the future.
Helping the terminated employee land a new job faster
- While you may think terminating an employee helps reduce your labor costs, it may cost you more than you think if not properly executed. This is because you have to pay the employee unemployment compensation (if your company has this set up) and any other costs associated with their package.
- When employees quickly find a new job, they will receive their new paychecks, reducing unemployment compensation costs.
Protecting you against legal claims
- Some unsatisfied terminated employees may sue their former employers for wrongful termination and get a large paycheck in return.
- When you provide outplacement services and the employee takes advantage of it, you reduce the risk of getting sued.

The federal reserve bank of Chicago published a study that projected an organization with 1,000 employees who were laying off employees could avoid losing roughly $1.4 million in wrongful termination lawsuits by offering outplacement services. - Velvet Jobs

What Is Reduction In Force Meaning(RIF)?

Reduction in Force (workforce), or RIF, is a permanent elimination of a position. It is a separation from employment brought about by low funds, lack of work, redesign, elimination of a position, or reorganization. When a RIF is implemented, it’s not likely or expected that the employee will be recalled to the job.

What Is A Layoff?

Sometimes, businesses are pushed to a point where they have to eliminate employee positions because of budgetary reasons, personal management errors, or general business needs.

A layoff occurs when an employee is relieved of their position, duties, and responsibilities. This can be a temporary suspension or permanent termination. A permanent layoff is also referred to as a redundancy.

What’s The Difference Between a Reduction In Force And A Layoff?

A layoff and a reduction in force (RIF) are usually used interchangeably. While the result is similar in that an employee loses their job for reasons out of their control; there are differences between them.

Layoffs usually come with an expectation that the employee might be rehired if an employer has more work or their financial condition improves. On the other hand, RIFs don’t have such expectations. Once a RIF is implemented, the position is gone for good.

The choice between RIFs and layoffs is up to your discretion as an employer. Sometimes, the former is necessary significantly when restructuring a business for more profitability. In such situations, a consolidation of responsibilities will lead to the elimination of some positions.

In other cases, your company may be down for a moment and then bounce back, so a temporary option (layoff) would be ideal. Deciding between the two depends on your business's overall health and vision.

When you’ve decided and brainstormed how to implement the strategy, it’s time to find a third party that can provide the terminated employees with outplacement services.

How To Select An Outplacement Services

There are quite a few outplacement options on the market today. Here are some tips on what to look for when selecting an outplacement firm specific to your needs:

Results: Find an agency that gives your former employees the best shot at landing a solid job. It will help build your reputation as an employer that cares.
Value/Cost: Select a firm that offers value at an affordable cost. The idea of terminating employees is to minimize cost, so you don’t want to spend too much on an outplacement firm. Great value at a reasonable price will do the trick.
Technology: Select a firm that integrates technology into its services. For example, since outplacement firms offer career coaching, they should use webinars and other technology to deliver coaching content. Such technologies place the outplacement firm and former employees ahead of the curve.
Knowledgable Staff: Choose a firm that utilizes the best recruiters, hiring managers, and career coaches in the business.
Flexible: Select a flexible firm willing to adjust its preferences according to the needs of your former employees.

outplacement help quote

The Cost Of Outplacement Services

The cost of outplacement varies depending on the firm. Some may charge as little as $350 per employee, while others may charge up to $10,000. The difference in the price emphasizes the services each firm will provide along with the level of employees they are helping.

The best way to determine if the price is worth the investment is to see an overview of the firm's services. If you would like to move forward with a particular firm, you can agree on an ideal price based on the number of former employees and their level within the work industry.

Fortunately, technology has cut down on the costs of outplacement services. As time goes by, the prices may continue to drop!

Wrapping Up | Outplacement Support

Businesses and organizations alike will face a time when downsizing is necessary for the overall health of their company. When that’s the case, outplacement services will be there to help.

Providing this service to employees who have been laid off will enable them to secure another role faster and show the remaining employees that you are an organization that cares about its workers. This, in turn, will boost employee loyalty and hopefully drive positive results moving forward.

We hope this helps with your decision and best of luck with your business! We also wanted to list the best outplacement services to help get you started.

Title: The Outplacement Guide | Definitions, Explanations, and What You Need to Know

Category: Employer Resources

Tags: outplacement, reduction in force, what is outplacement, Rif, reduction in force meaning, laid off employees, outplacement of terminated employees, executive outplacement services cost

Author: Reid is a contributor for theJub. He’s an employment and marketing enthusiast who studied business before taking on various recruiting, management, and marketing roles. More from the author. | Author Profile