Magazine article Management Review

The Ins and Outs of Outplacement

Magazine article Management Review

The Ins and Outs of Outplacement

Article excerpt

The Ins and Outs of Outplacement

In today's economic climate, more companies than ever are being challenged to reduce costs and increase efficiencies in operations. While employers often begin to cut payroll through attrition, layoffs frequently follow. Whether you prefer to call them "reductions-in-force," "downsizing" or - the term currently in vogue, "rightsizing" - for many companies, cutting staff is an increasingly traumatic experience.

Gone are the days of "last hired, first fired." Except in the most entrenched organizations, or where union rules decree who receives the pink slips, most companies have learned the lessons of past recessions well and are downsizing to cut layers of bureaucracy - frequently meaning mid-level management - and to refocus on the company's core business.

Other managers are losing their jobs due to mergers and acquisitions. The pending Chemical Bank/Manufacturers Hanover union, for instance, is expected to cut 6,200 jobs as back offices are merged and once-rival bank branches - sometimes located next door to each other on major Manhattan streets - are phased out.

Cuts due to M&As and retrenching of mid-level management may be good for the corporate bottom line, but they also mean that hardworking, talented employees, who may have been with the company for many years, are being let go. The current recession is unusual in that many people are "on the street" not because of how they performed their jobs, but rather, because those jobs are suddenly no longer critical to the company. "Due to changes in marketplace dynamics, more highly skilled, educated and talented people than ever before are joining the ranks of the unemployed," says Bob Graham, senior vice president and managing director of the Stamford, Conn., office of Drake Beam Morin, an outplacement firm.

And when it comes time to announce staff reductions, management frequently finds that either it has not established formal severance policies and outplacement programs, or where in place, they were written prior to current wrongful discharge legislation, and are therefore outdated.

Thus, layoffs, which are never easy, have become even more traumatic in the 1990s, and many companies are turning to outplacement programs to help meet the needs of both the employer and the former employees. "Mergers and acquisitions are the number one reason we're retained," Graham claims. "That's a significant shift from six to 10 years ago when the primary reasons were [personal] chemistry and job performance."


Appropriate outplacement programs cannot be developed overnight, nor in the frantic atmosphere of a company in the midst of announcing a major restructuring or layoff. Most consultants agree it is important for the company to have relationships with several outplacement firms before they are needed. Since approaches vary slightly between outplacement firms, and even within branch offices of multistate organizations, it's in the interest of the employer to have an understanding of the programs available and to have developed a rapport with the counselors.

For these reasons, more than ever before, human resources professionals and senior management must take a proactive approach in developing progressive, cost-efficient and appropriate outplacement programs. In many organizations this will require HR to challenge traditional relationships and responsibilities and take an active role in educating senior executives about the necessity of outplacement practices. For all practical purposes, if you haven't reviewed your severance policies for several years, they are probably out-of-date and could place you in litigious hot water.

The place to begin is with a needs assessment at the most fundamental level. Quality organizations can spend months developing objectives and mission statements that exemplify the company's guiding principles. …

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