ROI for Businesses using Outplacement & Career Transition Services

Too often, the focus for using Outplacement and Career Transition Services is placed on the obvious benefits to employees affected by redundancy, restructure and reorganisation.

However, the tangible benefits to the businesses that engage outplacement services need to be brought to the fore during turbulent economic times.

In 2002 the US Centre for Organisational Research conducted a study of 1200+ senior HR managers across a broad range of industries, 46% of which employed more than 1000 people.

They were asked to share their views on the values & benefits of providing outplacement services, with 88% of them experiencing downsizing in the past 5 years.

4 key benefits were identified:

Benefit No’1.

Providing outplacement services helps minimise/avoid legal risk. When terminated employees are talking to their outplacement consultant, they are not talking to their lawyer about ‘unfair treatment’ & the study found litigation reduced by 72% among employers using outplacement services with their displaced staff.

Among companies using outplacement services, only 15% had personal grievances (PG’s) filed against them compared to 26% in companies providing no support.

In NZ, the Employment Relations Authority reports that 57% of PG claims relating to redundancy go in the employee’s favour, with the average payout per person over $10,000 excluding legal costs. A 10-hr mgt-level outplacement package with People Central will cost $1,850 & a 6-hr package more suited to admin/shop floor staff $900.

The national cost of PG claims relating to redundancy is at least $12m currently.

Benefit No’2.

The 2nd benefit of outplacement is in maintaining a positive public image of the employer. Terminated employees who have been treated fairly & with dignity by their employer generally speak well of the organisation within their work related & personal circles.

The Centre for Organisational Research study found businesses providing outplacement services experienced a 78% improvement in their external public image

Think of the New Zealand market, where everyone knows everyone. When this economic storm passes (& it will) & businesses start looking to hire in the same labour pool, those who treated their departing staff with dignity & fairness will fair far better than those who did not in attracting talented people back to work

Benefit No’3.

Using outplacement services enhances the retention, productivity & morale among remaining employees.

When surviving employees learn that terminated employees have been treated fairly, they are more likely to stay put. In our current tight labour market, prospective employees are also impressed if they learn that the company has a reputation for being fair & consistent in its treatment of employees.

The COR study found that in businesses using outplacement services, both productivity & profitability increased in the 12 months following downsizing, with staff turnover, sick days & lateness remaining the same in the same 12 month period.

When comparing businesses using outplacement services with those which did not, productivity increases were twice common & profit stability or improvement was 50% more likely.

Public perception & bad press can have major impact on the value & profitability of a business. However, a well managed change process using outplacement services can maintain or even strengthen employee, community & investor relations.

Using outplacement services demonstrates to the employees & the public that the business has a conscience. It makes a strong statement to surviving employees that they are valued & that money, time & effort are being spent to ensure their continued satisfaction on the job

Finally, Benefit No’4.

Outplacement ensures that the stresses & workload of line managers & business owners is reduced.

When a business anticipates the need for redundancy, even senior HR mgrs approach the task with apprehension. No-one relishes being the source of bad news – its uncomfortable, its difficult & it can be traumatic.

Providing outplacement services can help smooth the transition for employees who are released from employment & reduce the risks of mishandling such events that can harm companies.

The COR study found 68% of line managers charged with responsibility for managing a redundancy/staff reduction programme reported a reduction in stress & workload when contracting the services to an outplacement provider such as People Central

So – aside from the moral obligation that employers have to genuinely assist & support employees affected by redundancy, providing outplacement services has a positive impact on the bottom line & provides significant return on investment.

If minimising risk and maintaining a positive external and image of your business is important to you when considering reducing staff numbers, then contact us.


  • US Center for Organisational Research
  • David Somerset
  • Employment Today