SUPPORT DEPARTING EMPLOYEES AND YOUR BRAND WITH OUTPLACEMENT May 2016
Zach Lahey, Research Analyst, Human Capital Management
Report Highlights p3 Best-in-Class companies are 2.7 times more likely to use employee data to help restructure their workforces.
p5 Best-in-Class companies are 2.5 times more likely to use outplacement.
p10 JC Penney’s time to fill after dismissal is 3 times faster than the national average.
Businesses now operate in an era when voices of individuals can have a major impact on overall success. Thus, savvy companies consistently take whatever actions they deem necessary to ensure past, present, and future employees are treated well and, in turn, look favorably upon their employers. While there are a variety of methods available to keep the workforce content, an often overlooked strategy for protecting the brand is properly communicating the business case for a layoff and helping impacted employees find new jobs faster. This concept is called “outplacement” — often offered along with severance during the offboarding process. This research report explores the importance of both outplacement and proper communication during offboarding, and how they can have an impact on a business’s identity and growth.
p11 Companies with outplacement in place improved their voluntary employee turnover by 18% year-over-year.
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The State of the Workforce Today
57% of companies believe that the biggest reason why employees commit to their role is that they are challenged and intrigued by their work.
Today, there are more job openings than ever before, and 75% of the fully employed workforce consider themselves passive candidates. In other words, they’re not looking for new roles, because they’re content in their current occupations, but they’re open to having a conversation with a recruiter or hiring manager at a different company. Naturally, smart employees understand that they’re more valuable than ever before. Such individuals recognize when they aren’t a good fit for the company, and they don’t sit around and wait for things to get better, either. These kind of employees take action. Employees know that there is a plethora of jobs available today, so they’ll seek out or accept alternative employment without hesitation. Hence, it’s vital to know why your employees leave in the first place (Figure 1) and what could keep them. Figure 1: Reasons Why Employees Leave
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We know this much, per Aberdeen’s Best Practice: Establish Strong Internal Relationships to Improve the Employee Experience (January 2016): 57% of companies believe that the biggest reason employees commit to their role is that they are challenged and intrigued by their work. So why might “challenged” and “intrigued” employees leave anyway? Even the savviest of companies can’t predict employee departures. But they can certainly plan ahead. For instance, by knowing why employees leave and commit in the first place, businesses can put employee experience front and center. Organizations should always factor the employee experience into any decision. One way to do that is to incorporate employees’ sentiments and perspectives into the trajectory of the organization as a whole. Per Aberdeen’s report Best Practice: Identify High Potentials before You Lose Them! (August 2015), Best-in-Class companies (sidebar) are 2.4 times more likely than All Others (88% vs. 36%) to use employee feedback to inform internal decision-making. Using such insight demonstrates to the workforce that they’re being looked after and trusted. That being said, it’s important to think critically about how employees affect the success and vitality of the business.
In Aberdeen's 2015 Human Capital Management study, the following key performance indicators (KPIs) were used to distinguish the Best-inClass (top 20% of aggregate performers) from the Industry Average (middle 50%), and Laggard (bottom 30%) organizations, with mean performance among the Bestin-Class as follows: – 86.9% of employees rated as “highly” engaged – 30.3% increase in customer satisfaction rates – 9.9% decrease in voluntary (unwanted) employee turnover
Offboarding: Offering More Than a Thank You Determining quality cultural fits versus non-fits, keeping the company afloat during hard times, and realizing poor investments are all examples of taking action to reduce the workforce for the betterment of the business. Such decisions aren’t necessarily the easiest to make, but savvy companies differentiate themselves by using data and feedback to
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4 Aberdeen Definition: Offboarding is defined as the process by which companies help transition employees away from the company. These transitions occur for a variety of reasons, including mass layoffs, dismissals, or voluntary turnover.
Did you know that companies use an average of nine channels to interact with and update their customers?
Support Departing Employees and Your Brand with Outplacement
recognize when things aren’t working and make decisions that will help remedy those situations. In fact, Best-in-Class companies are 2.7 times more likely than All Others (38% vs. 14%) to use employee data — assessment results, manager feedback, and performance — to help restructure their workforces. Such organizations make use of the variety of resources available to them to take the pulse of the company and make decisions about whether or not layoffs might be necessary. When companies deem that members of the workforce, whether individuals or entire teams/stores, aren’t a good fit, or a lack the bandwidth or capital to retain them, layoffs are typical. Largescale layoffs happen regularly, too. For instance, according to the Bureau of Labor Statistics, there have been one million plus layoffs annually for the past decade in the US alone. But that doesn’t mean downsizing should be harsh or impersonal. Instead, it’s imperative to note the importance of continuing to offer a quality employee experience and to consider implications that any actions taken during offboarding might have on the brand and the customer base. That’s where having a clearly defined offboarding process (sidebar) within talent management and HR really pays off for everyone. The aforementioned quality employee experience puts communication and transparency up front when it comes to all phases of their lifecycle, from onboarding through offboarding. Such a business practice is akin to the way sage companies treat their customers. Notably, per Aberdeen’s Customer Communications Management: Maximize CEM Results with Interactive Content (November 2014), companies use an average of nine channels to interact with and update their customers. It’s about providing as much relevant information as possible in as
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timely a manner. So when employees aren’t a good fit, or there isn’t the capacity to support specific teams, stores, or locations, it’s important to be as supportive, transparent, and understanding as possible. After all, employees — like your customers — are major brand ambassadors. They have the ability to easily post feedback on social media and company review websites, as well as share their thoughts with their networks — thoughts that, if negative, could be damaging to any brand. The offboarding process can involve a variety of steps from salary reimbursement to employee technology management, but because both retention and brand are so vital to the success of your business, exit interviews can be a hugely important part of offboarding. It’s simply a good business practice to check in with all employees leaving the company, whether they are leaving voluntarily or involuntarily. Inquire about their experiences, what they learned, and if they have any feedback. For instance, 59% of companies utilize exit surveys to get a better pulse from their departing employees. These surveys are actually one of the most underdeveloped and underutilized areas of talent management. But while adoption of such a tactic wavers in popularity, these interviews can provide insight into what needs to happen to help employees see the value in staying, as well as how their sentiment upon exiting might affect your brand.
Aberdeen Definition: Outplacement is defined as efforts made by a company to help terminated employees through the transition to new jobs and help them re-orient to the job market. A third-party firm usually provides the outplacement services which are paid for by the former employer and are achieved through practical advice and psychological support.
Just 25% of organizations have a formal offboarding process in place today. But smart companies don’t just focus on closing the loop on the traditional employee lifecycle. Instead, they’re even
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more committed to helping affected employees transition into other roles. This process is called outplacement (sidebar). Outplacement: The Next Frontier for Offboarding
Best-in-Class companies are 2.5 times more likely than All Others to use outplacement solutions.
Outplacement is by no means a new concept. But it’s one that top-performing companies truly understand the value of in order to support employees and their ongoing brand. To that point, Best-in-Class companies are 2.5 times more likely than All Others (55% vs. 22%) to use outplacement to support employees transitioning from the company to another role/department or leaving the company altogether due to layoffs or firing. Outplacement can be supremely helpful for employees transitioning out of the company, especially if they were not prepared to be reentering the job market. The majority of businesses already spend a great amount of time, money, and effort to find, hire, onboard, and develop their workforce, and outplacement is a dignified tactic to demonstrate to affected employees that they were cared for all along. Companies that use outplacement are no strangers to looking out for their public-facing identities and planning for the future. Case in point, they are 64% more likely than All Others (54% vs. 33%) to create, promote, and monitor their employer brand. They’re also the companies that incentivize and empower their employees to aid with such processes. Per Figure 2 below, companies that use outplacement think just as much about the present as they do about the future.
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Figure 2: Outplacement Users Are Forward Thinkers
These organizations perceive effective offboarding practices and outplacement to be just as integral to talent management as hiring and onboarding. A poorly managed employer brand or lack of foresight can be severely detrimental to the ongoing success of the company and the retention of the current workforce. These businesses want to understand what worked and what didn’t work; they want to have an accurate pulse on what’s happening internally. That’s why it’s a necessity for organizations to not get too comfortable with the state of the workforce today. Admittedly, though, it’s easy to get sidetracked.
Companies that use outplacement solutions are also 69% more likely than All Others to provide employees with referral tools.
Assessing the Impact of Outplacement While there’s a greater number of jobs available today than ever before, layoffs, dismissals, and voluntary departures are as
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8 Related Research "Employer Branding: What a Known Identity Can Do for Recruitment"
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common as ever and should be handled appropriately. As mentioned, not every employee will be a good fit and not all economic situations allow for workforces to remain the same size, so it’s in an employer’s best interest to provide a reliable service with proven best practices, transition methodologies, and resources, which help those impacted in a workforce restructuring or layoff to their next careers quickly. While looking after employees is certainly a good deed that does not go unnoticed, outplacement is also a savvy business practice. When used appropriately and with the right services, outplacement can do wonders for impacted employees and the company alike. More specifically, outplacement aids with: The ongoing stability of the employer brand. Past, present, and future employees will see that the company is always looking out for the workforce. Such a strong identity can be a difference-maker for referrals, retention, and employee satisfaction.
A few benefits of outplacement: • • • •
Stability of the employer brand Supporting employees’ futures Avoiding possible legal ramifications Decreasing unemployment taxes
Affected employees’ future. They’re given support and resources to help them redevelop their résumés, hone their interview skills, make new connections, and ultimately transition into new, fitting roles faster than they would if they were acting alone. Potential legal claims and liability. With previous employees focused on their futures, the company doesn’t have to be as concerned with backlash, frustrations, or negativity. Unemployment taxes. In the short term, the less time claims are drawn against your company, the less your experience rating will rise. In the long term, the more stable the job your employee eventually lands, the less www.aberdeen.com
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likely you will be to pay a portion of future unemployment claims. In order to accomplish the above, along with a slew of other benefits including stronger customer relationships and reduced unemployment taxes, it’s imperative for businesses to keep an open dialogue with all parties involved. Ultimately, successful offboarding of employees isn’t the end of the relationship; instead, it’s a transition into a new relationship. Just like the employee experience, the offboarding process and outplacement offering needs to be as human as possible and feel personalized. With that in mind, the next section of the report is a case study about a retailer that implemented outplacement and saw firsthand why it’s so valuable for both employees and the business alike. Case Study: JC Penney’s Outplacement Initiative Founded in 1902 as the Golden Rule by James Cash Penney in Kemmerer, Wyoming, JC Penney (JCP) started as a single retail store and has expanded extensively over the past century. JCP can be found in 49 states, employs 60,000 plus people, and still operates its first location to this day. The founding principle is Penney’s mantra that they sustain to this day: treat the customer the way you want to be treated. They apply that same adage to how they treat their employees, whether future, present, or past. As Amanda Hart, HR Senior Manager at JC Penney, puts it: “We treat every person with both dignity and respect, from everyday purchasers, to candidates, to when employees leave our organization.”
“We treat every person with both dignity and respect, from everyday purchasers, to candidates, to when employees leave our organization.” ~ Amanda Hart, HR Senior Manager, JC Penney
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10 Notable quotes from a few of JC Penney’s previous employees that used their outplacement solution: “The outplacement solution helped me market myself, it and gave me the confidence to interview after not searching for a job for nearly 30 years. I couldn't have done this without my coach. The resume writing team made me sound like a rock star!” “I can't thank you enough for your support and encouragement through the job search process. Your enthusiasm is great! I am so grateful I was able to be part of this program and land a great job!” “As I gave more info to help point out the type of job I wanted, the outplacement staff made their matching changes, providing me with very accurate available job positions. It was very impressive and very appreciated — the whole staff is great.”
Support Departing Employees and Your Brand with Outplacement
With so many stores and typical fluctuation with business, JC Penney made the smart move to centralize HR to their home office in Plano, Texas. Hart and her team — known internally as HR Operational Excellence (HR OpEx, for short) — cover all employee-centric facets of the business, including offboarding and outplacement. For instance, when the company closes a store, conducts major layoffs, or releases specific employees, HR OpEx handles all of the communications and strives to ensure all operations are seamless and smooth. Says Hart, “Our number one priority is to ensure that the impacted employees feel supported.” To help with that, JC Penney offers outplacement services to those affected by layoffs or closings. The century-old adage of treating everyone with dignity and respect is never forgotten, even in potentially unpleasant situations. JCP’s outplacement initiatives are all designed to be supportive of impacted employees. To ensure that, the HR OpEx team betatested out their offerings before implementation. Hart continues, “We participated in the services as if we were an impacted associate to see the level of customer service the coaches provide. We purposefully delayed our responses back to them to better understand their process of associate engagement. When we didn’t respond to their emails, they continued to reach out to us via voicemail and offered to adapt their schedule to ours. They remained professional and empathetic to our situation. We’re very happy with what we offer to our employees.” Said offerings include four-hour, on-site classes during unit closings that include best practices on how to effectively conduct a job search, how to interview well, how to write or improve a resume, and a Q&A session. Additionally, they offer virtual outplacement coaching packages to their remote and field associates, so no matter where they work from, they can
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still receive outplacement support. Ultimately, each person requires a different level of support, so JCP approaches every situation and every employee differently. That said, outplacement is never a checkbox for JCP. So no matter who the employees are — manager to entry-level — the HR OpEx team remains committed and supportive from the onset of the process through when they find their next jobs. Case in point, Hart says, “We try to keep the experience warm and fuzzy wherever possible, and we try to be as encouraging as possible, too. In doing so, we’ve had very positive experiences overall. We’ve even received thank-you notes from impacted employees.” Moreover, their attentiveness pays off dividends for their impacted employees. Hart continues, “Our average time to land (a new job elsewhere) after they’re let go is 67 days.” That’s three times better than the national average, which is 200 days. That speaks volumes about how engaged the impacted employees are and how committed JCP and HR OpEx are to helping previous members of their workforce find new jobs. Such commitment to the entire employee lifecycle goes a long way for supporting the business, its customers, and its image and brand.
Employees in companies with outplacement solutions in place are 12% more likely than All Others to rate themselves as highly engaged with their work.
Measuring the Impact of Outplacement As JC Penney and the aforementioned strategies demonstrates, virtual outplacement can do wonders for the business, both internally and externally. Among other things, having a defined process for transitioning employees elsewhere can help with current employee engagement, performance, and retention. More specifically, employees in companies with outplacement solutions in place are 12% more likely than All Others (84% vs.
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75%) to rate themselves as highly engaged with their work. Moreover, per Figure 3 below, outplacement users experience major returns on investment (ROI) for using such a tactic. Figure 3: Outplacement Does Wonders for Internal ROIs
Companies with outplacement in place improved their voluntary employee turnover by 18% yearover-year compared to All Others.
When the current workforce is shown just how much their employer cares for their old colleagues, they’re that much more likely to remain with the company. Notably, as can be seen above, outplacement users with engaged employees experience 11% year-over-year improvement in revenue per FTE. They understand that their day-to-day efforts don’t go unnoticed and commit that much more energy and effort to the success of the company. Such a result is a huge win for the company, as 30% of companies believe that the fourth biggest reason employees stick around is that they see a future with the organization. The Future of Work and What That Means for Outplacement The most successful companies have always been the ones that have foresight — they see potential roadblocks and www.aberdeen.com
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opportunities before everyone else — and take action to ensure they stay ahead of the curve. The future of work is a great example of how top performers can change everything, specifically as it relates to the gig economy and virtual/remote work. For the uninitiated, the gig economy makes short-term, contract, and/or project based roles known as “gigs” available to a freelance workforce-for-hire. This is a stark contrast to traditional salaried or hourly roles. Gig-type roles are on the rise; in fact, one estimate suggests that such jobs now make up almost 18% of the labor market. The space is heating up — especially with the rise of Millennials and their comfort level with job flexibility and virtual work — but might not hit full stride for another few years. The gig economy is becoming, however, a force to be reckoned with, so for those forward-thinking companies out there, such a development is a great opportunity for the business, its growth, and its brand. As previously discussed, layoffs and dismissals are part of running a successful business, but that doesn’t mean companies should leave impacted employees without support, which is where outplacement plays a huge role.
Gig roles are on the rise; in fact, one estimate suggests that such jobs now make up almost 18% of the labor market.
The gig economy has the potential to augment employees’ financial and perhaps even emotional stability in addition to outplacement. Outplacement solutions already help the affected develop, grow, and find new jobs. But imagine a situation wherein businesses don’t need to put as much time, effort, and money into aiding their impacted employees, because they’re able to pick up gigs or short-term roles? The intention of outplacement isn’t lost in the gig economy; in fact, previous employees take on new roles faster than ever and won’t feel as
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downtrodden by the whole experience. With the gig economy at a greater scale, employees can worry less about being unemployed between jobs, and employers can stress less about how mass layoffs, dismissals, or voluntary departures shape their brand.
Did you know that 37% of U.S. employees have worked remotely?
Another factor to keep in mind is the rise of the virtual/remote workforce. Gallup recently reported that 37% of U.S. employees have worked remotely. The fact is that flexible, virtual roles are becoming increasingly commonplace, and employees are getting used to being mobile all the time. Traditional outplacement practices, which required coming into an office and working 9 to 5 on the job search, don’t apply to this growing field. That’s why it will be a necessity moving forward for there to be virtual delivery of services, which must still be personal, to match the growing remote workforce. Truly virtual outplacement enables more personalized services — 1:1 meetings with the best coaches available (not just the nearest) or technology-enabled job searches (not just a built in job board feed either). A differentiating characteristic will be ensuring that the virtual outplacement process isn’t merely “checking the box;” instead it still provides personalized, helpful, and effective services to impacted employees. Final Thoughts As already discussed, past, present, and future employees need to be a major focus for any company looking to succeed. Whether it’s their perspectives off- or online, employees’ voices can have major ramifications on any company’s brand. A bad image doesn’t just affect employee retention and recruitment, though; it also can be detrimental to gaining, satisfying, and retaining customers. It’s no wonder that the second biggest HR pressure today, as reported by 40% of companies, is ensuring www.aberdeen.com
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that they either build or sustain a positive, thriving corporate culture to appeal to anyone involved. Savvy companies understand and factor these realities into any decision they make surrounding their employees, from sourcing, to onboarding, to offboarding and outplacement, and beyond. For more information on this or other research topics, please visit www.aberdeen.com. Related Research Employer Branding: What a Known Identity Can Do Best Practice: Identify High Potentials Before You for Recruitment; February 2016 Lose Them!; August 2015 Best Practice: Establish Strong Internal Talent Acquisition Technology: Today, Tomorrow, Relationships to Improve the Employee Experience; and Beyond; May 2015 January 2016 Author: Zach Lahey, Research Analyst, Human Capital Management (zach.lahey@aberdeen.com); Twitter; LinkedIn About Aberdeen Group Since 1988, Aberdeen Group has published research that helps businesses worldwide improve their performance. Our analysts derive fact-based, vendor-agnostic insights from a proprietary analytical framework, which identifies Best-in-Class organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategy. Aberdeen Group is headquartered in Boston, MA. This document is the result of primary research performed by Aberdeen Group and represents the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group.
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