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Save Now - Pay Later: The High Cost of Not Doing the

Outgoing employees are increasingly on their own after layoffs

Save Now – Pay Later: The High Cost of Not Doing the “Right Thing” When Downsizing

Layoffs have become a grim but common reality in today’s work landscape as companies ‘right size’ in an attempt to increase profits and lower expenses in a slow growth economy. Unfortunately, even as the occurrence of layoffs has risen, support for outgoing employees in the form of outplacement and career transition services is on the decline. Many cash-strapped firms are choosing to reduce or forgo traditional outplacement services in an effort to save money, leaving laid off workers to fend for themselves. But what seems like a way to cut costs in the short term could actually cost much more for a firm in terms of risk, productivity, and reputation in the long run. Here are some ways it can pay off to invest in outplacement services:

1) Reduce wrongful dismissal
Fear of litigation from former employees is a legitimate concern for companies – last year, claims filed with the EEOC reached an all time high of nearly 100,000. Average settlement costs were $40,000, with 10% of wrongful termination suits resulting in settlements of $1 million awarded to plaintiffs. But proper outplacement services can help reduce the risk of lawsuits filed by outgoing employees. By providing outplacement assistance, a firm can maintain feelings of good will and help terminated workers find new jobs more quickly, reducing the chance that they will pursue legal action against the company.

2) Reduce Length of Unemployment Claims
Recent statistics from the Department of Labor claim the average length of time to re-employment in the US is a staggering nine months. But studies have also shown that good outplacement programs can help reduce the time it takes for an employee to find a new position by up to 40%. This translates to less unemployment benefits paid out by the former employer.

3) Reduce Cobra Benefits
Similarly, a reduced period of unemployment means less company spending on Cobra benefits. Helping former employees land new jobs and new health plans is the best possible defense against ongoing insurance payouts for workers separated from the organization.

4) Protecting your Brand
In today’s hyper-networked world, a firm’s reputation is more transparent and more important than ever. If disgruntled former employees have something negative or damaging to say about a company, they have plenty of platforms to express it, from Linkedin to Facebook to GlassDoor, a website where workers can write detailed reviews of what it’s like to work at a particular company. By handling workforce reductions with care and compassion and assisting outgoing employees, firms can maintain a positive image, even amidst layoffs.

5) Protecting your Surviving Workforce
With a reduced workforce, a firm’s remaining employees are more valuable, and more strained. Many experience survivor’s guilt, increased workload, and anxiety about their personal and professional security. Stress and anxiety from layoffs can lead to health issues, increased absenteeism, lower morale and overall reduction in productivity for an organization. Outplacement services can assist remaining employees in dealing with workforce reductions and understanding the new business structure. Such support for remaining employees can help the existing workforce adapt and remain productive as the organization shifts, protecting the future success of the company.

For more information about outplacement and career transition services to help protect your company, contact jdaugherty@cpikc.com

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