Newsletter - April 2009
Group Outplacement: How It Can Cost You Nothing
April 9, 2009 - Whit Blakeley
For those who view outplacement—particularly group outplacement—as “high cost,” envision the possibility that using group outplacement services could return money to the client company, perhaps costing the company nothing for such services.
In 1997, OI Partners – Career Management Resources was asked by a client company, a large global company with 175 plants in North America, to close an 800-employee facility in Atlanta. We had previously closed a large department for the company but never a project of this magnitude. We proposed the typical, comprehensive “a la carte” outplacement services for a project of this type. This included a charge for the notification, a charge for change workshops, a charge for job search workshops, a charge for a career center, a charge for manuals and on and on. It was enthusiastically received by the vice president of human resources, and we replaced a long-standing relationship with what was then the largest outplacement firm in the country.
Upon meeting with the vice president of human resources to finalize the details of the project, I boldly asked if we could experiment with a new service delivery and pricing model. With a quizzical look, he said yes without asking specifics. We had previously done a great job with the small department and received tremendous praise from management and the clients.
What was unique about what we had proposed? First, we did away with the a la carte pricing and instead charged a flat and even monthly fee for the duration of the project based on our manpower costs. We didn’t charge for a hundred items separately, like workshops and manuals.
Second, we assured management, based on their severance program, that 85 percent of employees would have employment offers at the time of their separation. Ten percent would have employment offers within four weeks of their separation. The remaining 5 percent would be looking at retirement, pre-retirement options, entrepreneurial opportunities or receive traditional employment offers within eight weeks of their separation. How could we be sure of such results?
We held a no-cost (to the attending company) job fair on site at the client company guaranteeing at least 25 employers in attendance, five employment and staffing firms, five training and vocational schools along with counselors from the state’s Department of Labor. The companies we invited received resume books containing resume copies of nearly 100 percent of the employees. Companies invited agreed that they were seeking to fill at least 20 positions which had to include positions for non-exempt as well as all levels of exempt employees. Additionally, employers were told that almost all (95+%) of employees had attended interviewing workshops, had resumes, had sample job applications completed and were expecting to be hired either at or shortly after the job fair.
Lastly—and this occurred by happenstance—the plant controller offered to document for us any reductions in workers compensation and unemployment compensation claims over the course of the project, and for 60 days after completion of the project. His initial motivation for such consideration was to convince the company that outplacement was expensive and a waste of the company’s money. After all, he told us and management, the company was closing the plant for “economic reasons.”
To his surprise (and frankly, our own) the financial results were very different. The company experienced a dramatic drop in the number of workers compensation claimants and claims dollars. Also, working with the Department of Labor and the plant controller, the anticipated number of those expected to collect unemployment compensation benefits was almost negligible. The total outplacement costs for our services were about $275,000. The reduction in workers compensation claims alone returned $312,000 to the company. There were very few unemployment compensation claims, and the company’s unemployment compensation surcharge actually was reduced. The total project cost the company nothing for outplacement services, and the savings from workers comp and unemployment comp reduced the company’s overall closure costs by more than 20 percent.
The company asked us to close 14 other plants between 1997 and 2002. In that same period through 2008, we have closed or handled significant downsizings for approximately 75 facilities. The results in savings to the client because of the comprehensive service model and the metrics have been very consistent through 2008.
The key is employee support and service provided by OI Partners – CMR. The key for the client company is the willingness to change their past outplacement model into an enterprise group format, partnering with OI Partners closely, allowing employees an intermediate but comprehensive level of service, and tracking the actual reduction in closure/downsizing costs.
Whit Blakeley is managing partner of OI Partners - Career Management Resources in Atlanta, GA. He can be reached at 888-483-0503 or wblakeley@oipartners.net.