The Business Case for Outplacement Services
Poorly managed layoffs cost firms enormous profits!
With every dispersed employee there are direct and indirect costs:
- State Unemployment Taxes
- Potential Legal and Litigation Expenses
- Increased Retained Workforce Turnover
- Brand Reputation Costs
Our affordable career transition and outplacement services save organizations significant money while protecting brand reputation.
REDUCE STATE UNEMPLOYMENT (SUTA) TAXES
The longer a former employee remains jobless, the greater the expense to the employer.
An employer’s state unemployment taxes are verifiably reduced by offering career transition support. Years of research show career transition and outplacement services quicken the job-search process and thus decrease an employer’s unemployment tax expense.
Let’s do some conservative calculations. For example, an employer with 500 employees with a State Unemployment wage base of $15,000 will save $37,500 with a mere .5% decrease in unemployment expenses.
Mitigate Legal and Litigation Expenses
Avoid just one layoff related lawsuit and save on average between $40,000 and $250,000.
According to the small business administration, there has been a 2000% increase in wrongful termination lawsuits over the last 20 years.
Even more painful is the fact that the average court settlement is $200,000 and the average legal costs are $40,000 per incident.
A valid termination does not reduce the costs to defend your company’s position.
According to the Research, a dispersed worker who receives company sponsored career transition services is three-times less likely to initiate a lawsuit.
Let’s dig a little deeper and be conservative again as we work with the U.S. Private Venture Administration’s calculations. For every 50 employees laid-off, if a company reduces their litigation expense by a mere 1%, the savings equates to $125,500 or at least $2,500 per dispersed employee.
This 1% savings alone more than covers the cost of outplacement services.
Intentionally Address the Predictable 31% Increase
in Voluntary Turnover
Retain a mere 1% of your retained workforce, and in a conservative estimate, save $99,000.
Being forced to layoff employees is an agonizing experience for any employer. Not surprisingly, according to the research, it’s equally, if not more painful, for your retained employees.
Some organizations will experience up to a 31% increase in voluntary turnover of their retained workforce, when layoffs are viewed as poorly managed or when retained employees believe their former coworkers were not treated fairly and compassionately.
Voluntary turnover costs companies more than $600 billion dollars each year.(1)
By some estimates, voluntary turnover costs are somewhere between 33% to 200% of each lost employee’s salary. The estimate includes expenses such as recruitment fees, background checks, drug screening, temporary staffing, reduced productivity, lost expertise, and diminished productivity.(2)
Turnover rates vary by industry, with retail and wholesale’s harrowing turnover average topping the charts at 60.5% and energy holding the coveted position of 11.8%, the average is 19.5%.
Let’s use the most modest of estimates to calculate the cost of voluntary turnover, as a result of layoffs.
If a company’s typical turnover rate is on the low-end at 19%, an increase of 25% (less than the 31% predicted), results in a 4.75% increase in turnover following layoffs, or a predictable turnover rate of 23.75% in the next 12 to 18 months.
We’ll calculate the cost as 33% of an exiting employee’s salary, with a low base of $60,000. For every 500 staff members, the employer, in our conservative model, will lose approximately 119 employees, with 24 of those being the result of layoffs and the increase of 4.75%. Thus, for every $60,000 worth of salary, this calculates to a cost to the organization of $19,800 per lost employee. If the organization can expect an additional loss of 24 employees, that’s $475,200.
And, this $475,200 is only for the extra turnover. It does not include the 19% average loss nor take into account that the median salary in the U.S. is $85,800.
If we calculate the total cost of turnover for the predicted 23.75% of that same 500 employee unit, the number is almost unfathomable. 119 employees lost due to turnover, at a cost of $19,800 results per $60,000 worth of payroll will cost the company $2,356,00. Ouch!!
What if we could help you deploy compassionate layoffs and career transition services and reduce your turnover rate by just 1% (from 23.75% to 22.75%)?
In this scenario, by being able to retain just 5 of those 119 employees, your organization would save $99,000. Wow!
(1) Source: US Turnover Survey of 163 U.S. organizations, 2018 Mercer.
(2) Source: The Work Institute, a Franklin, Tennessee based consulting firm specializing in data-based insight and solutions (workinstitute.com)
Protect Your Employer Brand
A Strong Employer Brand Matters. Treat Dispersed Workers Compassionately to Protect Future Recruitment Efforts and Reduce Disengagement.
How does one reasonably calculate all the intangible costs and variables associated with lost productivity and disengagement, damaged reputation, weakened ability to recruit A-players, additional turnover, loss of client's and prospect's trust, stock valuation loss, etc. associated with poor culture and a damaged employer brand? This one is a bit more slippery and while the numbers are not included in our business case for outplacement calculations, any one of the following facts make a strong, stand-alone case for outplacement services.
When making the business case for outplacement services for your dispersed workforce, consider the following:
- 69% of Americans will not take a job with a company that has a bad reputation, even if they are unemployed(3).
- 92% would consider leaving their current jobs if offered another role with a company that had an excellent corporate reputation(4).
- 67% of workers are disengaged at companies with a poor culture vs. 70% at the world's best organizations for work(5).
- $3,400: The estimated cost of employee disengagement per $10,000 in annual salary(6).
- 51% of recruiters believe employee branding is the #1 investment a growing company can make(7).
- 79% of college graduates and Millennial job seekers look for culture and people fit with employees first, then by career potential(8).
- 50% of candidates say they wouldn't work for a company with a bad reputation - even for a pay increase(9).
- $30.5 billion a year: The estimated costs to the US economy due to Millennial turnover related to disengagement.(5)
- $350 billion a year: The estimated costs to the US economy due to disengaged employees and lost productivity.(6)
Research and Surveys conducted by:
(3) Glassdoor survey 2016.
(4) Corporate Responsibility Magazine Survey, September 2015
(5) Gallup: State of the American Workplace Report 2017
(6) McLean and Company, 2014
(7) Jobvite Recruiter Nation Report 2016.
(8) Collegefeed, March 2014.
(9) Betterteam, 2017
Head of Strategy, Allegis Global Solutions
HR Thought Leader of the Year by HRO and author of Redesigning the Way Work Works
“As Americans continue to cope with the employment-related repercussions of the financial crisis, the majority of people would still prefer to work for a company with business ethics that align with their own values. Today's global leaders face unique responsibility to not only be aware of this sentiment, but also to act in the best interest of their employees and customers.” - Bruce Morton, Head of Strategy, Allegis Global Solutions
Our outplacement and career transition services are affordable, flexible, and have an impact on your bottom line.
Our team of certified career coaches, outplacement specialists, and career transition experts specialize in getting employees back to work.
We enable your dispersed team to shift their focus from the pain of job-loss to the adventure of what’s next for their career.
When handled mindfully, career transition can be an energizing experience for even the most troubled individuals.
Our programs are proactive, engaging, focused, and results-oriented.
We enable job-seekers to focus less on the layoff experience, and more on landing their ideal job.
What makes us the Experts?
TurnKey Coaching & Development Solutions (founded in 2004), has experienced outplacement and management consultants, executive coaches and master trainers in every major metropolitan area in the USA and key hubs globally.
Through a single-point-of-contact, we provide affordable, full-service, LSO (learning services outsourcing) and make your employee development goals easier to obtain. From instructional design to implementing best-practices, to recommending strategic revisions, our clients tell us that we take the pain out of managing employee development programs. Our “turnkey” processes and objective oversight eliminate initiative overload and help your team to refocus on the business of the business instead of managing vendors.
Our on-site/off-site employee development programs are tailored enough to be relevant and meaningful to your industry while leveraging our off-the-shelf curriculum for an affordable and effective solution. We employ adult-learning best-practices and our proven curriculum, coupled with key-stakeholder interviews, your strategic goals, and industry research, for a unique and practical training and development program.
- Level & budget appropriate Outplacement Services and Coaching Programs including executive, mid-level, global leadership, HiPos, and Performance Improvement programs
- Training Programs: 400+ topics
- High-Potential Development Programs: Including Comprehensive Leadership University and Succession Planning components
- Assessments: Psychometric Assessments, 360 feedback (qualitative and quantitative) and Hiring Assessments
- Engagement, HR & Culture Surveys such as the Leadership Circle Culture Survey
- Strategic Planning Consulting & Retreats: data-driven strategic analysis and planning programs
- Organizational Development Consulting Services
- Capstone Projects: business strategy simulations and business simulation competition
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