How a Negative Outplacement Experience Can Hurt Your Business

Outplacement: in everyday use, the word is often a kinder replacement for terms such as “laid-off” or “downsizing,” both of which have a bit of negative stigma and a touch of fear associated with them. Outplacement, by definition, means “the provision of assistance to laid-off employees in finding new employment,” but we think it goes a little further than that – at least it should. 

In human terms, losing one’s job often means more than a loss of income; it can also mean a loss of one’s stability, security, and even dignity. The result can include everything from anxiety and sadness to physical symptoms such as headache and weight changes. The loss of a predictable day compounded with the loss of purpose, belonging, and challenges associated with the former position can leave people debilitated, and that feeling grows steadily with each new day that doesn’t bring a meaningful job offer.

Humanizing the outplacement experience will not only improve the outcomes of those who have been let go, but it will also dramatically improve the experience for those employees who were not let go. Purpose-driven outplacement is more cost-effective for the company, more secure for current employees and more gracious for those who must move on.

Failing to deliver this can have disastrous consequences for your business.

Employer Branding

The scope and objectives of branding for marketing purposes and as an employer may be different, but the audience on either side is still human beings. People wear a variety of hats over the course of a day, a week, a year. At some points they’re operating as employees, consumers, parents, spouses – but all are still one person. That is to say that what affects your company’s employer branding will eventually spread out into your consumer marketing, and the other way around. The individual tactics of branding may be different, but in the end, you’re trying to make a good name for your company so consumers will spend dollars and talent will generate products and services.

A poorly executed outplacement event can have a tremendous impact on your organization’s branding on both sides, no matter how well you try to control the situation. The power lies with the people in this case, too, as a company’s employees have been found to be more trustworthy than a PR department, the CEO, or even an organization’s founder and the stories told by the outplaced individuals and those who remain employed by the company will ultimately be the ones considered accurate.

The Tangled Pushback

As Millennials continue their growing domination of consumer and employee spaces, their habits begin to dominate the markets as well. Facebook is slowly becoming one of the top sources of information for job seekers who want to get a sense of a company’s culture, for example, while 55 percent of consumers complain on social media sites like Facebook about poor experiences. In other words, the two markets are intertwined online, and are moving closer and closer to being a single domain rather than two endeavors. What does this mean for consumers? When former employees turn to Facebook and other social media sites to tell their stories – good or bad – everybody is reading, and the impact is real.

Sixty-four percent of consumers have stopped purchasing from a brand after hearing about the poor treatment of that company’s employees. One study found that a negative employee experience had a direct impact on consumer behavior: consumers were assigned both negative and positive employee reviews to read before staying at a popular hotel chain. Those who read a negative review gave significantly lower ratings for satisfaction and quality of service and were significantly less likely to recommend the hotel to others – even though their experience was the same as those who read positive reviews.

Organizations must be aware that the pool of potential employees is also a pool of potential customers, too. It’s difficult to imagine a person remaining loyal to a brand as a consumer when they feel let down by the brand as an employee. Even the recruitment process can have an impact on consumer behavior. Consider the case of Virgin Media. After reviewing the records of rejected applicants, 18 percent were found to be customers of the brand and six percent switched brands following a poor experience as a candidate. The dollar amount associated with that shift: $6.2 million.

Employee Productivity

If the purpose of reducing an organization’s workforce – whether it’s a major restructuring event or a minor cut – is to increase profitability, then it only makes sense to make improvements to profitability from multiple angles to have the greatest impact. One of those additional angles is retaining the productivity of the workers who are not part of the exit. Remember, these are human beings who may be grateful to have a job following a downsizing event, but they still have anxieties and fears about their own security and stability. Unless these emotions are eased, they will cut into productivity, and therefore reduce the effectiveness of the downsizing.

According to one study, the employees who remained following a downsizing event experienced a 41 percent reduction in job satisfaction, a 36 percent reduction in commitment to the organization, and a 20 percent decline in job performance. Other studies have found a reduction in creativity and innovation following an outplacement event. Layoffs also sever ties between sales personnel and customers and researchers have found that customers are more likely to move to your competitors following a round of layoffs.

All this damage isn’t inevitable. A reduction in workforce can be a profitable decision, provided that comprehensive – humanized – outplacement services are given to those who have been downsized and that those services extend to those who remain with the company afterward. The workers who remain want to know that their friends and former colleagues haven’t been left out to dry; that they aren’t next on the chopping block; that if they should be up for layoffs they won’t lose their homes, their cars, their hopes, and their dreams. If the outplaced are given a truly soft landing and genuine efforts to ease the transition into a new career, then the decision to downsize can be seen as fair. Morale and engagement can be preserved, customer relationships can be saved, productivity and profitability can actually be boosted. In other words, the real goals of the reorganization effort will be achieved.

The consequence of ignoring the need to provide comprehensive outplacement services is risky. Is your organization exposed? Learn more about how to deliver purpose-driven outplacement services by downloading our free whitepaper, Humanizing Your Outplacement Practices.