Outplacement: A Corporate ‘Soft Landing’ In The Face Of Retrenchment

In a recent news interview with London based Financial Times newspaper, the Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo Iweala hinted that Federal Government may be forced to embark on cost cutting measures like rationalisation of its agencies to reduce its recurrent expenditure if the price of oil continue to fall. “We will have to look very hard at recurrent expenditure, and identify overlapping agencies. When the price is heading down, everyone sees the necessity but that doesn’t stop them from hating you,” the Minister said in the interview. The columnist concluded that the measure will definitely lead to mass retrenchment in the federal civil service which many Nigerians believed is bloated.

This sceptre of mass retrenchment is not restricted to the public sector. In April, 2014, two of the country’s telecom giants, MTN Nigeria and Etisalat Nigeria had laid off a total of 2, 252 across the country, out of their total workers in the companies respectively. In Feb, 2012,Access Bank Plc tops the league of banks that have adopted this measure, with the sack of over 1,500 employees of Intercontinental Bank which it acquired, based on its recent appraisal model- Operation Just Cause. Ecobank Transnational Incorporation, which acquired Oceanic Bank International Plc, also disengaged an undisclosed number of workers while Enterprise Bank Limited, formerly known as Spring Bank Plc, one of the nationalised banks announced that it had given 140 of its under-performing employees, an option to resign. In the textile sector, about 5,000 workers were forced out of job in late 2008. Recently, the Nigerian auto assembly company, Peugeot Automobile Nigeria (PAN), sacked 565 workers of its 753 workforce and placed the remaining staff on half salary. Similarly, the confectionery maker, Cadbury Nigeria Plc. has fired 300 staff not so long ago.

While we understand that economic exigencies can cause firms to seek to ‘right size’ (to use the euphemism) their workforce, we posit here that Outplacement, if strategically deployed, can create a ‘soft landing’ for the disengaged staff. Outplacement is a term used to describe the activities of a downsizing company to facilitate the resettlement of former employees into new jobs and help them re-orientate themselves to the job market. Outplacement services offered by consulting firms are usually paid for by the employer. Outplacement providers with the requisite competence are contracted and the desired results are achieved through coaching, practical advice and psychological support. In fact, it is highly recommended that Outplacement is included in any change-management or organizational culture transformation process-to cater for staff that will no longer fit into the new corporate culture at the end of the exercise.

The term “Outplacement” was coined more than thirty years ago by the founder of a New York based career consultancy. With the increased rates of downsizing, rightsizing, redundancies and layoffs, particularly during the 1980s and 1990s, businesses increasingly found a need for some form of assistance in reducing the trauma of redundancy for both departing employees and those who remain. Indeed, research shows that losing one’s job is one of the most stressful experiences a person can face, ranked third behind death and divorce. Outplacement is currently a $4 billion a year industry globally.

Job seekers who have had the luxury of steady employment for many years are often ill-prepared to sell their skills and expertise to new employers. This is especially true for those who have worked at the executive or management level, where high salaries and experience specific to one company can leave someone who has lost a job unsure of where to start looking.

So how can Outplacement service benefit an organisation with a reorganisation or downsizing agenda? The process of separation can be difficult and expensive. Outplacement helps minimise the cost and negative impact a layoff can have on an organization.

Successful outplacement programmes offer:

Liability prevention: It demonstrates that the company offers grounded and fair separation programs. Outplacement services display an organization’s commitment to fulfilling their corporate responsibilities to their employees.

Enhanced corporate image: Retrenchment usually projects the company in a negative light in the public eye. Outplacement preserves the company’s reputation by caring for transitioning staff. It elevates the brand in the eyes of investors, customers, remaining employees and future job candidates.

Better retention rates and productivity from remaining staff: Outplacement demonstrates the company’s concern for employees, even when tough business decisions force layoffs. The company can retain key talent by showing care for outplaced employees. “Using outplacement demonstrates to your employees that layoffs are not capricious bloodbaths undertaken on a whim, but, rather, a necessary part of the company’s strategy for change and growth. Outplacement also demonstrates that compassion, fairness and consistency remain a part of the corporate culture, even after a lay-off”.

It reduces the stress-level of managers involved in layoffs: The managers who execute the actual termination or lay-off are the ones most affected by it-out of all the parties involved. The intervention of outplacement consultants in planning and executing retrenchment can make the process more manageable. Managers will be more willing to terminate marginal employees and lay off excess employees if they know that they have the support and guidance of outplacement experts.

As a critical component of the company’s change management strategy: Correct use of outplacement helps a company plan for long-term growth and change. It encourages consistency and confidence in decision-making and minimizes precipitous action. In many companies, outplacement is seen as a standard corporate benefit akin to dental or health coverage.

Many companies have a genuine desire to “do the right thing”: Most companies are run by compassionate human beings who want to do all they can to help their laid-off employees. Outplacement provides them with the opportunity to express their compassion to the laid off staff.

The one common thread that seems to be present in all we have seen above is the importance of the human touch in a retrenchment exercise. An Outplacement intervention that is accessible, compassionate, caring, knowledgeable, thinks strategically, evaluates readiness and options, and one that walks with the displaced employee throughout his/her transition journey is priceless in providing that touch.

Chinedu Duru is a Managing Consultant with Hamilton Lloyd and Associates