Layoffs can have an impact on a company’s reputation, affecting not only the employees directly involved but also the perception of current and prospective employees and customers. The significance of outplacement services is how effective it can be in helping mitigate the negative consequences and even enhance a brand’s reputation during times of workforce transition.
How does outplacement affect a brand’s reputation?
One of the key statistics that highlights the importance of outplacement services is the market response to layoff announcements. In their book, “Does Employee Downsizing Really Work, a comprehensive study by Deepak Datta & Dynah Basuil, revealed that following a downsizing announcement, organizations often experience negative returns and reduced investor confidence. The majority of organizations encountered negative returns within the range of -0.30% to -2.12%.
These market declines can also affect consumer confidence, leading to fewer sales and new customers. By providing outplacement assistance to affected employees and supporting them in finding new employment, a company can better manage its brand reputation in such situations.
Furthermore, the long-term effects of layoffs on former employees can reflect poorly on a company. Research indicates that a significant percentage of laid-off workers struggle to find equivalent or higher-paying jobs, even a year after the layoff. This can result in lower earnings for the affected individuals compared to their peers who were not displaced.
Protecting brand sentiment during a reduction in workforce
Offering outplacement services that help these workers find new careers, a company can positively influence the narrative for both the employees and the organization.
Additionally, a reduction in workforce size, even as small as 1%, can result in increased turnover rates within the following year. Employees may feel less secure in their positions and actively seek opportunities elsewhere. However, offering transition assistance to laid-off workers can help rebuild trust and loyalty among the remaining workforce, thus reducing turnover rates.
What to ask your outplacement provider
Finding the right provider of outplacement services can be a challenge. This provider should act more like a partner than a vendor and should consider some key metrics about your business, brand, and long term organizational culture goals.
Determine how your new partner will assess your brand’s reputation before the organizational change and how they will use these considerations to help protect you during this challenging time.
Use the following as a general topic guide to get the conversation started:
- Employee Satisfaction
- Alumni Engagement
- Assessing Turnover Rate
- Hiring Metrics
Employee satisfaction is an important indicator that can be measured through surveys, interviews, or online reviews. High levels of employee satisfaction reflect a positive and respectful exit experience, which contributes to an enhanced employer brand and reduces the risk of negative word-of-mouth.
Alumni engagement is another metric that can demonstrate the impact of outplacement services on a company’s reputation. By maintaining a strong relationship with former employees through social media, newsletters, events, and referrals, a company can benefit from their advocacy, recommendations, and insights. Tracking metrics such as followers, likes, shares, comments, mentions, testimonials, or ratings generated by alumni can provide insights into the positive impact on the employer brand.
Monitoring the turnover rate of current employees, especially those affected by layoffs, is crucial. Comparing turnover rates before and after implementing outplacement interventions helps assess the effectiveness of retaining talent and maintaining trust, engagement, and morale among employees. A low or stable turnover rate indicates successful management of employee concerns, contributing to a positive employer brand.
Finally, hiring metrics can be analyzed to evaluate the attractiveness and competitiveness of a company’s employer brand in the labor market. Changes in metrics such as time to fill, cost per hire, quality of hire, and applicant pool size and diversity can reflect the impact of outplacement interventions on the company’s ability to recruit and onboard new talent.
Final Considerations
Investing in outplacement services not only demonstrates respect and care for employees during workforce transitions but also helps protect and enhance a company’s reputation. By offering support to departing employees, creating brand advocates, and maintaining a positive employer brand, organizations can navigate layoffs more effectively, mitigate negative consequences, and attract top talent.
It is crucial to choose the right outplacement partner to ensure tailored and meaningful support for each unique situation.
