What are offboarding and outplacement? How do they differ? What kind of benefits do they bring to an organization? How to properly manage offboarding and outplacement processes?
The world we are living in nowadays can be referred to as VUCA. Even though the term itself was coined as early as in 1987 and was then used to describe the reality of the end of the Cold War, it is also very relevant in the context of the present business reality. The words which form the acronym (Volatility), (Uncertainty), (Complexity) and (Ambiguity) are an accurate reflection of today’s need for flexibility and the ability to adapt to changing circumstances.
In the times of change, companies are forced to find their way in the New Normal, that poses a number of challenges.This is particularly visible in critical moments, such as the outbreak of the COVID-19 pandemic in 2020. According to a survey run among the world’s leading CFOs by PwC, their greatest concern is global recession (70% respondents). Up to 77% of the surveyed CFOs declare that they are considering cost containment measures. In such circumstances, it is necessary to make crucial decisions which will allow companies to adapt to the new reality. Some important areas of transformation include agile crisis and employee management as well as focusing on issues related to supply chains, taxes, commerce, finances, and the company’s strategy and image.
The key challenge faced by HR specialist is effective human resource management. It is necessary for them to ensure transparent communication with employees, providing them with support, and taking care of their wellbeing. The New Normal is sometimes connected with workforce reductions, also on a large scale. In the US, since 1996, lay-offs of 50 or more employees have resulted in a million of people losing a job every year. Given that, it is indispensable to use adequate tools. These are, for instance, the processes of offboarding and outplacement.
What The New Normal is and what kind of challenges it brings?
The term New Normal usually used in reference to the world of business. The phrase means a situation where something that was unlikely in the past becomes a common phenomenon. It was popularised by Mohamed El-Erian, the former CEO of PIMCO, one of the most important global investment management firms. El-Erian introduced this term in 2009, alluding to the difficult economic situation in the world following the global financial crisis in 2007–2008. These words are usually used to describe the reality of those days, the global recession period of 2008–2012, and the COVID-19 pandemic in 2020-2021.
What the New Normal requires from business is a flexible approach to many issues. This is noticeable in the way work is organized in various companies. For example, in 2005–2017 in the US, the popularity of remote work increased by 159%. The importance of remote work is growing, and the New Normal of the pandemic forced companies into promoting this solution. The remote work experiment turned out to be successful. As Gartner study reveals, 82% of company leaders plan to let employees work remotely some of the time after COVID-19, and 47% said they plan to permit remote work full time going forward.
Another change enforced by the New Normal is that companies must face restructuring, including workforce reduction. The International Labour Organization estimates that working hours will decline by 6.7% in the second quarter of 2020, which is equivalent to 195 million full-time workers. The situation is still difficult both for the employers and the employees. However, companies can help their employees go smoothly through the lay-off process, which is also beneficial to their own operation.
Why is it necessary for you to be able to restructure your company efficiently?
At a certain stage of business development, company restructuring may turn out to be unavoidable. The decision to do so is usually made when the company does not deliver the desired KPIs, when its employees become ineffective, when the organization is expanded or reduced considerably, and when the customers’ needs or the general situation in the industry change.
Restructuring is often an essential moment of organizing the New Normal and dealing with new problems. The process can result in financial savings as well as optimize the functioning of the company by means of communication and management improvement. In the long term, restructuring makes it possible to maintain the stability of the enterprise.
However, to run this process correctly, it is necessary to approach it in the right way. As shown in the survey by McKinsey & Company, as many as 60% business leaders do not analyze the condition of their company sufficiently prior to the reorganization. This approach proves harmful to the company rather than helpful.
The survey carried out by Bain & Company in 2010, focused on 57 examples of a corporate reorganization, showed that one-third of them did not improve the companies’ performance. The abovementioned survey by McKinsey & Company survey by McKinsey & Company demonstrates that 80% of reorgs fail to deliver the hoped-for value in the time planned. What is more, in 10% of the cases, the changes cause real damage to the company. As reorganization means uncertainty and the possibility of lay-offs, it is also stressful for employees. According to the survey, in 60% of cases, this results in noticeably reduced productivity.
The ability to reorganize skillfully is crucial for bringing actual benefits to the company. Hence, it seems necessary – especially if the process involves downsizing – to introduce proper communication and to use automated tools.
Various forms of restructuring
Company restructuring may take various forms. Employers normally choose to reorganize their company in order to streamline their business operations, increase the profits, or maintain the stability of the company. Sometimes, restructuring is needed because the company is merged with another one. There are seven types of corporate reorganization and they usually involve the following elements and processes:
- Mergers and Consolidation;
- Acquisition – Target Corporation Subsidiary;
- Acquisition – Target Corporation Liquidation;
- Identity Change;
- Asset Transfer.
The possibilities of reorganization are endless. It allows the company to achieve and maintain a competitive advantage, reduce implicit costs, facilitate the flow of information and materials within the organization, and improve its general strategy and position.
HR management is a significant element of restructuring, especially when it comes to downsizing. External service providers can offer interesting solutions in this respect: professional outplacement and offboarding programmes adapted to the needs of a particular organization. Thanks to these, staff reductions can be less painful both to the company and the employees – including those who remain with the company (for more on this, see the section titled “Survivor Syndrome”). Such actions taken as part of restructuring can increase the performance levels in the company and have a positive impact on the general image of the company. This is because they prevent the negative consequences of lay-offs, such as a decrease in employee activity and efficiency, the employees’ decision to look for a new workplace, or recurring over-employment, which leads to further lay-offs.
Corporate Social Responsibility and workforce reduction
Corporate Social Responsibility is gaining more significance in the age of coronavirus as the principles behind it can help to maintain social accountability while ensuring the best possible business performance during this difficult time.
Socially responsible enterprises should pay attention to a number of issues: they need to provide their employees with access to benefits and training as well as promote ethical development. Their attitude to mass lay-offs is equally important, especially in times of crisis, when it becomes necessary to handle difficult situations properly.
In such circumstances, companies should organize lay-offs with the wellbeing of dismissed employees in mind. According to Leeds University Business School’s publication titled Socially responsible restructuring in an era of mass redundancy, employers should focus on the following issues in particular: effective anticipation of change, informing the employees about lay-offs in advance, and proper management of communication before downsizing. Another crucial issue is supporting employees through outplacement programs, including training and retraining opportunities as well as career counseling.
The risks of downsizing and redundancy programmes
Department reorganization and company restructuring often result in workforce reductions. The New Normal has entered the labor market recently, and the phenomenon of VUCA has become even more noticeable in business. Downsizing can be caused by numerous factors, including the need to adapt to the reality of VUCA. The world is changing rapidly, nothing is stable and certain. Downsizing may bring about some risks to the employer, stemming both from the nature of a given company and the characteristics of the laid-off employees as well as the particular industry and labor market. Mass lay-offs are particularly difficult to organize.
The main risks of redundancy programmes include:
- the remaining employees’ fear of what the future will bring, which may affect their job satisfaction, engagement, and motivation;
- negative opinions about the former employer posted online;
- the growing dissatisfaction of the employees who stay with the company and are concerned about the possible work overload;
- problems with finding and employing new talents;
- psychosomatic problems with health among the leaving employees.
Redundancy programmes can be easily controlled and systematic thanks to outplacement processes: special support programmes for laid-off employees. The goal of outplacement is to improve the situation of the people who lose their jobs and leave the company. Outplacement usually consists of various consultations, training, and courses for the employees who want to improve their qualifications and find a new job quickly. Effective communication during downsizing is crucial – both with the employees who were given the notice and with the employees who remained.
The study carried out by Charlie Trevor of University of Wisconsin–Madison and Anthony Nyberg of University of South Carolina revealed that downsizing a workforce by 1% leads to voluntary turnover the next year. The calculations show that there may be a 31% increase in turnover, which affects the functioning of the company seriously.
What must be kept in mind too, is that losing a job is considered one of the ten most stressful life events. It affects both the people who are dismissed and those who remain. The latter begins to experience the so-called survivor syndrome. It has an impact on the general well-being of the remaining employees and their attitude to work. Magnus Sverke and Johnny Hellgren of Stockholm University and Katharina Näswall of the University of Canterbury found that the remaining employees mostly experience a drop in job satisfaction (41% of the respondents). Other noticeable effects include lower organizational commitment (36% of the respondents) and lower performance (20% of the respondents).
Another study analyzing 27 cases of mass lay-offs that have taken place since the 1970s reveals that the market response to downsizing is negative, which in fact reflects the above conclusions. The possible outcomes include the loss of trust on the part of the stakeholders, which certainly puts the company in a difficult situation.
Hence, it is essential to ensure proper support to the employees who are affected by redundancy. Outplacement and offboarding programmes should help not only the people who lose their jobs but also those who were lucky to stay. Such programmes are also a great chance to boost the positive image of the company.
The Survivor Syndrome
Survivor syndrome is one of the consequences of layoffs in companies. Redundancies are hard not only on those who have to leave to company but also on those who remain there. The survivor syndrome may occur among the employees who have kept their positions. Due to downsizing, the surviving employees begin to wonder why they are the ones to stay and they worry that they might still be the next to go.
The symptoms of the survivor syndrome are the following:
- increased stress levels and the need to adapt to new work circumstances, changes in the employees’ behavior, possible increase in aggression, anxiety, and other emotions;
- fear of job loss (job insecurity), which is characterized by increasing job loss anxiety and decline in self-confidence at work;
- decrease in work motivation;
- increased voluntary turnover resulting from the employees’ fear of losing their positions: the anxiety makes them rather leave the company voluntarily than wait for being fired;
- loss of trust in the employer and the company, which is also related to reduced employee engagement.
What is more, the remaining employees may experience a sense of guilt connected with the fact that other employees have been made redundant. The survivor syndrome frequently results in heightened anxiety levels related to workforce reductions. Besides, the remaining employees may actually miss the dismissed ones and feel very sorry for them. Thus, their employers should expect a possible decline in performance, engagement, and efficiency levels as symptoms of the survivor syndrome.
What’s the difference between outplacement and offboarding?
Offboarding and outplacement programmes are a great method of ensuring the highest possible comfort to dismissed employees.
The main goal of outplacement is to provide laid-off employees with complex services which help them transition to new jobs. Such programmes are meant to protect employees, establish positive relationships in the team, improve risk management methods, and boost the image of the company.
Offboarding is a word used to define the whole process of employee departure – no matter if they are dismissed or if they leave voluntarily. Particular stages of this process show the best ways to say goodbye to the employee who is leaving. Offboarding procedures are related to both communication (concerning the fact of leaving, changes in the team, feedback) and administration. Taking care of good relationships with the former employees is also of great importance. Aberdeen found that only 29% of companies formalized this process. It is a good idea to consider implementing offboarding in a company, as it helps in various areas: better change management, improving the image of the company, and easier acquisition of boomerang employees.
What services are part of outplacement and offboarding?
Outplacement services are aimed to help the employees who lost their jobs in finding their way in the labor market – and in finding a new job. Such services are based on a variety of comprehensive activities.
Outplacement programmes consist of career counseling, financial consulting, psychological support, coaching, providing aid in job hunting, creating a network of contacts, building a personal brand, sharing information about job fairs, organizing courses and training (both refresher and requalification training), ensuring support in the relocation process, and teaching how to create and edit recruitment documents (CVs, cover letters, and others.). In fact, outplacement should be managed by an external service provider specializing in such programmes. The automation of the process is also essential these days. Apart from traditional meetings and standard forms of information transfer, outplacement can involve the use of new technologies, e.g. e-learning platforms, which allow to carry out the whole programme remotely.
When it comes to offboarding, the services connected with formal matters such as staff and administration documentation are of key importance. Apart from that, communication should be in focus, especially in relation to the handover of responsibilities and delivering the message about the dismissal. An exit interview is an important element of offboarding – it is a wrap-up conversation that helps in determining the level of the ex-employee’s job satisfaction and presents the company in a favorable light. All these procedures can be performed online.
What are the effects of offboarding and outplacement?
Outplacement provides employees with a sense of security. By helping former employees in their process of job seeking, the company gains recognition and appreciation. According to a study run in Polish companies in 2016, employees mostly appreciate support in terms of job interview preparation (86%) and the development of a new job search strategy (71%). Up to 66% of companies declare that what their employees value most is emotional support as well as diagnosing their professional potential.
The company will benefit from a comprehensive approach to outplacement
as well. In the survey run by Reed Consulting, 78% of the respondents claim that the implementation of an outplacement programme has a positive impact on their corporate image. Interestingly, 82% of the organizations with outplacement services worldwide indicate that outplacement helps them enhance their company’s brand and public image in times of economic uncertainty.
Offboarding, which means an appropriate way of saying goodbye to an employee, can bring many benefits too. Just like in the case of
outplacement, it helps build a positive image of the company, thus constituting an important component of employer branding. The employers who devote their time to become acquainted with the perspective and experience of the exiting employees enjoy more trust.
This is very important: WorkPlace Trends’ statistics show that 40% of employees could consider returning to their former workplace.
Those former employees who have undergone proper offboarding can function as a great showcase of the company itself. This helps the employers acquire new hires. On the other hand, negative opinions from former employees can have a major impact on the company as well. Negative feedback from ex-employees can make it difficult for the organization to recruit and retain people in the future.
What does a perfect offboarding process look like? Offboarding stages
Offboarding is the process of employment termination in the best way possible. The main goal of offboarding is to appropriately handle the experience of departing employees. The process of saying goodbye to employees is very important from the point of view of any company. A study by CareerArc revealed that more than half (55%) of job seekers would decide against applying for a position if they read negative reviews online.
These opinions are usually given by the employees who have already left the company. Ex-employees often give vent to their grudges against their former employees on online forums and on social media. This results in negative reviews about the employers and may damage their public image. However, offboarding may prevent employee dissatisfaction and build the company’s positive image among the departing employees.
Research by Aberdeen showed that offboarding is implemented only in 29% of companies. According to TEKsystems, only 14% of managers believe that offboarding in their companies is organized in an effective manner. This proves how important it is to introduce adequate offboarding solutions and to make sure that the process is smooth, well-organized, and orderly
A comprehensive offboarding process should consist of the following elements:
- preparing the notice for the employee and handing it in a friendly, non-judgmental atmosphere (or: accepting the employee’s resignation if he or she is leaving by their own choice);
- making sure that the notice period is adjusted to the contract, the applicable labor law, and the employee’s preferences (e.g. if this is the employee’s wish, the notice period can be shortened);
- checking the number of the employee’s spare leave days and deciding whether the employee should use them or receive their financial equivalent.
- appointing a replacement and encouraging the departing
employee to contact his or her successor and share all the information about a given position, such as the necessary tasks and duties – this way the team is able to keep on functioning seamlessly;
- appointing a person or a couple of persons who will take over the employee’s unfinished tasks.
- handover of the employee’s equipment: business computer, car, phone;
- returning of all the passes, parking permits, etc.;
- canceling the employee’s email address as well as the login details
and passwords to systems and applications.
4. Organization and relationships:
- informing all the team members about the fact that their colleague is leaving;
- saying goodbye to the employee in a nice atmosphere, e.g. during
lunch with the whole team;
- building a positive impression as an employer;
- conducting an exit interview.
One of the crucial elements of offboarding is the abovementioned exit interview. During the interview, the employer can ask the leaving employee questions regarding his or her impressions of working for the company and suggestions concerning various solutions of work organization and organizational culture. An exit interview is a great way of saying goodbye to the employee as it helps the employer make a lasting positive impression and talk about healthy business relationships in the company. It must be kept in mind that every employee leaving a company becomes its ambassador – former employees will build the company’s image by sharing their opinions about the brand, be it in speech or in writing. Correct offboarding creates positive feelings in employees and helps improve the corporate image.
What does the good outplacement programme look like?
Employee turnover, workforce reduction, and employees quitting on their own are natural and inevitable elements of the business. Outplacement processes can simplify lay-offs and downsizing. Outplacement consists of controlled dismissals, organized in an efficient and systematic way. Outplacement programmes are directed both to employees who are laid-off individually and to employees who lose their jobs as part of mass lay-offs. Outplacement is also a good idea when the company wants to have a good relationship with former employees.
As it turns out, the employers who have implemented outplacement programmes can enjoy 20% higher profits than those who have not done
this. This is mainly because dismissed employees share their opinions about their former employees – on social media and online forums as well as among their friends. If the departing employees receive support from their employers, they are likely to leave with a positive attitude to the company and a favorable opinion about it. Another reason why companies that introduce outplacement gain more is that the employees who stay with the organization are less prone to become anxious, they are more committed to working diligently and thus they bring proper revenues to the company.
Outplacement processes can be run individually or in groups. Their main elements include:
- career and psychological counseling;
- courses and training;
- individual resume analysis;
- preparing a list of potential employers for the employee;
- enabling the employee to look for a new job, e.g. by allowing them to take a couple of additional days off;
- supporting the employee in opening their own business;
- organizing networking meetings to help the employee meet
new people, including potential employers and people who were
dismissed in the past and are doing well professionally.
Outplacement helps both the employee and the employer. The employee can feel safe and is guided smoothly through the new, difficult situation, while the employer has a chance to improve the company’s image and reputation. What is important, the employees who stay with the company should also be taken care of. This way, the employer is able to reduce the risk of the occurrence of the survivor syndrome and the related job insecurity.
In some organizations, outplacement programmes offer the assistance of consultants for the laid-off employees, to help them in job hunting.
The consultants can also provide career or psychological counseling to the employees. Outplacement procedures should include the following steps:
- Preparing an individual programme for each dismissed employee or for a group of dismissed employees.
- Ensuring proper communication with the outplaced employees: making sure they are aware of the reasons for lay-offs and describing the whole outplacement process.
- Hiring internal or external consultants, determining the rules of the
programme and the time it will take.
- Individual and group support for the departing employees.
- Integrating the outplacement experience with future events, such as further lay-offs.
When meeting with the laid-off employees, managers and consultants should clarify the particular goals of the programme as well as its principles and the benefits it will bring to the employees. It must be emphasized that the employees who take part in such programmes find a new job quicker and feel more valued. What is more, outplacement has a positive influence on the people who stay with the company by lowering their sense of job insecurity. In short, well-organized outplacement programmes are beneficial and indispensable to all companies.
The most common mistakes in the offboarding and outplacement process
Although the successful separation from the employee can be really beneficial and profitable to the company, it is natural that mistakes are sometimes made in the process. According to HROnBoard, 71% of organizations have no formal offboarding process, and 70% of organizations are only interested in dealing with resignations. Moreover, 62% of companies use paper-based offboarding. Only 32% are inclined to partially automate their offboarding. Even less, i.e. 5%, decide to implement fully automated offboarding processes. This approach may turn out to be ineffective, as employees are more likely to expect comprehensive solutions which are focused on the use of online tools.
Another common mistake related to offboarding is the lack of consistent strategy, which may result in misunderstandings and loss of trust in company management practices. Companies should pay special attention to conducting an extended exit interview, followed by its analysis and relevant conclusions, which can then be used to improve the functioning of the organization. The lack of this element may have a negative impact on the company’s image.
Outplacement processes should follow adequate rules as well. Any mistake may lead to trust issues and affect employee efficiency and sense of security. Potential risks include an inappropriately customized approach to departing employees, introducing outplacement too late, devoting too little time to the programme, or focusing on one element only, e.g. solely on the preparation for job interviews.
To sum up
Successful offboarding needs proper planning. The companies which adopt a formal approach to HR issues may count on retention increase by 14% and employee engagement increase by 11%. What must be kept in mind as well is that offboarding programmes protect companies from data leaks. The research shows that up to 87% of the departing employees take essential data with them. In most cases, this is the result of the lack of procedures that could guarantee proper data handover.
All in all, offboarding can constitute a great help to companies, as evidenced by many examples. Take Mailigen: the company introduced an offboarding programme which had a positive impact on its image and reputation, also among potential candidates. What’s more, it ensured full confidentiality of the company’s data. This is possible thanks to the use of a special checklist, which gives a clear outline of the tasks to be completed as a result of employee lay-off.
Outplacement is also an effective method of improving the company’s image. The programme implemented by Orange Polska in 2013 proves to be an interesting and successful solution. The process is divided into two stages. The first one begins during employment and centers on the employee’s preparation for future career changes by means of workshops and meetings. The second stage takes place when the job contract is terminated. With the help of external service providers, employees get a chance to become acquainted with the local labor market and to learn how to find attractive job offers. After twelve months of the introduction of this type of outplacement, 75% declared that they were satisfied with it.
In such delicate matters as offboarding and outplacement, it is advisable to use the services of specialists.
Companies that offer automated and complete solutions are the place to go to.