Chances are, most of the employees at your company won’t be there five years from now. The typical length of time U.S. workers stay at a company is just 4.2 years, according to the Bureau of Labor Statistics.
But as these employees depart, they’ll leave with an opinion about your company — and likely hold it for years to come.
This is why outplacement — a service provided by the employer typically to help terminated or laid off employees transition to new jobs — is becoming a standard benefit in a growing number of industries. Once considered a perk given just to C-suite or executive level employees, outplacement solutions today are often offered to employees at every level of the organization. According to Verified Market Research, the global outplacement services market is projected to grow at a CAGR of 6.2% from 2018 to 2025 reaching $2.37 billion (US).
Companies are getting wise to the fact that while employees’ official tenures may be short, their relationship to the company as current and potential customers, brand ambassadors, and even future hires lasts much longer.
Let employees depart on a bitter note, and a company’s brand reputation could take a beating on Glassdoor and social media pages. An impressive 38% of laid-off or fired employees leave negative reviews of their former employers on these online networks. By providing outplacement to departing employees, companies give their former workers an improved opportunity to find a softer landing. These employees are likely to leave their old employer with a more positive parting impression that benefits the brand over the long run.
Not surprisingly, the industries with volatile workforce needs are the same ones that have been quickest to adopt outplacement services as the norm. Some of these industries are subject to sudden market changes, while others have to manage shifting seasonal needs. Many of these industries also experience frequent mergers and acquisitions, as well as changes due to technological advances.
Here are four of the top industries that offer outplacement solutions to outgoing employees as a common practice.
Technology
The software tech industry had a 2017 turnover rate of 13.2% — the highest of all business sectors, according to a LinkedIn analysis of its network. Of course, not all of this churn is due to layoffs. As tech talent is in high demand, many of these skilled employees are voluntarily jumping ship in search of better benefits and compensation.
But restructurings and reductions in force due to mergers and acquisitions in the tech industry also contributed to the industry’s high turnover rate. As The Wall Street Journal reported, 2018 was a banner year for tech M&As, and heavy tech acquisitions are expected to continue in 2019. Thus, tech companies have been quick to embrace outplacement solutions to help former employees quickly land new jobs.
There’s another reason why tech companies have been early adopters of outplacement solutions. Cutting-edge companies are often eager to try out new solutions like virtual outplacement services, which can include online career coaching, video interview practice, and digital resume reviews. With a workforce accustomed to getting the services they need via the internet, tech companies often engage tech-savvy outplacement companies to assist their employees where they’re comfortable — online.
Retail
The retail industry announced high layoff numbers in the first quarter of 2019 — 46,061 cuts, according to CNBC. Why are so many retail workers being laid off? For one, many stores are getting shuttered. Sears alone closed hundreds of stores in the last year in its struggle to survive. In total, U.S. retailers — including many familiar names like Gap, Victoria’s Secret, and Bath & Bodyworks — have announced more than 7,150 store closures this year.
Yet the retail sector isn’t strictly shrinking. In fact, during the holiday season, retailers often have to compete for workers. In late 2018, companies like JCPenney even offered prizes and free vacations to entice applicants. The often-changing workforce needs of the retail industry means companies often seek to hire boomerang employees, so retaining positive relationships with past workers is crucial. This is one reason why Macy’s and JCPenney, among other major retailers, have provided outplacement assistance as a benefit to recently laid-off workers.
Financial services
In late March, Bloomberg reported a “wave of pullbacks in finance,” listing 17 financial firms that have undertaken job cuts since the beginning of 2019. The layoffs are happening for a wide variety of reasons: market volatility, consolidation in the sector, automation and new technology, and changing consumer investment patterns.
Many financial companies have long invested in outplacement services for their employees. The tactic not only helps laid-off employees leave on a brighter note, but also helps attract new employees who are already aware of the volatile nature of the sector and anticipate their new jobs may not last permanently. Even back in 2001, The Wall Street Journal noted firms were using outplacement services to lure employees. In recent months, U.S. Bank, Wells Fargo and Thrivent Financial have all provided outplacement services for laid-off employees.
Healthcare
Although nurses and physicians are in high demand in the current labor market, labor cuts are still common in healthcare organizations due to major changes in the healthcare landscape. The sector saw a record number of mergers and acquisitions in 2018, and the trend continues this year, according to Healthcare Finance.
The sector will also continue to transform due to changes in technology. Telemedicine — which allows patients to consult with health care providers remotely — is changing how many people access healthcare in recent years. In addition, automation and artificial intelligence too are sure to affect the healthcare industry in years to come.
All of that, combined with a nursing shortage, means healthcare organizations face a unique challenge. They need to preserve or improve their ability to attract future talent — even while undergoing short-term reductions in force.
In addition to the above industries, a number of other sectors too offer outplacement as a regular practice today. Manufacturing, oil and gas, and aerospace are among the sectors that have all seen major shifts in technologies and business landscapes in recent years, and have frequently engaged outplacement services to help manage their changing workforce needs.
One size does not fit all when it comes to employee outplacement services, however. Different industries benefit from different approaches. For example, for hourly retail employees who are accustomed to searching for and applying to jobs in person, the most appropriate outplacement services might be face-to-face career counseling offered on-site. In contrast, virtual outplacement programs might work best for banking, technology, and other sectors whose employees require digital-age services like LinkedIn profile reviews and seek the convenience and accessibility of an always-available online platform.
Overall, the growing popularity of outplacement solutions shows more companies are choosing to take a holistic approach to the talent life cycle. A layoff doesn’t end the employer-employee relationship; the employee who is laid off today could be a consumer of the same company’s products and services next week, a brand advocate next month, and a returning employee next year. Of course, the same employee could just as easily become a bitter ex-worker who lowers the company’s Glassdoor rankings and puts down the brand on social media, leading to fewer customers and difficult talent acquisitions.
Companies have many choices today on how to treat their workforce: what benefits to provide, what employee programs to offer, what employee assistance to contribute during reductions in force. The types of employees—and ex-employees—you end up with largely depends on the ongoing relationships you choose to nurture—or not—with the people who cross paths with your company.