It's a story with which millions can sympathise. The tough economic climate has unfortunately made redundancy commonplace. According to Work Audit research by the Chartered Institute of Personnel and Development (CIPD), published in March 2012, over the past three years nearly 2.7 million people have been made redundant in the UK. That's bad news for businesses as well as employees, with the cost to UK employers estimated at a hefty £28.6 billion. A wider measure, taking into account the effect of these job losses on UK economic output, puts the cost at a whopping £132 billion, which is equivalent to 9.4% of 2011 UK GDP.
These figures are huge, but they only tell part of the story. Although the prevalence of redundancy means the stigma attached to those affected has been greatly reduced, the potential ramifications should never be underestimated. Any insensitivity or lack of rigour when making redundancies risks opening an unappealing can of worms. Disillusioned by their treatment, those made redundant may seek redress through litigation or by publicly venting their displeasure in ways that would inflict damage on a carefully nurtured corporate reputation. As for the survivors of a cull, their productivity and morale may plummet in the aftermath if they perceive their former colleagues to have been treated with unfairness or disrespect.
Faced with such an unattractive prospect, some HRDs have thought hard about how the redundancy experience can become more positive for organisation and individual alike. Increasingly, outplacement (the process by which a company helps a former employee transition) has come to be considered a crucial aspect of a better model of redundancy. But which, if any, outplacement services should HR be offering? And what evidence is there that they actually work?
These are issues that telecoms group TalkTalk has addressed over the past couple of years. The company grew quickly and has subsequently needed to simplify its organisational structure and root out duplication of roles throughout the UK and Ireland. More than 1,000 staff members have left the company in three waves of redundancies since February 2011. Outplacement consultants Fairplace and Penna were brought in to provide specialist support.
"I've worked at organisations where the number-one agenda item is: how do we mitigate the cost of change?" says TalkTalk HR business partner - consumer, Tom Webber. "But at TalkTalk we have values related to people and community, and when you are taking people through a period of change it's good to be able to look them in the eye and tell them you are really trying to help. The right quality of outplacement helps people move along the change curve. It helps them realise the situation is for real and gets them through the denial stage quicker." Webber adds that having a third-party outplacement partner on site able to reassure people that the process is normal is very helpful.
Like TalkTalk, BPO specialist Capita has made a significant number of redundancies. Where appropriate, it has put in place an outplacement service for affected employees. The service usually includes offering career-transition guidance with individual support in CV writing and career planning.
Capita HR director Claire Neal argues that whether an organisation chooses to implement an outplacement service should depend on its desired outcomes. So if redundancies are likely as the result of a contract ending or a site being closed, then the organisation will be working to a particular timeline and may therefore be more likely to implement retention initiatives to hang on to skills and experience.
"The culture of an organisation will also come into play when considering an outplacement service," says Neal. "If an organisation has relatively flexible policies and procedures, then employees affected by redundancy may be allowed time off to visit recruitment agencies or attend interviews. In addition, during consultations with employees, it may transpire that they feel confident in tackling the job search themselves and do not require an outplacement service."
In Neal's opinion, outplacement services should most strongly be considered if there are large numbers of individuals, all in similar roles, being affected. In these instances, she believes, it's advisable that organisations work hard to support and manage employees through the period of transition to ensure employee engagement is maintained.
In recent years, there has been some debate as to whether outplacement should be made compulsory. However, even outplacement providers have their doubts as to the wisdom of going down this path. "The thing with outplacement is it can be so broad that by making it compulsory you risk turning it into a tick-box exercise," says Ciaran Wrynne, head of design and delivery for career transition at recruitment company Hays. "You can get people who need counselling and are very upset; people who need coaching about managing themselves better; someone who wants to change career; or someone who knows what they want to do and just wants help with their CV and interview skills."
In other words, making outplacement mandatory would risk commoditising it, whereas ideally, outplacement should be both flexible and part of an organisation's HR strategy.
Frustratingly, there has been comparatively little academic research on outplacement and related areas. Dr Ian Ashman of the Institute for Research into Organisation, Work and Employment at the University of Central Lancashire published an interesting study earlier this year called The Nature of Bad News Affects the Teller, which examines the negative effects on line managers involved as 'envoys' in the face-to-face delivery of downsizing initiatives.
Dr Noeleen Doherty, senior research fellow at Cranfield University School of Management, researched outplacement back in the mid-1990s and arguably remains the most prominent academic in the field. Although she has not conducted any new empirical research since, she has kept a close eye on developments. She observes that a lot of the lessons in terms of good practice regarding redundancy seem to have been forgotten in today's context. "Have all the practicing managers of the 1990s retired already?" she wonders.
It's a theme echoed by Elaine Hopkins, whose book Redundancy Sucks! An NLP Guide to Surviving and Thriving after the Axe was published in October. "In HR's rush to get on the board they've lost some of the soft, fluffy people-management skills and become as functional as finance or facilities," says Hopkins. "I also think the CIPD doesn't lead from the front on this issue and there's an underlying assumption that redundancy will be negative."
In that respect, those employers prepared to go the extra mile stand to benefit. "Well-executed outplacement services help protect and enhance the public reputation of the organisation," says Fairplace client relationship director Annie Slowgrove. "This is of increasing value in recruiting the best talent, as there is a growing trend for employees, particularly Gen Y employees, to make career decisions based on the ethos of potential employers."
But with budgets tight, how can employers be sure they are getting value for money if investing in outplacement? For a start, by using outplacement consultancies with the ability to deliver local services. Asking employees to travel long distances may erode their goodwill. It's also important to assess the quality of consultants and level of one-to-one support they can give each employee. Moreover, consultancies should have strict criteria and assessment processes for their coaches and invest in their continuous training.
The modern outplacement model is flexible and bespoke, so costs vary according to specific needs. However, pricing tends to fall into two models: for large programmes, costs are often calculated per head, whereas smaller outplacement programmes are costed at the delivery of the programme. It generally starts at around £300-400 per person, but can be much higher - for example, with senior managers where one-to-one consultancy is required.
Good outplacement is money well spent, but pinning down ROI is tricky. Evidence is often anecdotal. TalkTalk's Webber says employees can be "hard to contact" following redundancy, making it difficult to get the full picture. However, a recent TalkTalk outplacement programme saw 60% of employees find jobs within three months, with many others going on to study or travel.
Success in securing alternative employment may be hard to measure, but uptake of outplacement services isn't. Hays says it is proud of the fact that its take-up rate is 93%.
Also important is the impact on the remaining staff. Good outplacement support can be a real morale booster. "The people staying after the change can see ex-colleagues are all looked after, so they focus on the business rather than on looking over their shoulders," says Penna commercial and operations director Owen Morgan.
Many HRDs are motivated by social responsibility and the desire to do the right thing. They also understand that the benefits in reputation and rebuilding trust and employee engagement outweigh the cost of investment.
Going forward, as Computacenter group HR director Barry Hoffman believes, outplacement providers will have to be more international in scope as more people have international careers. Technology will also play a greater role, and outplacement will become more integrated into the talent agenda as success depends more on presenting yourself as an individual.
Hoffman sees another advantage in using outplacement consultants: "They are a good way of connecting with the marketplace. They can be a good recruitment channel." Clearly, these days there's far more to outplacement than softening the blow of redundancy.