Outplacement: process and theory explained

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Outplacement: this article provides a practical explanation of outplacement. Next to what is outplacement (definition and theory), this article also highlights the topic of downsizing, the psychological effects of being laid off, what outplacement services and programmes are and the benefits of outplacement for employees. Enjoy reading!

What is Outplacement?

Defintion and theory of outplacement

Outplacement is the process an organisation offers to employees whose employment is ending, in order to facilitate their transition to a new job. Outplacement is a formal and professional programme involving various services and guidance. It is usually paid by the former employer, for example after a company feels forced to shrink due to disappointing results.

There are several benefits to implementing outplacement procedures. For example, the remaining employees’ morale is retained because they can see that outgoing colleagues receive enough help and guidance when leaving the company. The personal interests are great, too. For many people, their job is a part of their identity, and its loss may have great and dramatic psychological effects.

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The term outplacement was invented over 30 years ago by James E. Challenger. With his consultancy company, he developed the initial concept and ways of implementing modern outplacement programs into organisations. In the 1980s and 1990s especially, an increasing number of companies were in need of guidance for departing employees.

Downsizing as ons possible reason

Downsizing is the term used to indicate that the organisation’s size is decreasing, and that employees will probably have to be laid off. There are a number of possible reasons for the size of the organisation decreasing.

One possible reason is poor performance by employees; another possible reason is poor management. Whatever the reason, employees are laid off to either reduce costs or for disciplinary reasons. In case of a layoff for disciplinary reasons, also known as instant dismissal, an outplacement programme is virtually never offered to the employee.

Downsizing is a painful process both for the employees that are leaving the organisation and those that are staying. Whatever the reason behind a layoff, human resource management has to be fully equipped to conclude this process as thoroughly and personally as possible. The share of HR departments that invest in these processes is growing.

Severance Pay

It happens relatively often that an organisation compensates an employee who is laid off. This usually happens in the form of a severance payment and a bonus on top of the salary. This compensation is made for the sudden loss of the job, and is part of legislation in many countries.

No payments are made to employees who are laid off for disciplinary reasons. Instant dismissals happen when a person violates the code of conduct and for this reason, they are not entitled to any compensation whatsoever.

Outplacement: policy for downsizing

Good organisations have adopted effective policies with clear procedures in order to provide the employee with everything they need in the event of downsizing. An important first point is that the dismissal interview should be carried out professionally, with both the line manager and an HR professional present. This meeting is unpleasant for all parties, but the news is mostly painful and traumatic for the employer.

Complimentary policy for outplacement, guiding employees to a new job, is often carried out by external parties. These services are outsourced, and so are paid by the former employer. These services combine psychological, emotional, and professional support with practical guidance and advice in order to shape positive prospects for the employee.

The consultants providing this outplacement programme help people find a new job or start their own business, or advise them with their retirement wishes. Programmes each have their own time limits, and will virtually never last longer than twelve months.

Psychological Effects of Being Laid Off

Being laid off never comes at a convenient moment and may cause a lot of stress and inconvenience to employees and their home situations. The most obvious reason for stress is the lack of financial means. Life costs money and, although social welfare benefits exist in many countries, they are often not high enough to be able to live comfortably.

Apart from that, there are also great emotional consequences. After a certain number of years, a job becomes part of a person, and its loss may result in a feeling of emptiness or even depression, anxiety, and other complaints.

Hence, the role of outplacement in these situations is very important. The benefit of outplacement mentioned most often is the goodwill this process builds between the outgoing employee and the employer. It would have otherwise been tainted by the sudden dismissal without any further communication.

Outplacement services and programmes

Processing & Orientation

Many employees, after hearing they are being laid off, need a brief moment to recover from the impact of the news. Only then, with the right guidance, will they be able to look at the future in a level-headed and positive way, possible opening a new career path.

It’s important that the employer should not be sent home after the bad-news interview and then never be contacted again. Frequent contact from the organisation or outplacement firms is desirable and useful. This is called outplacement coaching.

In addition, it’s important to look at individual strengths and weaknesses, and interests. After the acceptance phase, the employee will work on a realistic profile of themselves. A clear profile helps when entering the labour market.

There will often be a variety of job openings, not all of which will interest someone. Once a choice has been made, the programme continues with job interview training.

Job Interview Training

Job interview training prepares a candidate for the job interview they will have to undergo. The focus here lies on career development:

  • Focus on personal strengths
  • Positive communication
  • Techniques for answering questions
  • Gaining self-confidence

Wage Negotiations

Wage negotiations take place after the first phase of the job interview has finished, often in a second or third interview. The interview focuses mainly on working conditions, as well as the wage and benefits packages that are in line with the job and the market. Some tips for wage negotiations include:

  • Choose the right moment to talk about it
  • Make sure you don’t name an amount first
  • Base your desired wages on data and arguments
  • Take your time to think about the offer
  • Always consider saying no
  • Negotiate about further benefits or wage arrangements

CV + Social Media

Another part of outplacement is practical guidance in writing a new and relevant curriculum vitae, as well as keeping social media channels up to date and doing career assessments. This is also where candidates are taught how to deal with headhunters who contact them with job offers.

Many outplacement programmes consist only of the facilities and training types mentioned above. There are a handful of organisations who have taken care of outplacement in such a way that guidance continues up to the moment of the candidate finding a new job.

In practice, however, we find that most organisations don’t have their outplacement solutions sorted out at all.

Benefits of outplacement for employees

The modern labour market is competitive, fast, and complex. Especially compared to 30 years ago. People who are returning to this labour market after a long period are strongly in need of outplacement services. They need guidance that is fast and personal, and that is provided by flexible, result-oriented consultants.

In the end, outplacement, when used properly, brings many benefits to the employee, including:

  • Determining career priorities and wishes
  • Developing a personal career plan
  • Networking
  • Preparation for a self-employed job, if desired
  • Insight into the modern labour market
  • CVs
  • Cover letters/ videos/ creative alternative ways of applying for jobs
  • Improving interview skills
  • Making use of social media such as LinkedIn
  • Preparation for retirement

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Now it’s your turn

What do you think? Are you familiar with the explanation of outplacement? Do you think outplacement works well in many organisations? What do you believe should be paid particular attention to in employees’ outplacement programmes? Have you ever been in a comparable situation? Have you seen colleagues leave, and what was that like for you? Do you have any tips or additional comments?

Share your experience and knowledge in the comments box below.

More information

  1. Aquilanti, T. M., & Leroux, J. (1999). An integrated model of outplacement counseling. Journal of Employment Counseling, 36(4), 177-191.
  2. Kirk, J. J. (1994). Putting outplacement in its place. Journal of Employment Counseling.
  3. Pickman, A. J. (2013). The complete guide to outplacement counseling. Routledge.
  4. Westaby, J. D. (2004). The impact of outplacement programs on reemployment criteria: a longitudinal study of displaced managers and executives. Journal of Employment Counseling, 41(1), 19-28.

How to cite this article:
Janse, B. (2019). Outplacement. Retrieved [insert date] from Toolshero: https://www.toolshero.nl/human-resources/outplacement/

Original publication date: 09/04/2019 | Last update: 07/31/2023

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<a href=”https://www.toolshero.nl/human-resources/outplacement/”>Toolshero: Outplacement</a>

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Ben Janse
Article by:

Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.


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