Faced with Lay-offs? The Cost of NOT Doing It Well

DownsizingEvery business owner or hiring manager, at some time or another, will eventually be faced with the unpleasant task of terminating an employee. Down-sizing, outsourcing, job redundancy, whatever the reasons, it’s absolutely critical to your company’s reputation, and hence financial success, that you do things right.

According to USA TODAY 13% of lawsuits against corporations were for wrongful termination, second only to shareholder suits, and the costs –legal fees, business disruption, lost productivity and worse, broken relationships with existing employees and customers – are often staggering.

What to do when you are faced with workforce reductions, especially at C-Suite executive levels?  What are the considerations and costs associated with departing employees?

A word of advice – do not cheap out on employees who you are terminating. Outplacement costs can be easy to pare down to the bare minimum. But that is a very short-term outlook. The long terms costs associated with cheaping out, especially on the senior executives who have helped build your company can spell disaster.

There is zero benefit, and a whole lot to lose, when trying to scrimp on outplacement services for key members departing your executive team, or for that matter any long-term employee whose position has become redundant.

Corporate sustainability starts in the home, with the people who work for your company, and the impact their employment has on their co-workers, family and friends. From a marketing perspective demonstrating accountability with the employees you hire, manage and yes, even the ones you have to terminate, has a long lasting and far-reaching impact on your direct market — those who directly, and indirectly, bear witness to the way you treat your team members.

So What About Outplacement Services?

At the senior executive levels the standard offering is one year of outplacement services, here are the essential components you need to think about in designing a program that is both fair and effective for your departing employee.

Career assessment
Resume Development
Interview Training
Career Marketing Plan
Access to job search databases
Job offer negotiation advice
New job transitioning and onboarding coaching
Single point of contact to insure efficient communication flow
Consulting support to help before, during and after the notification event

How much Does Outplacement cost?

The Wall Street Journal cited in an article that 58.5% of laid off professionals receive outplacement for 1-3 months. Another 17.7% receive outplacement for 3-6 months. Executives are likely to receive more services for a longer period of time.

Costs can range anywhere from $5,000 for a bare bones 3 month program, to a year of coaching and support for C-Suite executives in the $25,000 range.

How much does a wrongful dismissal cost you as an employer? Statistics show between $50,000 and $250,000 in legal fees and potential settlement payouts. You do the math.



Barbara Ashton is a senior executive search consultant with over 30 years experience working with Canadian businesses to hire outstanding employees.

Ashton & Associates Recruiting Inc – Helping you hire right. Every time.

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