Outplacement Firms Face Performance Reviews

Outplacement firms, many of which have enjoyed a surge in business since the recession began, have come under fire for providing job seekers with standardized services that provide little value.

According to an article on WSJ.com, businesses that are anxious to shed former employees impose time limits that hamper effectiveness. Even though employers dole out substantial fees to these agencies, many of them don't track whether outplacement even works.

Executives estimate about 40% of workers offered outplacement services don't show up or ask for cash instead.

The article said that some industry participants are troubled by reports of mass-produced résumés, canned job advice and lackluster counseling.

WSJ noted that outplacement services arose in the 1960s to provide out-of-work managers with an office, a phone and a secretary. Layoffs were less common and participants needed to battle the stigma of losing a job.

By the 1990s, outplacement firms expanded to serve everyone from CEOs to hourly workers. Providers competed by lowering prices, offering volume discounts to corporate clients for an increasingly standardized menu of workshops and referral services.

Now, outplacement is a standard feature of corporate layoffs. More than two-thirds of 265 U.S. employers with layoffs during the past two years offered outplacement, at an average cost of $3,589 an employee, according to a June survey for The Wall Street Journal by the American Management Association and Institute for Corporate Productivity.

Outplacement generally begins the day an employee is terminated. Providers often send staff members to each work site to explain their services. The process helps companies efficiently show employees the door, and gives the outplacement firms a chance to market themselves.

The article said that employees usually gain access to online seminars, group workshops and individual time with a coach, for periods ranging from a month to more than a year. Programs for executives, priced around $10,000 and up, generally provide a private office and more coaching time; those for midlevel managers or clerical workers, priced $5,000 or below, may offer a chair and phone at a shared table.