With world economies tumbling and layoffs looming, what is the outlook for the <strong><a href="http://www.employmenttalk.com/">outplacement</a></strong> industry? Is it enjoying a resurgence? What is the forecast for layoffs? Who is being hit the hardest? What’s new in layoff legislation? How are <strong>outplacement firms</strong> transforming to meet changing market demands? <br />
This cutting-edge article answers these questions - aggregating factual data from the most current prominent studies into a powerhouse of knowledge. It is a sequel to the <a target="_new" href="http://www.employmenttalk.com/outplacement-2008.pdf">Outplacement Industry Forecast 2008</a> published earlier this year.<br />
Are you positioned to grab your piece of the pie? Do you have the right tools in place to take on those bigger layoffs? Read on . . . <br />
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<h3>LAYOFF FORECAST</h3>
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How quickly things change. As recently as March, a survey by Towers Perrin (<a href="http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200804/Econ_Survey_Exec_Sum.pdf">2008 Business and Workforce Challenges</a>) embedded link to reported that broad layoffs were not likely and organizations were focusing on growth. Now, just a few months later, the facts paint a gloomy picture. Without question, layoffs are on the rise. Consider the following:<br />
<ul>
<li>Layoff announcements rose 48% for the 3rd quarter of 2008 compared to the same quarter last year (U.S. Bureau of Labor Statistics).<br />
</li>
<li>U.S. Job cuts are on pace to exceed 1 million this year for the first time in 3 years (Challenger, Gray & Christmas).<br />
</li>
<li>In March, 11% of U.S. organizations surveyed predicted a large-scale reduction in the workforce as being "very likely" ( <a target="_new" href="http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200804/Econ_Survey_Exec_Sum.pdf">2008 Business and Workforce Challenges, Towers Perrin</a>). If this survey was repeated now, likely that number would increase.</li>
<li>26% of surveyed organizations in the U.K. have contingency plans to make new or further redundancies in the next twelve months in addition to those already planned (<a target="_new" href="http://www.cipd.co.uk/pressoffice/_articles/311008redundancyfears.htm">CIPD/KPMG Labour Market Outlook</a> - Redundancy Special, October 31, 2008).</li>
<li>In the U.K. redundancies increased by 21% from the 1st quarter of 2008 to the 2nd quarter (U.K. Office of National Statistics).</li>
<li>The number of U.K. employers seeking help with making redundancies rose by 28% from August to September (Chartered Institute of Personnel and Development, 2008).</li>
<li>61% of Irish employers cannot rule out having to let staff go as the economic downturn and the credit crunch hits profits (Peninsular Ireland, August 2008).</li>
<li>80% of recent calls to the Irish Small and Medium Enterprises Association helpline have been inquiries from firms asking about redundancies (I.S.M.E., October 2008).</li>
<li>Redundancies in Spain’s construction industry between January and August of this year were 395% more than over the same period last year (Expansion, October 11, 2008).</li>
<li>11% of small business owners in Canada plan to layoff employees (<a target="_new" href="http://smr.newswire.ca/media/assets/21/American%20Express%20Canada%20Factum.pdf">American Express Survey</a>, October 2008).</li>
<li>11% of companies polled in Singapore have laid off workers or are planning for a retrenchment exercise this year. This is much higher than the 2% forecasted 6 months earlier (Singapore Human Resource Institute, 2008)</li>
<li>Unemployment in the U.K. is predicted to double by the end of 2010 (<a target="_new" href="http://www.ey.com/global/content.nsf/UK/Media_-_08_10_20_DC_-_ITEM_Club_Autumn_2008_forecast">Ernst and Young ITEM Club</a>, October 2008).<br />
</li>
</ul>
And the list goes on . . .<br />
<h3>WHO IS BEING HIT THE HARDEST?</h3>
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The research indicates layoffs are widespread affecting a cross section of the general population. Although the initial economic downturn was in the financial sector, layoffs are rampant among other industries. Summarized, the most affected are:
<ul>
<li>executives, managers, professionals and skilled workers</li>
<li>computer, auto and apparel industries</li>
<li>private and not for profit sectors<br />
</li>
<li>men</li>
</ul>
More specifically:
<ul>
<li>Managers and professionals, and skilled non-manual workers are most likely to suffer from the increase in redundancies (<a href="http://www.cipd.co.uk/pressoffice/_articles/311008redundancyfears.htm">CIPD/KPMG Labour Market Outlook - Redundancy Special</a>, October 31, 2008).</li>
<li>36% of 1,000+ leaders polled publicly revealed that executive-level jobs will be cut and 10% suggested senior management will also get the chop (Leaders in London International Summit 2008).</li>
<li>In the U.S., the computer industry reported the most cuts in September, followed by the auto industry and the apparel industry (Challenger, Gray & Christmas).</li>
<li>81% of redundancies in both the U.K. private and voluntary/not for profit sectors are compulsory in contrast to the public sector where 62% are voluntary (<a target="_new" href="http://www.cipd.co.uk/pressoffice/_articles/311008redundancyfears.htm">CIPD/KPMG Labour Market Outlook</a> - Redundancy Special, October 31, 2008).</li>
<li>149,000 of the 152,000 jobs lost from June through August were held by men (U.K. Office of National Statistics).<br />
</li>
<li>The number of people in employment aged 50 to State Pension Age (59-64) fell by 20,000 in September, of which 17,000 were men aged 50-64. (U.K. Office of National Statistics).</li>
</ul>
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<h3>WORKERS AROUND THE WORLD FEAR LOSING THEIR JOBS</h3>
Pummeled every day by negative headlines, it is no surprise workers around the world are worried. Just a year ago, 25% of the world’s employed population thought they might lose their job (Gallup International’s 2007 End of the Year Survey). Now look at the numbers . . .
<ul>
<li>37% of Americans fear losing their job due to poor economic conditions (<a target="_new" href="http://www.employmentlawalliance.com/en/node/2436">America At Work</a>, Employment Law Alliance, September 2008).</li>
<li>3 million workers in Great Britain fear losing their job in 2009, and 13% of surveyed workers did not believe that they would still be working by this time next year (Trades Union Congress, August, 2008).</li>
<li>78% of Irish workers are worried that they will lose their jobs in the current recession (Peninsular Ireland, 2008).</li>
<li>72% of workers in Australia fear losing their jobs after large recent layoffs (Sunday Mail Survey, Galaxy Research, August 2008).</li>
<li>19% of Israeli employees saying they no longer feel their jobs are safe, and that they fear that they could be laid off (Market Watch Institute and Aviv Group, October 2008)</li>
</ul>
<b>And what about getting a new job?</b><br />
Fifty-one percent of Americans say they are worried about finding a new job if they lose their current one (<a target="_new" href="http://www.employmentlawalliance.com/en/node/2436">America At Work, Employment Law Alliance</a>, September 2008). <br />
And for those whose fears become reality, getting a new job is taking more time than before. The average time it took job hunters to land positions in the 3rd quarter of 2008 was 4.4 months according to Challenger, Gray & Christmas. This is compared to 3.5 month in the 2nd quarter and 2.8 months in the 4th quarter of 2007.
<h3>DEMAND FOR OUTPLACEMENT IS ON THE RISE</h3>
Providing outplacement support to exiting employees has become standard business practice for many companies. The demand for such services is increasing in this heavy job-cutting market. This is evidenced by the following research:
<ul>
<li>81% of employers engage help from external outplacement providers (<a target="_new" href="http://www.reedconsulting.co.uk/downloads/Outplacement_Research_06.pdf">The Value of Outplacement</a>, Reed Consulting).</li>
<li>50% of employers use only external outplacement providers (<a target="_new" href="http://www.reedconsulting.co.uk/downloads/Outplacement_Research_06.pdf">The Value of Outplacement</a>, Reed Consulting).</li>
<li>34.1% of surveyed organizations offer outplacement services to certain classifications of employees, while 13.6% offer it to all of their employees (HRfocus Termination Survey 2008).</li>
<li>30% of 600 surveyed companies outsource outplacement services (H.R. Department Benchmarks and Analysis 2008, Bureau of National Affairs).</li>
</ul>
With this increasing usage, the outplacement industry has grown to a 3 billion dollar industry, and some sources state it is as high as 10 billion.<br />
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Financial performance data on individual outplacement firms is extremely limited due to the fact that the majority of firms are private. One public firm however recently reported a 25% increase in net revenue this year compared to last year. In September, Penna Consulting, a U.K. based public limited company reported their net revenue to be approximately 25% ahead of the same period last year and pre-tax profits earned in the first six months of this year will be higher than those of the full 2007/8 year. Consequently, they are projecting that market expectations for the full year ending in March 2009 will be materially exceeded. <br />
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Additionally, a recent news article, <a target="_new"" href="http://www.kansascity.com/898/story/870444.html">Area Braces for Upsurge in the Ranks of Jobless</a>, reported Lee Hecht Harrison’s outplacement business was up 50% over the same time last year.<br />
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<h3>MARKET DEMANDING CHANGES IN OUTPLACEMENT SERVICE DELIVERY</h3>
As more companies offer outplacement services to their employees, the size and shape of those services are changing. In the past 5 to10 years, the outplacement industry has experienced the effects of "belt-tightening" by many companies. Shifting financial priorities for such companies coupled with commoditization within the outplacement industry seemingly have brought forth this period of economization. <br />
<br />
As outplacement has become a necessary cost of “doing good business,” companies are looking for cheaper ways to access the service. Below are some general trends:
<ul>
<li>Shorter program lengths - Many outplacement firms have been forced to offer shorter programs. For example, in the 1980s, a mid-level manager may have routinely received 6 months of outplacement support, while now the same manager might receive 1-2 months of support.</li>
<li>Decreased usage of office space - Increasingly outplaced individuals are choosing to perform <strong>career transition</strong> activities from home instead of utilizing office space provided by the outplacement firm. Consequently many firms are downsizing their physical office space.<br />
</li>
<li>Increased use of technology – Increasingly outplaced individuals are utilizing technology to support their <strong>career transition</strong>. Consequently most firms are offering technology portals which can be accessed from home.</li>
<li><a target="_new" href="http://www.right.com/Documents/NewsRoom/20080311103658_183553509.pdf">Personalized transition</a> – Employees and companies have been pushing for “non-cookie-cutter” support.(H.R. Magazine, March 2008) reviews new service models which share the following characteristics:<br />
<ul>
<li>A move toward equal partnerships between former employees and employers<br />
</li>
<li>Socially responsible and compassionate behavior<br />
</li>
<li>Greater choices when it comes to outplacement delivery methods, including increased use of technology<br />
</li>
<li>More emphasis on personalized one-on-one career guidance<br />
</li>
<li>Access to tools to develop critical skills<br />
</li>
<li>Special content matched to careers<br />
</li>
<li>Tailoring services to employees in areas that matter most to them<br />
</li>
<li>Increased accountability – employees want to remain continuously connected until successful outcomes are reached</li>
</ul>
</li>
</ul>
<h3>BUSINESS CASE FOR OUTPLACEMENT</h3>
For employers offering outplacement services, the resulting benefits are numerous. Consider the following:<br />
<br />
<strong>RECRUITMENT – BOOMERANG HIRING – NEW TREND</strong><br />
25% of U.K.’s workers have returned to old employers and 33% of the U.K.'s employees now consider returning to their old jobs (Survey by Enterprise Rent-a-Car and YouGov). Offering outplacement increases the likelihood an employee would return to a previous employer.<br />
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<strong>IMPROVED EMPLOYEE MORAL, MOTIVATION, PRODUCTIVITY</strong><br />
66% of surveyed employers feel outplacement support improves morale, motivation and productivity during times of change (<a target="_new" href="http://www.reedconsulting.co.uk/downloads/Outplacement_Research_06.pdf">The Value of Outplacement</a>, Reed Consulting). <br />
<br />
<strong>IMPROVED RETENTION</strong><br />
65% of surveyed employers agree that providing outplacement support for exiting staff helps retain remaining staff (<a target="_new" href="http://www.reedconsulting.co.uk/downloads/Outplacement_Research_06.pdf">The Value of Outplacement</a>, Reed Consulting). <br />
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<strong>IMPROVED REPUTATION/BRAND PROTECTION</strong><br />
78% of surveyed employers feel that providing outplacement could improve the organization’s reputation (The Value of Outplacement, Reed Consulting). <br />
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<strong>EMPLOYER OF CHOICE</strong><br />
55% of surveyed employers believe that outplacement can help the organization be seen as an employer of choice (The Value of Outplacement, Reed Consulting).<br />
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<strong>REDUCTION IN LEGAL ACTION</strong><br />
The majority of employers believe that providing outplacement reduces their legal liability. Employees feel better about their employer if they are given assistance during their transition, which reduces the risk of termination lawsuits.<br />
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<h3>UPDATE ON LEGISLATION AFFECTING LAYOFFS</h3>
<strong>FOREWARN ACT</strong><br />
With the massive increase in layoffs, the proposed 2007 FOREWARN Act may receive increased attention and move along more quickly to become an actual law. It currently is in the first step of the legislative process. The FOREWARN Act would strengthen the employee notification process of mass layoffs or plant closing and add tools to enforce the current WARN Act (Worker Adjustment and Retraining Notification) which came into law in 1988. The <a target="_new" href="http://www.doleta.gov/programs/factsht/warn.htm">WARN Act</a> is a federal law that requires employers who employ at least 100 employees to provide 60 days’ advance notice of plant closings and mass layoffs. <br />
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Unfortunately, few employers are abiding by the WARN Act. According the the Government Accountablility Office, only 1/3 of employers are providing this notification.<br />
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The FOREWARN Act would give the U.S. Department of Labor (DOL) and state attorneys general the authority to enforce the WARN Act. The FOREWARN Act would:
<ul>
<li>increase penalties to double back pay plus benefits</li>
<li>reduce the mass layoff figure from 50 to 25</li>
<li>reduce the employer size from 100 to 50 employees</li>
<li>lengthen the notification period from 60 to 90 days</li>
<li>require employers to provide written notification to the Department of Labor</li>
</ul>
This legislation would clearly add protections for those workers who are about to lose their jobs due to mass layoffs or plant closings. And, such changes would force employers to be more forthright and public with their downsizings with the new requirement of providing written notification to the DOL. The new financial penalties of non-compliance will likely spur employers to comply. <br />
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<h3>STATES PASS THEIR OWN LAYOFF LAWS</h3>
Many states have felt the WARN act is outdated and does not provide enough protections for workers. A growing number of states (currently 9) have passed their own versions of WARN which often cover employers too small to be covered by the federal WARN Act. Many have made it so employees in layoff groups as small as 25 (compared to 50 for the federal law) will receive protections. New York is the most recent state to pass such legislation which will be effective on February 1, 2009.<br />
And what’s in it for the outplacement industry? As more states pass laws providing protections for employees facing layoffs, and if the FOREWARN Act passes, there likely will be increased business opportunities for outplacement providers. Particularly with the FOREWARN Act the pools of laid off workers increase:
<ul>
<li>mass layoffs now 25 workers vs. 50</li>
<li>employer size now 50 employees vs. 100.</li>
</ul>
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Additionally the required public disclosure to the DOL may make downsizings more publically visable, spurring employers to offer outplacement in order to protect their reputations.
<h3>POWERFUL OUTPLACEMENT SOLUTIONS TO INCREASE YOUR BUSINESS</h3>
The research is clear – the opportunities are increasing for outplacement providers. The critical factors converging to create this climate of growth are:
<ul>
<li>Burgeoning layoffs</li>
<li>Outplacement becoming a standard company offering</li>
<li>Business benefits: boomerang hiring; improved morale, motivation and productivity; improved retention; improved reputation/brand protection; employer of choice; reduction in legal action</li>
<li>Layoff legislation – states passing laws improving employee protections; proposed FOREWARN Act strengthening current federal law</li>
</ul>
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The <strong>outplacement firms</strong> who stand the most to gain will be the ones that adjust to the changing demands in the market. Personalized transition support coupled with technology tools will be key. <br />
Do you currently have these components solidly in place? Are they available in an easily accessible and efficient manner, enabling you to increase the amount of business you can handle? Are you poised to quickly take on more clients? <br />
If not, consider boosting your services with Insala’s cost-effective, easily accessed online career transition program, <a href="http://www.employmenttalk.om">EmploymentTalk</a> that provides numerous resources to help support employees in transition. It clearly meets the majority of the components employers are looking for with world class assessment instruments, a powerful automated tool for CV/Resume development, and excellent content on interview skills, resume development and more – all accessible 24/7 in a secure and confidential environment. <br />
And, along with the growth underway in the outplacement industry, our technology experienced a 20% increase in usage by individuals undergoing career transitions from October 2007 to October 2008.<br />
If you currently don’t have online services, or the ones you have aren’t meeting your needs, request a <a href="http://www.employmenttalk.com/demo.asp">live demo</a> to learn more.
