Maybe you’re downsizing and exploring outplacement options. Or maybe you’re just building a contingency plan.
Either way, your HR team and General Managers will want to know how much outplacement services cost and what tools and services bring the best ROI.
To answer your question immediately, outplacement services can cost between $50 and $10,000 per employee, depending on the number of impacted employees, the scope of services offered, and how long the services are provided for.
Quite a range, right?
That’s because good outplacement services are tailor-made to meet your specific needs. Besides, outplacement shouldn’t be considered a cost. Rather — an investment.
Apart from giving you the bottom line, this article will explain the different types of outplacement services, ways of handling outplacement, and some of its main values.
So in this guide, we break down:
- Different types of outplacement services and their cost
- Factors that influence the cost of outplacement services
- Things to consider when structuring your outplacement plan
- Why outplacement is the best investment you can make (even with minimal financial commitment)
What Exactly Are Outplacement Services?
Outplacement services are packages offered by employers to laid-off employees to help them transition to a new role quickly and provide support during the difficult (and often unexpected) time of unemployment.
These services are typically organized as group or 1:1 sessions and include help with resume writing, interview coaching, networking, negotiating salary and benefits, and more.
Outplacement definitely provides value to employees who are leaving, but it’s also a huge benefit to you as the company. It helps you protect your reputation as an employer and reduces your overall unemployment costs.
But above everything else, it sends a message that you care about your people.
And here’s what you need to know about the cost of outplacement services.
Types of Outplacement Services and Their Cost
There are different types of outplacement services, the cost of which varies depending on:
- The scope of services offered
- The number and seniority of impacted employees
- The duration of the services provided and
- How outplacement is organized (in-house or using an external outplacement organization)
1. Low-to-no-touch outplacement services ($1,000–$1,500 per employee)
This lower-tier outplacement services package normally includes resume and cover letter writing and help with selecting open positions that could be relevant to the candidate. These typically last between 30 and 45 days. The cheapest option is usually a limited-time access to an online course on resume writing and job search.
2. Medium-touch outplacement services (up to $5,000 per employee)
Next level of outplacement programs include resume and cover letter writing, interview preparation sessions (group and/or individual), mock interviews, and networking site optimization. They’re typically offered to impacted employees for up to 90 days.
3. Full-touch outplacement services ($2,500–10,000 per employee)
Finally, the top-tier outplacement services that are usually offered to management or executive-level employees. The services are being provided for a longer time (usually up to 120 days), come with a much more individualized approach, and can include everything from the basic and second-tier plans plus some not-so-common types of services.
This can be anything from:
- Resume writing and optimization
- Cover letter writing
- Interview preparation and thank-you letters
- Mock interviews
- Online presence optimization (e.g. LinkedIn profile optimization)
- Career coaching
- Personal branding
- Negotiating salary and benefits
- Resume posting to job boards like Indeed, Monster, or CareerBuilder
- Programs available to C-suite
- 1:1 programs and coaching sessions
- Special programs for career changers
Factors that Influence the Cost of Outplacement Services
Cost is one of the main roadblocks that companies face when trying to provide outplacement services. Let’s analyze the key factors affecting the ultimate outplacement costs:
Outplacement program type
As part of the severance package, companies can provide different levels of outplacement services (refer back to the three common types outlined above). For small and medium-sized businesses laying off a sizable part of their workforce, it would often be unfeasible to offer more advanced packages.
What you can do in this scenario to lower the cost is divide all the impacted employees into groups, or tiers, and provide each group with different levels of service, depending on what programs they need.
|Bonus tip: Refrain from assumptions. A Senior Developer may code like a beast but have very limited online presence. They may not even have a Linkedin account. Your top performing Account Manager may be the best closer you’ve ever met, but lack in the confidence department when they need to sell themselves in a job interview. Our point being — avoid one-size-fits-all solutions. You know your folks and probably know who needs what kind of support.
The number of employees covered by the plan
Clearly, it’s not the same if you’re forced to lay off 10, 100 or 10,000 employees. The lower the number, the more financial resources you’d be able to spend on an individual employee. You could provide white-glove service (including 1:1 sessions) and afford to work with the best career coaches out there.
In case of mass layoffs, you can still offer premium plans to executive-level employees and opt for a lower-value service such as resume feedback or a resume building tool + resource pack for everyone else.
Duration and timeline
How long are you going to provide outplacement services for? According to a study shared by Recruiter, it takes about 6 weeks for an employee to find a new job after a layoff. Maybe, but we’re living in a post-pandemic world at the brink of recession where Big Tech has laid off 98K people in less than two months. Bouncing back isn’t easy, as many companies institute hiring freezers or are, themselves, also laying off.
Surely, you can’t provide months of outplacement services for everyone because it will definitely drain your budget (after all, you’re downsizing for a reason). So again, think about dividing the ex-employees into groups and provide several different packages depending on who needs what.
Your outplacement services cost will definitely depend on whether you’re doing it in house or hiring a specialized outsourced company to handle outplacement for you.
If you decide to handle it internally, you may keep the cost of outplacement services to a minimum. That said, consider you may not have the internal expertise to provide comprehensive outplacement. Plus, you’ll have your hands full putting out dozens of PR and administrative fires following the announcement of layoffs.
This can lead to suboptimal outplacement services and come back to haunt you (we’ll come back to that later).
The service provider’s credibility
If you opt for a third-party company, this means that your ex-employees will get access to an outplacement platform and work with career coaches and career transition specialists to get re-deployed as fast as possible.
As with any other partnership, you’ll want to ensure your company (and your employees) get real value from outplacement.
So before you make your decision, you’ll need to evaluate, check how credible the firm is and what exact services they offer.
Here’s a quick checklist that you can use:
- Check each provider’s placement numbers
- Check their performance data and general reputation
- Check independent review websites to see how the served employees scored them
- Check their social media for any revealing comments or praise
You can also opt to do a combination of both – work with an external organization for certain, more advanced services and deliver other parts internally.
Some outplacement firms will leverage technology to work with employees no matter where they are. If your workforce is spread across different locations and time zones, it’s often the best solution to opt for the remotely accessible services.
Still, some outplacement firms have clunky solutions, complex programs and many levels of support to choose from, making it difficult to pick the right options.
So try to find an option that works best for what you need.
Consider things like:
- Is it affordable?
- Does it offer on-demand options?
- Does it include personalized materials at scale?
For instance, you can have 1:1 coaching for senior roles, and group workshops for everyone else. Employees in manager and VP roles can get specialized executive outplacement packages.
One such program is BigInterview’s Outplacement – a varied program that covers all roles and seniority levels, and much of the coaching can be done on-demand, remotely, on the employees’ own timeline.
Is the Outplacement Cost Worth It?
As an employer, you’re not legally obligated to provide outplacement services. And we understand if, in the midst of a company crisis, outplacement feels unnecessary, or almost counterintuitive.
But here’s the truth.
Failing to provide support to the people you’re forced to lay off can backfire in many ways, and we’ve already witnessed some big players mishandling the process.
Outplacement, in fact, is your safety net.
When considering the cost of outplacement services, factor in the costs of reputation damage, unemployment benefits, and possible lawsuits that could drag on for months and years. You’ll see that outplacement cost is negligible in comparison with the potential consequences of handling layoffs poorly.
Here’s what to have in mind:
1. Outplacement lets you show grace under pressure
The world is watching.
Employees take their working lives online, and don’t hesitate to vent when things go south.
There have been numerous layoff confessions on LinkedIn — a good example is Google, whose employees found their access cut off without a timely reaction from leadership. Another one is Twitter’s November fiasco, when new owner Elon Musk cut the workforce in half and informed the remaining employees that they’d have to commit to “long hours”.
Yes, layoffs are difficult, but it’s in the darkest hour that you’re supposed to shine the brightest, right?
Just like in breakups, there are two types of companies — those who place blame elsewhere and play dirty (or dead), and those who are not afraid to confront reality, admit their failures, and help the other person exit with dignity.
After all, your company culture should be such that you’re not doing it only for the world and as part of your reputation risk management strategy, but rather to show respect to the people who helped build your company in the first place.
2. Outplacement boosts your reputation
Back to reputation — it takes a lifetime to build and a minute to destroy.
When planning something so drastic as termination, you need to understand how your actions affect public perception. Layoffs are a scenario that can harm your employer brand and you should approach it pragmatically.
Outplacement will help you remain a desirable employer, avoid lawsuits (when employees feel wronged, retaliation is common), and limit your liability for unemployment compensation.
3. Outplacement helps increase retention
You don’t want negative press or litigation, but you know what else you don’t want? To leave a bad taste in the mouth of those who remain. Without a doubt, their morale will be low, and so will their productivity.
That’s where outplacement really makes a difference — by showing laid-off employees care and respect, you’ll send very clear signals to the remaining workforce about how you treat your people.
4. Outplacement will help you recruit in the future
Imagine providing no support to your terminated employees, who then take to job boards and leave negative reviews. This isn’t something you can fix easily.
Critical comments, stories of unfair treatment and clumsy termination will discourage future hires.
What this means long-term is that you’ll struggle to hire top talent, your recruiting cycles will be longer, and all of this will ultimately increase your expenses.
Don’t shoot yourself in the foot.
Without a doubt, outplacement is a useful part of the exit package that will soften the blow for those you’re letting go. And don’t get discouraged by the cost of outplacement. There are many outplacement options that don’t come with multiple zeros but are still super worth it.
If you need a hand, here’s how we can help:
- Assist you in providing outplacement to every impacted employee through custom-tailored programs (including group, 1:1 and executive outplacement programs)
- Give you free tips on how to choose the right outplacement services provider to get the best value for money.