In the November 12, 2013 Ask The Headhunter Newsletter, a reader asks about outplacement:

My company is downsizing and I know I’m going to get cut. HR tells us they’re going to give us help finding a job from a top firm that specializes in this. What do you think of outplacement?

Nick’s Reply

When you get fired, outplacement is often the consolation prize. The employer spends 10 or 15 grand to help the employee “transition” (that’s used as a verb, so help me) and the gullible departee is grateful that someone is going to find her a job.

door-no-2Now read my lips: Outplacement might extend your unemployment rather than help you land a new job. So take ownership of your status, and maybe put some extra cash in your pocket. Here’s how.

Some years ago, when AT&T was doing a big downsizing, I got a call asking if I’d like to help with outplacement. I explained that I don’t scale — I can’t coach 5,000 people into new jobs because I don’t think anyone can do that. No, no, no, they said — you’ll be working with just a handful of managers who really need your help. So I took the gig.

The handful of managers comprised the career development team — that branch of the human resources department responsible for outsourcing “transition assistance” for 14,000 employees to a bunch of huge outplacement firms at a cost of $15,000 per person.

But the career development team didn’t want to go sit in cubicles with thousands of other newly minted job hunters. They wanted something better. They wanted highly customized help. Now, this was a huge feather in my cap. I represented “something better,” and I was proud of it. I did a good job helping every single one of them land in new jobs, and I got paid well.

But the point of this story is that the HR exec who hired me explained that outplacement isn’t so much for the departing employee. It’s mostly for the legal protection of the employer. I’ll over-dramatize how it plays out in court:

Downsized employee: “Your Honor, after 20 years on the job, they cast me out on the street!”

Judge: “Did they give you expensive outplacement services to help you find a new job?”

Employee: “Well, yes. They spent 15 grand on Transition Gurus, Inc. to help me, but they never found me a job.”

Judge: “Fifteen grand on a big-name company like Transition Gurus?! Why, they gave you the best! No matter that it didn’t work. No company ever got sued successfully for retaining Transition Gurus, Inc. Case closed! Next!”

While there are some boutique outplacement firms that do good work, the outplacement industry is dominated by a few big players that process the downsized like cattle. Make sure you know what you’re getting into.

Here’s how big-time outplacement often “works”:

  1. You don’t choose the outplacement firm or the counselor you work with. Your employer does. So from the start, you’re in the back seat of this adventure.
  2. The outplacement firm works for your employer, not for you. The firm’s job is to get you out of your employer’s hair, keep you busy, and make you feel like someone’s going to get you a job so you won’t sue your employer for wrongful termination. Outplacement is mostly about the company’s liability, not your future.
  3. Outplacement firms earn more money when you don’t find a job. Say what? Just what I said. Some of these firms drag out the process to milk the client for more fees, and to make it look like their “process” is thorough. Many programs are boilerplate presentations conducted by lightweight trainers. In some cases, they’ll talk you into buying “premium” services with your own cash.
  4. While you try hard to swallow the drivel some greenhorn counselor is feeding you (after all, you really do need help…) months drift by and your status deteriorates due to protracted unemployment. The firm looks busy, while you look like damaged goods.

Outplacement might be helpful, but never forget that you are responsible for your next career step. Don’t be lulled into thinking that a high-priced consultant — who works for your former employer — has any real skin in your future. The skin is yours alone.

(Special Case: Rip-Off Edition: Who’s trying to sell you a job? This is where outplacement and “career management” turn into scams. Beware.)

Some employers are willing to give you cash in lieu of outplacement services if you ask. (You might have to sign release to get it. Talk to your lawyer.) It might be the best deal, and it might help you get into high job-hunting gear faster. If you decide to spend the money on outplacement with a good small firm, that’s up to you — you get to choose the firm and the counselor. If you use the money to tide you over while you conduct your own job search, that’s also up to you. I’d take Door Number 2: Go for the cash.

Have you ever been downsized and outplaced? Tell us about your experiences!

: :

  1. During vacation, I had 2 messages from the outplacement company to contact them for services. I called my manager, who confirmed that I was being let go. Our CIO apologized for the mix-up, but no one was disciplined for it. I had 30 days to get another position within the firm, or leave. I stretched this into an additional 9 months.

    The outplacement services were OK, and they sold no additional services to us. This was part of the ironclad contract that I had to sign, in exchange for not suing my former employer.

  2. I used outplacement services when I was let go and found them to be very helpful. Like most people who spent nearly two decades since last looking for a new job, I was not prepared. Yes they have a base program but also my counselor was there to customize what I needed for MY search. She offered assessments to help me pinpoint exactly what i wanted to do when I grew up along with in person seminars on meaningful topics. Compare that to the small change I could have gotten by asking, they were worth far more

  3. My experience with outplacement is almost 20 years ago so I’m not sure how relevant this may be. I hadn’t looked for a job in a long time, so I found their initial services helpful. Someone helped me get my resume up to date, and there were some talks about different job search techniques and what the job market was like at that time. Everything wasn’t websites and e mail yet, so using their phones, faxes, stationary and postage saved me some money. Having a professional sounding person to answer the phone and take messages if I wasn’t there was also helpful. My counselor, unfortunately, wasn’t very helpful, didn’t know about my field, had no contacts, I was seriously considering changing fields and he had no ideas how. I did not rely exclusively on outplacement, and found my next job through my own efforts, just like Nick would tell you. Since I wasn’t paying I thought it was okay, but in retrospect I would say my former employer did not get their moneys worth.

  4. It would almost make sense to pay the person laid off directly and take your chances…

  5. Outplacement can be a positive experience:

    1. Some outplacement firms are better than others and some outplacement packages are betther than others. If you have an opportunity to research in advance the firm who would be handling your outplacement as well as the specifics of the package you are being offered, you might decide to take the outplacement offer.

    2. Outplacement centers can be an excellent source of support and networking. Due to downsizing, I was given outplacement services after a year on my first job following graduate school. I found my next job via a contact from a fellow job hunter in my outplacement group. I stayed with that company for over 10 years.

    3. Not all outplacement counselors are the same. I was disappointed with the counselor I was assigned, whom I felt did not provide any useful assistance. I explained to the director of the outplacement office that things weren’t clicking between the two of us and requested a different counselor. He complied, and my second coach was excellent. I stayed in contact with her for quite some time and considered her an excellent addition to my professional network.

    Like anything else, you have to know what you’re getting, what you want, and advocate for yourself.

  6. Unless that was a typo, I’m floored that AT&T spent 210 mil just on outplacement. I can’t imagine the remaining lawsuits that can’t easily be dismissed would come close to that number.

    That said, Nick, what did you do for them? The sheer number alone makes that engagement a daunting task.

  7. I’m glad to hear some of you have had good outplacement experiences. As DK points out, it’s all about the counselor assigned to you. A friend of mine who runs a popular job search organization for finance folks read it and noted with a wry grin that lots of outplacement counselors are failed HR people. I don’t know how true that is, but I’d bet a few bucks he’s right. The counselors and coaches who ARE good can make a tremendous difference — but it’s up to you to make sure you’re working with someone who knows what they’re doing.

  8. @Matt F: It’s not a typo. I was told $15,000 per person was the going rate. I don’t know how many of the 14,000 actually got “processed” through outplacement, so I don’t know the budget. I was also told the facility they set up accommodated around a thousand people at a time: cubicles, chairs, phones, computers. It was a mill.

    When you stop and consider how any firm could scale to handle so many people and do it one-on-one with personal attention… well, maybe for that kind of fee it could be done. But I didn’t meet one downsized employee who felt they were getting good services. It was boilerplate.

    My fee per person was far less than that – far less – and the group was about 20 managers. Like I said, I don’t pretend to scale like that. I didn’t process people for a year. I was in and out. I did a group session then intense one-on-one coaching and phone follow-up.

    The distinction between outplacement and what I do shows up in the Talk to Nick sessions I do now. One hour, period. I work only with people that I know I can help. That’s not cherry-picking; it’s just common sense. I have people tell me in 50 words or less what they need help with. If they want a job search strategy or long-term hand-holding, it’s cheaper and more effective to read my books. If the problem is narrowly defined, we schedule the hour. I’ve never had anyone walk away without a specific solution.

    I think the problem with counseling and coaching is that there’s too much time wasted on nonsense. 90% of it is re-hashed and available in articles and books.

    Here’s how I view it: If I can’t help you in an hour with a targeted issue, then I’m not going to pretend I can hold your hand for weeks or months for thousands of dollars, and I’m not going to schedule you. I believe long-term counseling is a racket.

    I have a standing challenge to people I know in outplacement: Give me a roomful of 1,000 people and 1.5 hours. I’ll teach them more that they can use than six months’ worth of regular outplacement sessions. The reason is simple: Job search is not a step-by-step process. If it were, everyone would be getting job offers because the process has been so over-defined that it’s silly. (Just look at all the career books that say the same things!) Nailing a good job offer is about knowing how to deal with a handful of daunting obstacles that crop up while you’re doing the steps — if you don’t know how to handle them, you’ll probably lose. Those daunting obstacles are what Ask The Headhunter is all about. (It’s why the subtitle of my Fearless Job Hunting books is “Overcome the daunting obstacles that stop other job hunters dead in their tracks.” I really believe that. As a headhunter, I’ve seen it play out again and again.)

    It’s why I use a Q&A format. Who cares what the steps are, when people who are following the steps write in with specific stories about the obstacles they encounter? THAT is what they need help with: Those make-or-break events.

    Outplacement doesn’t “think” that way. Outplacement is a profitable business because it’s a cookie-cutter process that scales easily. If not effectively for the job seeker.

  9. Outplacement is as functional as mammary on a bull. I was “outplaced” in a downsizing and the severence package was 6 months pay, 18 months paying COBRA medical insurance and outplacement which was seminars at the unemployment office. The first 2 were valuable. I attended the seminars (no charge) they basically are networking sessions with people in similar situations. No worthwile connections were made. They had nothing to offer and neither I had any to contribute

  10. Excellent article!….Nick’s work is always a pleasure to read!

    This article was an eye-opener re: how outplacement firms help protect downsizing companies from legal liability.

    And, it was very interesting to read that it does not hurt to ask if one can receive cash in lieu of the established outplacement firm service.

    Yet, sorry to be a contrarian here…but after my last downsizing, I felt the outplacement firm — Lee Hecht Harrison — was helpful. I liked the live videos and extensive library of docs re: job searching. Even now that my time has run out for all of its services, I can still use many of its services — no live videos, but I can avail myself of the archived videos and other resources.

    Yet, again, would I have preferred the cash to choose to spend on my own choice of an outplacement firm — I don’t think I could’ve done better….but….to use the cash on general household expenses, if that would’ve been an option?…Well, cash for that purpose might’ve come in handy. :)

  11. Nick,

    I just read your “This Week’s Q&A Outplacement Or Door Number 2?” email and wow, it described my frustration with them to a “T.” I would add that the most career counselor types I’ve encountered assume you want the same job you had and essentially their input is pretty minimal.


  12. I was laid off in 2011 after 23 years of service with AT&T and had no option to use an outsource company to help me find a job. And here is sit 18 months later still looking. If AT&T still has this service, they keep it a good secret!

  13. This subject is a reminder of the mid-90’s when mutual funds tanked. The Edward Jones securities broker responded by churning new recruits like an investor’s portfolio. The “consolation prize” for the canned recruits was some unknown “outplacement” firm w/an 800 number, answered by a voicemail which rendered no follow-up response or communication. Very classy . . . and so reflectant of yet another bad actor in the financial sector.

  14. I agree that cash is the best option. If you read Nick’s column you can do the legwork yourself. I did learn after layoff number one to never stop networking. As soon as you land a job prepare for the next layoff. Telecom is not lucrative when you have a job nor secure in the long view.

  15. I had a choice of two outplacement services, and received a very competitive “offer” from the one I eventually chose. They allowed me (a senior professional) access to their “executive” services and leadership group, which was invaluable for vetting my resume and networking strategies. I was a very aggressive student of the program, and networked in person or by phone with 3 to 5 contacts per week during my severance period. When that period was over, I secured a lucrative freelance contract through a member of my network (someone I had met through the outplacement service) in about a week. In the meantime, I received (and declined) three job offers because I was enjoying exploring working for myself. I eventually accepted a fourth job offer from a company that reached out to me because of my online presence.

    I was very lucky. But I also worked extremely hard and was able to generate positive results.

  16. Nick,

    You are just about always 100% on. Your recent post about HR was brilliant.

    On this one – a different perspective. I have been in outplacement, and you are right about them.

    But – if I had to do it again, it would be a good place to work on my search. A place to go. Maybe there are cheap ways to rent an office – but this isn’t bad with the amenities of an office.

    However, to your point, I would be sure to know that they are not getting me a job, and are little if any help. Also, I wouldn’t get comfortable there.

  17. Nick,

    I really enjoyed this post and will definitely bookmark it for future references. I wish I had this advice when I was laid off from a very well-known tech company 2 years ago.

    I was provided with outplacement resources but after 6-10 resume revamps and weekly calls with my “counselor” for 3 full months, it still took me 1.5 years to find a similar job.

    After the severance ran out, times got a little tough. A long stint of unemployment in a major metro area is no fun. Although I am currently employed, I’m still making up for loss of a regular paycheck two years later.

    If I ever work for a major corporation again, option 2 will definitely be my solution instead of option 1.

    I was lucky to be offered outplacement resources and the mentoring was helpful(I was able to take the Birkman Assessment for free), but eventually I felt it was a lose/lose because I had been a very loyal employee for 7 years, never had a PIP, always got my quarterly bonuses and yet it took me a long time to find a job. An underpaying job for that matter!

    Am I still somewhat bitter? Yes, because I got burnt the more I think about it and ignorant to the fact that there could have been an option 2.

    Luckily there are still people out there such as yourself that believes in employee rights.

    Keep up the good advice!

  18. A few years back I was laid off when the company I worked for decided to move their production to Mexico. The company offered me outplacement services which I gladly accepted. The outplacement company actually helped me out, but not in the way you would think. They hooked me up with a government grant project, run through the local unemployment office, to get project management training for free. I ended up with an associates certificate in project management from the George Washington University. I wouldn’t have known about the training if it wasn’t for the outplacement service.

  19. I was blindsided by my layoff 5 years ago after 13 years of loyalty and hard work. I was foolish enough to think the outplacement was going to be my salvation. My “counselor” wrote my resume after I emailed her my dusty copy. My sessions with her were timed up to the minute and we frequently had to end the calls when I wasn’t done asking questions. I ended up rewriting my resume several times before I got any nibbles. The only good that came out of that was her advice of buying a separate health insurance policy instead of taking the expensive COBRA. I was too depressed to think of that on my own! In the long run, I was very disappointed with the service and they chased me down over email to “rate” my experience with them once my contract expired. I ignored them. Once again, I find myself looking for another job after another layoff and find the State unemployment office to be much more helpful in their advice and services. I’m glad I found this blog because Nick’s advice of networking is spot on.

  20. Nick I love a lot of your stuff but the days of $15,000 outplacement are long gone – and even in the old days, that was the executive level stuff. Most now is done online and virtually, even with great local firms.

    The value of outplacement to an employee is the direct result of the work the person puts in. Most outplacement firms have tons of good info and advice but a fair number of people think that they will get a job with NO effort. And we both know just how likely that is.

    I regularly recommend clients consider buying outplacement services when they are re-organizing. Sure it often helps reduce legal issues for the employer. More importantly, for many employees and especially longer service ones, it gets them in the game sooner. And it reduces the probablity they will be negative in their interviews and prolong their search.

  21. I’ve had outplacement 3 times…3 different major outplacement companies. Considering that unlike me, most people they deal with were pole axed out of their work routine and tossed in the street and have zero experience or a clue as to how to go about hunting for a job.
    Patricia Frame hit the key point. You only get out of it what you put into it, and in all cases there were good counselors. The best value in a counselor is to kick the client in the ass when they are going through the motions and not doing the job of hunting for a job, plus support empathy etc.
    I particularly liked that I had a place to go, bricks and mortar and in my last adventure, the manager let us keep using the facilities after our contracts ran out, just not counselor time & training etc. I didn’t care. I wanted the office, phone, supplies etc.
    I figured it was something coming to me, had value, and I was getting everything coming to me. I was surprised that only about 30% of the employees who could use it..ever did.

  22. This has also happened to me, that is why I never trust the outplacement companies anymore. I have decided to deal with things on my own. First, I looked for a job by myself, but nobody replied, so I decided to ask help. I found this company online and it proved to be the right choice. Now I have a wonderful job that I am proud of!

  23. More than 12 years, the insurance company I was working for decided to close up the office and move most of the operations to the Albany area. This particular office employed about 1,000 people. We were told about a year prior to the “closing” date that everything was moving and our office would be shut. We were told that those who decided to go to Albany would get to keep their jobs, but the company wouldn’t be paying for re-location. Only two people on my floor decided to go to Albany–both were single, older, more advanced in their careers (and who could afford to pay for their own relocation). The others were all lower in pay scale (couldn’t afford to move), had spouses (just because you keep your job doesn’t mean your spouse will be able to find a comparable job in Albany), kids (too hard to uproot them from the schools, friends, etc.). No one was offered any cash due to the closing of the office; businesses go out/move elsewhere/merge with other businesses all the time, and there’s no obligation on the part of the employer (that whole at-will employment thing) to give you a pay out because they’re laying you off. I don’t know about the bigwigs–but none of us worker bees had official contracts. Nonetheless, I thought the company treated us fairly. They gave us plenty of notice (we had a year’s notice); they brought in folks who helped us with our résumés, with workshops (for those of us who decided to go in different direction and were trying to decide what we wanted to be when we grew up), hosted job fairs (brought in other employers to our site who were looking to hire; paid for computer training (more general training that wasn’t limited to the insurance industry); hired masseuses for us; fed us; granted us time off for interviews, to meet with a career counselor and still paid us, etc. I had been caught by “downsizing” in other jobs, and none of those employers did even a fraction of what this one did (those waited until the last day, then out the door like the trash).

    As for the kind of “outplacement”, I don’t know how successful it was. I appreciated the help with my résumé (having a fresh pair of eyes to look it over and make suggestions was helpful), and one of the career counselors who talked to us about various jobs, careers, and options after looking at our interests, personalities, etc. was also useful. Hosting job fairs on site was helpful too–they were all day events, and we were encouraged to go downstairs, visit the employers and their reps there, get information, etc. What I remember about those was that I talked with hiring managers–I’d brought my résumé (in case I found something that interested me), not once did I talk to an HR grunt. We bypassed them, and I was hired by someone I’d met at one of the job fairs. Most of my former colleagues took advantage of the help with résumés, figuring out options and possibilities, and the job fairs, and most found jobs on their own. Of course, the economy was quite different back then (2000-2001), and while a number of people found it tough because with so many of us thrown on the job market, which could only absorb so many people despite there not being a recession, I was still pleased that the company made even that effort to help us. One of my former colleagues remarked to me not long ago that she, too, remembered what they had done and had appreciated it, and that after all, employers aren’t obligated to place their soon-to-be former employees in new jobs if they get bought out by/merged with another company, if headquarters decides to close an entire office and move those functions and jobs to another location, etc. Many were long-term employees, and despite having all that advance notice, it was still hard.

  24. Ooops–I meant to write in my first sentence–more than 12 years AGO. Apologies.

  25. For some reason my first reply did not post.

    The only time I’ve had outplacement was when I worked in insurance. Headquarters decided to close our site and ship the jobs to Albany. We were told a little more than a year in advance of the closing of the site what would be happening. Those who wanted to keep their jobs were welcome to work in Albany, but there was no re-location funding. There were over 1,000 employees at this site, and I can think of only two who decided to go to Albany. The rest couldn’t–they had spouses who had jobs (no guarantee that the spouses would find jobs in Albany), kids in schools, houses, extended family, and more. What the company did was bring in career counselors so those of us who decided not to go to Albany could get help with résumés, advice on job hunting (many of the employees had been there for a long time and hadn’t been job hunting in 20 years or more), advice on new possibilities (for those who hadn’t decided what they wanted to be when they grew up/career changers). They also hosted several all day job fairs, inviting other area employers to our site so we could meet with them, talk to them about available jobs, etc. They hired masseuses (to help with stress, as we were also training our replacements) and often ordered food, encouraged us to go to the workshops, take the time we needed to meet with counselors, prospective employers, etc. I don’t remember being offered these services vs. cash, and I’m inclined to think there was no cash option, at least for the majority of us (worker bees and middle management). Perhaps it was different for upper management.

    But, I can’t complain at all. My colleagues and I, while shocked and disappointed with the closing and wondering where we would all eventually wind up, were grateful for what we got. No other employer I’ve ever worked for provided anything; they’re not obligated, morally or legally. Businesses consolidate, move operations, merge with other businesses, go out of business all of the time.