Outplacement Services: for Graceful Exits

The controller of a small San Diego medical instrument company was so respected by his superiors that when one of them left to start his own company two years ago, the controller was begged to follow along. He did. But 18 months later the boss decided that the controller was not the right man for the job and abruptly fired him.

Twenty years ago, or even 10, the story might have ended here, with the ex-employee feeling angry, victimized and perhaps too upset to begin looking for a new job. However, in the case of the controller, and an increasing number of other terminated executives, the severance package handed out with the pink slip included the services of an “outplacement counselor.”

A what? Although executive headhunters have made a name for themselves, the world is less familiar with their flip side, the folks who step in and clean up after executive heads roll. But in the last two decades, these services, which help terminated employees find their next jobs, have mushroomed into a thriving $100-million-a-year national industry as companies seek to give their executives a variety of benefits in the event of a takeover or merger and, at the same time, avoid wrongful-firing lawsuits and negative publicity from a messy executive-suite cleaning.

Typically, outplacement services are retained by a companies that want to get rid of an employee quickly and as painlessly as possible for both the employee and the company. Fees, which are paid by the company, are generally set at 15% of the terminated employee’s total annual salary. And the average client is a man between 45 and 55 years old in an upper-management position who has been fired not because of incompetence but because his working style no longer fits the business plan or because the “personal chemistry” between him and his superiors no longer works.

“We do see a few incompetents and drunks,” admits Carl Miller, director of Career Management Services in Santa Ana. “But business is so volatile these days that there are broad changes in strategy almost overnight at many companies. This often means that heads must roll.”

Although these services seem to duplicate the offerings of both employment agencies and executive recruiting operations, they actually fit somewhere between the two.

Outplacement services usually limit their offerings to inspirational counseling sessions, personalized job-search tutoring, including resume-writing lessons and polishing interview techniques, and routine secretarial and office services, such as telephone answering and typing. However, outplacement executives stress that reputable outfits never promise to find a client a new job, do not work simultaneously as executive headhunters and accept payment only from the company doing the firing, not from the client.

“Our whole job is to train people to be nice and help them make themselves more acceptable to the world,” explains James Challenger, founder of Challenger, Gray & Christmas Inc., the Chicago outplacement service that claims to be the nation’s oldest and one of its largest.

Still, many question whether these services provide anything that is otherwise unavailable to the job-seeker. The answer, even from outplacement counselors, frequently is “no”--tempered with a quick explanation.

“An executive can find a job without a service, but with one, the process is faster,” says Tom Sawyer, the former outplacement director at Fluor Corp. in Irvine and currently a management consultant.

By some estimates, the services cut the job-search time in half by focusing the applicant’s energies, polishing his interview style, often with the help of videotaped practice sessions, and, perhaps most important, offering him access to their hiring network, which often includes executive headhunters and personnel directors.

“The time a person is out of work is not a nice time,” says Challenger. “It’s a time of rejection. And if we can shorten it, we are providing an important service.”

Outplacement services also claim that they help the former employer just as much. According to Challenger, the services allow companies to absolve themselves of any guilt they might feel for firing an employee, cut the time the company is exposed to a wrongful-firing lawsuit and offset potential negative publicity.

Says Howard Kosh, executive vice president of Univance in Century City: “The purpose of outplacement often is to have an amicable parting of ways so the employee leaves thinking the company is good and caring.”

And the employee, Kosh adds, often finds a better job, with a higher salary, than the one he just left as a result of going through the job-search counseling.

Barbara Butcher, a 32-year-old account executive for Multi Media Presentations in Culver City, is one believer in outplacement services. Last year, Butcher was laid off by WED Enterprises as the theme-park subsidiary of Walt Disney Productions completed its Epcot project in Florida. Severance benefits included an outplacement service.

“The service gives you an office to go to every day, so you really feel you’re going to work and that your work is finding a job,” says Butcher, who had spent 15 years--all her adult working life--in the Disney operation.

Butcher found her current job, which pays 20% more than the old one, because of a chance conversation with another client at the outplacement service. “He happened to mention the Multi Media opportunity and I went and talked to them. Five weeks later I had the job,” she recalls. “It’s difficult to network like that at home.”