‘Outplacement’ Softens Blow of Hitting Bricks : Irvine Firm Among Those That Help Find New Beginnings for the Terminated

After Jim Easton (not his real name) was told last year that his services as president and chief executive officer of a ceramics firm were no longer needed, his company hooked him up with an “outplacement” counselor to soften the blow and help him find another job.

The counselor, from Irvine-based Executive Horizons, helped him feel “less fearful of what’s going on in the outside world. He gave me a road map, a helping hand,” said Easton, now an entrepreneur with his own business in San Diego.

Easton is grateful that his former employer gave him someone to talk to.

“Usually you’re in a situation where you’re being dumped, and it doesn’t feel good,” said Easton, who asked that his real name not be used.

Increasingly Popular

Outplacement companies such as Executive Horizons, which also has offices in La Jolla and Los Angeles, number at least 200 throughout the country and are becoming increasingly popular among both employers and employees, according to personnel service experts.

Companies may not be responsible for finding new jobs for the people they fire, said Charles D. Bearden, Executive Horizons’ president and founder, but “they feel it’s a good move, it promotes good feeling in the existing employees . . . and it minimizes the risk for legal action that is so prevalent in California.”

People sue employers for wrongful termination for hundreds of reasons, said William K. Ellermeyer, president of the Ellermeyer Co., a career development and out-placement firm recently acquired by Lee Hecht Harrison of New York. “They sue because of age discrimination, or sometimes it’s sex discrimination: ‘You fired me and you hired a woman.’ ”

An argument may not always hold legal water, Ellermeyer said, but often it will get the sympathy of a jury.

“I think people very often sue when they’re angry, when they think no one cares,” said Rex Olsen, an Executive Horizons vice president. He said his company’s services reduce an employee’s anger, fear and anxiety.

Increased litigation costs were also cited by Jan Thompson, senior vice president at Drake Beam Morin, a New York-based career management and outplacement company that is widely regarded as one of the founders of the industry.

Half a Million for Jury Case

“One local law firm that I work with here (in San Diego) tells me that an average settlement out of court for a wrongful termination lawsuit is $100,000, and that doesn’t include the cost of depositions. If it gets to jury it’s almost half a million dollars,” Thompson said.

Most common are lawsuits in which an employee claims the company failed to honor an employment contract, said San Diego labor attorney Rich Paul.

“I think the most common mistake that employers make is that they do not sit down in advance and prepare the case against (themselves). . . . How is the employee going to claim he or she was mistreated? Can we say with confidence that we have gathered all the facts . . . and that they really warrant this discharge?

“Many wrongful discharge cases are filed not so much challenging the grounds for termination as challenging the way in which it was accomplished. The very big dollars in wrongful discharge cases have come where the jury finds some kind of . . . abusive conduct and the jury literally gets mad and awards substantial punitive damages.”

The increasing number of mergers and acquisitions has helped improve the visibility of outplacement in the past 5 years, said Bill Stone, president of SoCal Personnel Services in Kearny Mesa and president of the California Assn. of Personnel Consultants. “Obviously, when one (company) acquires the other, there’s going to be positions that no longer fit, there’s going to be duplication.”

“They’re popping up all over,” said Lee Rollins, manager of employee and organization development at San Diego Gas & Electric. “I’m contacted on a regular basis by outplacement firms wanting to do business with us.”

SDG&E; maintains that few people will lose their jobs in the utility’s proposed merger with Southern California Edison, but outplacement in some form will be offered to those who do.

Jerry Smith, vice president of personnel for Computer & Communications Technology in Kearny Mesa, a manufacturer of recording heads for computer disk drives that recently laid off many employees, said a valuable aspect of outplacement is that it provides technical advice on how to get the next job.

“In general, I find that many people don’t understand . . . that securing another job is a job in itself,” he said.

Outplacement gives flexibility to firms wishing to make staff changes and sends a positive message not only to remaining employees but also to prospective employees. It can also help salve management’s conscience.

For the employee, outplacement often boosts his or her damaged self-esteem. Executive Horizons starts by reviewing a person’s case with company management to make sure the employer will “protect the dignity of the client as much as possible,” Bearden said. “Where will the termination take place? Have all of the facts been gathered? What will the termination pay be? Will his benefits continue and for how long? What will the individual be told and who will do the telling? We want to make sure that the employer has covered all of the necessary bases and that they are going to conduct this in as dignified an environment as possible.”

Employees are asked to complete a written assessment of themselves, concentrating on successes in their career and work-related preferences. The next step is a 3-day workshop in which an Executive Horizon counselor helps the employee clarify or focus his objective.

Resume preparation and extensive interview training are also included, as are lessons on telephone interviewing, using time effectively, keeping records and how to construct a network of business contacts for job hunting.

For its services, Executive Horizons charges 10% of an employee’s annual salary. For example, to terminate an employee who earns $50,000 a year could cost the company $5,000.

Thompson, of DBM, said her company also helps identify trouble spots in the layoff process. For example, some people deal with termination by “crying in their beer and telling others what an SOB their company is and blowing their references,” she said. A company can also use the wrong words when terminating someone and wind up facing a lawsuit.

“You will have every level of emotion, the full spectrum, from the very stoic person who expected it to happen to the person who expresses surprise and breaks down,” Bearden said. “It’s important that the terminated person . . . understands that he or she is not in a unique situation but that this happens to many people and there is life after his current employment.”

Most companies offer outplacement services only to upper managers, Bearden said.

“Not everyone who is terminated is a bad employee,” said Rollins of SDG&E.; “There are various reasons an individual is ‘downsized,’ ” a term Rollins used to describe an employee laid off because of corporate cutbacks. “The probability of using outplacement is slim or none for someone we outright fired.”

Rollins said outplacement counselors from a series of firms are brought in to give customized help to terminated SDG&E; executives and high-level managers earning $75,000 or more a year. Those managers earning less are told they can go to an outside outplacement firm for help--usually a 2-day seminar on job-hunting tips--at SDG&E;’s expense.

For people who are “way below that, we still provide them with some kind of outplacement counseling, but instead of one-on-one, we do it in a group,” Rollins said.

Bearden said outplacement is “a rapidly growing industry. In Southern California 10 years ago, you might have found six to 10 companies maybe, and now there are probably more than 50. Ten years ago, you had to explain to companies what this service was. Now most of them are aware of it.”