In the wake of workforce redundancies in the past three years, more companies are offering what has been termed 'compassionate downsizing', which emphasizes career growth rather than immediate re-employment, according to a recent study by the Conference Board (CB).
The study, entitled 'Compassionate Downsizing: Making the Business Case for Education and Training Services', defines compassionate downsizing as the offering of services beyond redundancy to help employees find new jobs and to progress their career beyond the current workplace with both respect and care. According to the Conference Board, the technique can also help preserve the morale of those employees that remain, and help generate continued goodwill.
The study was based on a survey of 369 senior human resources executives of mid- to large-sized global companies. Some 87% percent of the survey respondents indicated that their companies had made some employees redundant between January 2001 and December 2002. Among those, the mean downsized total was 1,022 employees, representing an average of 8.9% of the companies' workforce.
"Outplacement began as a service for terminated executives at the six-figure salary level and consisted chiefly of administrative support during the job search," explained Sophia Muirhead, senior research associate at The Conference Board, and author of the report. "In the recession of the early 1990's, the idea expanded to middle management, and outplacement firms later began to include more transitioning services in coaching, mentoring, and development."
Most of the firms surveyed now offer severance pay, outplacement and job placement assistance, continued healthcare benefits, and priority consideration for reassignment for those who have previously been made redundant.
Some firms are also now enhancing their severance packages by providing additional benefits such as career and educational counselling, references, interview coaching, and education and training benefits. Education and training benefits are offered as a supplement to outplacement - not as a replacement for it. While 84% said that their company offers traditional outplacement assistance, 13.6% also offer education and training as transition benefits.
Most likely beneficiaries
More survey participants in the energy, utilities, healthcare, and consumer manufacturing industries said that their company offers education and retraining benefits to laid-off employees. Among those companies providing education and training benefits, the average annual cost per employee is US$4,025. But more than 75% of the firms that offer education and training benefits were more likely to offer these benefits to middle management and technical or professional employees than to other levels of employees.
The top four reasons given for offering transition benefits to downsized employees were:
· to sustain the morale of retained employees;
· to demonstrate commitment to the remaining employees;
· to manage former employees' perceptions of the company;
· to maintain the company's reputation in the community.