The ROI of Well-Handled Layoffs

Layoffs can be perceived as breaking the psychological contract between an organization and its employees, resulting in decreased trust and greater stress in the workplace.  The negative effects — decreased commitment and productivity — are costly for employers.  Not only are top-performing, non-impacted employees more likely to leave, but the employees that remain may exhibit less effort, involvement and commitment.  Employers can mitigate the negative effects of downsizing by providing employee-friendly practices.

A coordinated, well-thought-out process helps both the employer and the employee in many ways and delivers a high ROI through sustained productivity during heightened uncertainty, increased retention of staff who remain, reduced recruiting costs and increased customer loyalty.

Providing career transition support to impacted employees is not only the responsible thing to do but it makes sound business sense. The quality of the transition support affects how your separated employees, your remaining staff, your customers, and your community judge your company. A positive career transition experience pays off in a multitude of ways.  Employers are increasingly reaping the benefits which include improved morale, motivation and productivity, increased retention, better support of managers, and improved reputation.

Additional benefits of outplacement not always considered include:

  1. Protecting company brand

Your company brand and reputation is golden. The Internet enables people to quickly get information about your organization through social networks, corporate reputation sites, blogs, etc.  This information can be obtained by people considering joining your team as well as present and future customers.  People will remember the character of the firm and how it handled their “people” in tough times and they’ll share the story for generations of employees to come.

  1. Maintaining trust and respect

As workers transition from an organization their treatment is a very visible factor and will either increase or decrease trust and loyalty of remaining employees. How they were treated in the transition will also influence how the departing employee views and talks about the organization.

  1. Potential Decision-Maker

The employees you exit may land in a position to influence the decision to buy your products or services short-term or in the future.

  1. Reduced recruiting costs

Former employees may be your best source for the next top candidate by referral or direct hire. Treat them like they are a prime customer whose product or service needs have shifted, and you will reap the reward in future returns on positive talent relations.

The percentage of workers over age 50 is significantly growing as the baby boomer generation ages, greatly impacting the workforce in which one in three workers is already over 50. A shortage of talent looms and will be particularly critical for some industries.  Employee transitions must be handled with the same care and concern as the candidate selection and hiring process itself. Departing employees are not depleted resources but rather talent re-entering the pool of potential human capital on which the organization must draw for its ongoing success and future growth.

  1. Fewer unemployment claims

Fewer unemployment claims reduces the employers UE contribution rate.

  1. Reduced claims exposure

Employees are less likely to linger on your health plans via COBRA, reducing the claims exposure.


Kristi Rocha and Lynne Saiz serve as Vice Presidents of Client Service at Torchiana, Mastrov & Sapiro, Inc.