Layoffs are short-term solutions that can have lasting impacts on your company’s bottom line: its customer base. No matter what your brand offers, be it goods or services, your customer will think about the people behind your product once the news of a layoff breaks. Your brand reputation is invaluable and a layoff can negatively impact it faster than the years or even decades it took to develop.
There are many reasons why a company may need to reduce headcount. No matter how merited, however, there are negative implications that will swirl around your brand name once you let a large number of employees go at one time. The news will spread beyond your corporate walls, into the public market and unsurprisingly reach your customer base.
Whether your company was over capacity, needed a fast way to cut spending, or was in the midst of a market downturn—how you handle the layoff will leave a lasting impression long past the initial relief a temporary financial cut can bring. Here’s how an outplacement program can help retain your customer base.
The Negative Impacts of Layoffs
Outside of a potential dip in share price, once a layoff is made public your company will likely be understaffed given it has just let go an entire department or more. Not to mention that layoffs can act as a warning signal to existing employees and ignite a mass exodus among the remaining team members. To add to the financial pressure that a company is likely looking to alleviate with a layoff, oftentimes there are direct and indirect costs associated. Employee exit procedures cost time and money to coordinate. Further, companies will pay for a loss in productivity and have to cover unemployment insurance and rehiring costs.
To top off just some of the negative side effects of a layoff already listed, perhaps the most withstanding is that of the long lingering negative public opinion. The perception of a layoff is never really seen favorably through a loyal consumer’s lens. People’s trust in your brand will waver and can mess with your customer retention. If a layoff is executed without a clear plan and an element of genuine care, your customer base will notice and most likely take a hit.
So it’s important to enter into a layoff with well-thought-out solutions in place for your impacted employees. Beyond a fair severance package and empathetic separation conversations, outplacement services as a part of a severance package is one surefire way to help mitigate negative backlash.
How an Outplacement Program Can Help
Outplacement programs offer career transition assistance to recently let go employees. These assistance programs can help employees learn about new career opportunities, offer career coaching services, and refresh resume writing and interview skills. These kinds of services can be performed in-person or virtually through an online system. Typically, outplacement can be offered for a variety of reasons that involve letting go a large number of employees at one time, including company downsizing, restructures, corporate mergers or bankruptcy.
Companies can include outplacement program services as a part of an exit plan or severance package. On the practical side, they are designed to help the former employee by reducing the time it takes for them to find another job. These services do not only benefit the individual though—they can also benefit the company. By reducing the time it takes for the employee to get rehired, the company will lessen its time paying for unemployment fees. Plus, a company can have some kind of an influence over where the former employee ends up working next. The inclusion of outplacement services can also help deter an employee from looking into litigation—given they typically should sign a separation agreement that outlines the acceptance of this assistance (and monetary amounts) will inhibit them from filing lawsuits against the company in the future.
But moreover, having an outplacement program can show your customer base that your company cares about people. Consumers are a direct line to your company’s long-term growth and are worth considering when in the process of executing a layoff or developing a company policy. Outplacement programs can communicate the idea that your company is loyal and concerned about their employees’ best interests whether they are a part of the corporation or not.
Consider Your Customer Base At All Times
It’s true that letting go of employees can directly impact customer retention. It’s important that each individual customer’s perception of events matters to the business. A layoff can influence their loyalty and willingness to do business with your brand even on a small level. Competition for goods and service providers is rampant. If you turn off one customer, ten customers, or hundreds of customers, chances are they have other options and will take their business elsewhere. Customers may be especially eager to cut ties with your business if they knew your former employees on a personal level. A customer might have even been loyal to your company because they knew an employee from years of doing business together. A customer who witnesses the dismissal of employee fixtures may go on social media to speak out against your brand.
Further, even if some of your customer base looks past the ethical or personal implications, they may feel the negative impacts in more tangible ways too. The cut down and possibly less motivated existing workforce may not be operating at optimal levels. Late packages, longer hold times, and other inefficiencies can all negatively impact your customer base firsthand. These kinds of inconveniences can really turn customers off. And once impacted, they typically won’t have to look too far to find a similar business that offers the same thing they were getting from your company.
Remember That Your Brand’s Reputation Matters
It’s really no question that outplacement programs can mitigate the inevitable negative impacts of a layoff. Offering outplacement services as a part of a severance package can be especially important when an employee has worked for an organization for many years. And while it’s generally considered the right and good thing to do, companies can also benefit on a practical level by maintaining their consumer and employer brand reputation, and gain a more positive perception across the board. After all, the faster an individual gets rehired, the less likely they will be spending time writing negative reviews on job boards and comments on social media. It’s important to note that what former employees have to say really does matter—one in five candidates would apply to a 1-star rated company. These benefits can also positively impact future job seekers. They can view your company’s outplacement program as a generous attribute, making your brand an ideal place to work.
If your company is planning for future scenarios in the event a layoff is necessary or are facing an impending layoff, seek help from outplacement professionals. This topic is not only extremely stressful for those who lose their jobs, but can also impact those who have to execute on an exit plan as well at those employees left in their positions who have to do their jobs with less support. Learn more about Intoo’s powerful on-demand platform for outplacement services. Employees can use this service to find suitable jobs that match their experience and qualifications, facilitate networking, and develop their resumes to land better career opportunities in the future. Alleviate some of the stress associated with this not-so-great time and get help navigating layoffs before your company’s reputation and customer base are at risk.
INTOO staff writers come from diverse backgrounds and have extensive experience writing about topics that matter to the HR and business communities, including outplacement, layoffs, career development, internal mobility, candidate experience, succession planning, talent acquisition, and more.