Outplacement Firms Struggle to Do Job

From the Wall Street Journal | Aug 20, 2009

By PHRED DVORAK and JOANN S. LUBLIN

When PepsiCo
Inc. laid off administrative assistant Sonia Service in February 2008,
she thought she'd have a leg up on her next job. Pepsi referred Ms.
Service to an "outplacement" firm that specializes in helping laid-off
employees get new work.

Dennis Kale for The Wall Street Journal

Damian
Birkel, a former outplacement counselor, teaches at Professionals in
Transition, a nonprofit self-help group he founded for the unemployed.

 

Eighteen
months later, Ms. Service says outplacement was a waste of time. She
says the job-search training was rushed. During a practice lunch
interview, a coach chided her for ordering cranberry juice, saying it
could be interpreted as a sign of a urinary-tract infection, she
recalls. Her résumé was sent to a prospective employer with a cover
letter that included a typo and bore her signature -- which she says
she never saw.

"I am embarrassed," says Ms. Service. She still hasn't landed a job.

As demand rises in the $4 billion-a-year outplacement business,
providers increasingly offer standardized services, which some workers
say offer little value. Businesses anxious to shed former employees
quickly and cheaply impose time limits that hamper effectiveness. Few
employers track whether outplacement works.

Skeptical employees are voting with their feet: Executives estimate
about 40% of workers offered outplacement services don't show up; some
ask for cash instead.

Look-Alike Letters

View Interactive

Compare cover letters for two job-seekers.

Some
industry participants, too, are troubled by reports of mass-produced
résumés, canned job advice and slipshod counseling. "It breaks my heart
when I hear about stuff like that happening," says Celeste Calfe, North
American board president of the Association of Career Firms, a trade
group. "And I know it's happening."

Outplacement firms say some frustration with their services reflects
the stress of trying to find work during the downturn. "We understand
that clients get angry; angry at their former employer, angry at us,
angry at the prospective employers that don't seem to be calling back,"
John Challenger, CEO of Chicago-based outplacement firm Challenger,
Gray & Christmas Inc., wrote in response to questions.

Outplacement
services arose in the 1960s to provide out-of-work managers with the
trappings of a job, such as an office, a phone and a secretary. Layoffs
were less common and participants needed to battle the stigma of losing
a job.

By the 1990s, outplacement firms expanded to serve everyone from
CEOs to hourly workers. Providers competed by lowering prices, offering
volume discounts to corporate clients for an increasingly standardized
menu of workshops and referral services.

Now, outplacement is a standard feature of corporate layoffs. More
than two-thirds of 265 U.S. employers with layoffs during the past two
years offered outplacement, at an average cost of $3,589 an employee,
according to a June survey for The Wall Street Journal by the American
Management Association and Institute for Corporate Productivity.

Recipients typically get access to an office and a coach, either in
one-on-one or group sessions. They also usually get help with résumé
writing, interviewing and job leads.

Business is booming amid the recession. Right Management, the Manpower
Inc. unit that's the nation's largest outplacement firm, posted a 36%
increase in second-quarter revenue, to $158 million. Right expects to
serve 200,000 people world-wide this year, twice as many as last year;
it says revenue is rising more slowly because companies are opting for
cheaper group services. Second-quarter revenue at Lee Hecht Harrison,
another big provider that is a unit of Switzerland's Adecco SA, jumped 57% to $119 million.

Outplacement firms say their services are effective. Right
Management says 95% of the people who used its services in 2008 were
satisfied. The company says clients who report back to them about
getting jobs do so in an average of 16 weeks. Challenger, Gray &
Christmas, which says it pioneered outplacement, says its clients find
jobs in a median of 14 weeks.

Yet both companies say they don't track the percentage of total
clients who find work before their outplacement programs end.
Challenger says it's now writing software to do so; Right Management
says it's hard to get accurate data since some clients leave midprogram
and others don't notify the firm when they land jobs.

Employers say they offer outplacement to protect their reputations,
forestall lawsuits and minimize unemployment-insurance payments.

It's "a good thing to do from a PR perspective," says Manny
Avramidis, the American Management Association's senior vice president
for global human resources. Mr. Avramidis says he isn't sure if
outplacement is effective, but he offered the service to 60 workers the
AMA laid off in October.

Outplacement typically begins the day an employee is laid off.
Providers often send staff members to each work site to explain their
services. The process helps companies efficiently show employees the
door, and gives the outplacement firms -- which are often paid only for
the workers who use them -- a chance to market themselves.

Employees
usually gain access to online seminars, group workshops and individual
time with a coach, for periods ranging from a month to more than a
year. Programs for executives, priced around $10,000 and up, generally
provide a private office and more coaching time; those for midlevel
managers or clerical workers, priced $5,000 or below, may offer a chair
and phone at a shared table. Workers can also tap job-search boards.

Some activities appear to follow routines. Two Challenger clients,
executives from different companies and different parts of the country,
describe mock job interviews over lunch with their coaches.

One man says he was scolded for not following his coach to the
restroom to continue the conversation. The other says he was chided for
ordering diet soda because it suggested immaturity. Both executives
asked not to be identified.

Cigdem Oktem, a management consultant, was laid off by Corporate
Executive Board, a Washington, D.C., consulting firm, in February,
along with a few hundred colleagues. Ms. Oktem says she got six months
of outplacement counseling at Lee Hecht Harrison's Washington offices.
When a family emergency demanded her attention for a few months, Lee
Hecht let her pause and restart the service.

Lee Hecht provided a clear, 10-step process for finding a job,
including a spreadsheet for tracking calls, leads and interviews, Ms.
Oktem says. The firm organized weekly meetings where she could trade
tips and contacts. And it gave her unlimited one-on-one access to a
coach, with whom she still meets every two weeks for advice and moral
support. She hasn't found a job yet, but has interviews lined up.
Overall, she says, outplacement has been a boon.

One challenge for the industry is that laid-off workers have
different needs. Some like going to an office; others are happy to
connect online. Many like career counseling but don't want help with
their résumés.

By contrast, John Farmer, a 61-year-old executive in Dallas who was
laid off from a financial company in February, hadn't written a résumé
in 20 years and wanted help. But he found coaching sessions to be
"almost like grief counseling," he says.

"One size doesn't fit all," says Harry J. Martin, a management
professor at Cleveland State University and one of the few academics to
study outplacement. Mr. Martin was co-author of a paper last year
decrying "commodity outplacement" and urging more individual attention.

Some employers are experimenting with cheaper approaches. Lora Villarreal, chief personnel officer at Affiliated Computer Services
Inc., last year hired RiseSmart Inc., an online provider, to offer
outplacement to 4,200 workers. RiseSmart culls job boards and
social-networking sites, then sends weekly alerts to users. It also
provides individual phone counseling and online group seminars.

Ms. Villareal was unhappy with ACS's prior, more expensive
outplacement firm; she says former staffers complained they didn't get
individual attention. RiseSmart CEO Sanjay Sathe says a standard
six-month package costs an employer about $2,500 a person.

Chet Shubert, 53, arranged outplacement as a human-resource
executive at Wyeth Pharmaceuticals and National Starch & Chemical
Co. Last year, it was his turn, when he was laid off following a
merger. He says he was offered several months of outplacement at
Right's Management's Philadelphia office. In his first group meeting,
he was surprised when a staff member said the firm didn't track how
many clients get jobs.

Mr. Shubert says he got access to job-posting sites and group
workshops on topics like preparing a résumé or closing a deal;
equivalent material can be found online, he says. He says his coach
didn't offer useful advice.

Mr. Shubert's verdict: "truly boilerplate" and "lacking for middle
and upper management." He says he stopped going after about a month; he
later found a job on his own, from which he was recently laid off.

Right President Doug Matthews, in a written response, says each
participant works with a coach to develop a job-search plan tailored to
his or her "unique learning style, needs, skill level, and desired
outcome."

Damian Birkel, a career coach, joined Right in June 2007, initially
as a contract counselor and later as a full-time employee. He primarily
worked from home, but spent at least one day a week in Right's office
in High Point, N.C.

Mr. Birkel says Right assigned him 60 people, a minimum of 15 a day,
to coach by phone or online. One month of outplacement included no more
than four hours of counseling, he says, a limited number of online
seminars and access to a portion of Right's Web site. Most users
received one to three months of services, which often ended before they
found work, he says.

Mr. Birkel says Right fired him in August 2008, after he extended
counseling time for people whose outplacement had expired. One was a
single mother who'd missed appointments while trying to retain her
foreclosed home. "I wasn't cut out for over-the-phone, fast-food
outplacement," says Mr. Birkel.

Right's Mr. Matthews confirmed Mr. Birkel's employment dates but
declined to comment further, citing privacy laws. He says Right is
committed to "individualized counseling."

Ms. Service, the former administrative assistant at Pepsi, was
offered outplacement with Challenger, Pepsi's main provider for about
the past decade. She was invited to a two-day individual workshop in a
suburban New York hotel near her former office, where a coach reviewed
skills such as crafting résumés and cover letters.

The coach said Challenger would check online regularly for relevant
vacancies, then send Ms. Service's résumé and cover letter to
prospective employers.

Ms. Service didn't like Challenger's rewrite of her résumé because
it contained too many dates she thought would reveal her age; she says
she asked Challenger not to use it. Ms. Service says she never saw the
finished cover letter. Ms. Service was later surprised to find that the
résumé and a cover letter -- which contained a double comma and the
date written as "February 05" -- had been sent to a New York
public-relations firm on her behalf earlier this year.

Documents reviewed by The Wall Street Journal showed the materials
resemble those of another ex-Pepsi job seeker sent to the same firm --
including the same typo and quirky date style. The firm's president
says he eliminated both women from consideration as his executive
assistant. "We didn't take the letters seriously because they did not
reflect an understanding of our company -- and they looked alike,'' he
says.

Ms. Service says she learned about the mailed letter and résumé from
the Journal. Pepsi spokesman David DeCecco says the issues raised about
Challenger's service "are news to us." He says the company is working
with Challenger "to improve this service."

In a written response, Mr. Challenger says his firm tells clients it
will automatically send materials to prospective employers. Mr.
Challenger says clients are told someone else will sign letters on
their behalf, in the roughly 3% of cases where the firm sends materials
out by mail.

The firm says it crafts standard cover letters with its clients and
asks them to approve the final version. "While the introductory and
closing paragraphs are similar across many cover letters, the meat of
the cover letter is individualized by the client," Mr. Challenger
writes.

Though pieces of advice may seem "silly," he said they are part of
an overall message to always think about perceptions of the
interviewer. "Ordering ice tea, water or coffee, doesn't stand out.
Ordering cranberry juice might."

Write to Phred Dvorak at phred.dvorak@wsj.com and Joann S. Lublin at joann.lublin@wsj.com