The impact of outplacement programs on reemployment criteria: a longitudinal study of displaced managers and executives.

The purpose of this study was to examine longitudinally the impact of outplacement support (e.g., counseling end psychological assessment) on several reemployment criteria. A sample of 1,880 managers and executives using the services of a large outplacement organization was examined. Controlling for past salary, severance, and demographics, results demonstrated that displaced managers and executives participating in programs that demonstrated higher levels of outplacement support took more time to find reemployment, had greater likelihood of reemployment, and had higher salaries in new jobs than individuals participating in programs with lower levels of outplacement support. Implications for organizations reducing their workforces are discussed.

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Downsizing and staff reductions are common strategies for reducing business costs and improving organizational functioning (Balutis, 1996). Although these strategies are often necessary for business purposes, the psychological costs, such as acute stress, anxiety, and clinical depression, to the individuals being displaced can be serious (Leana & Feldman, 1992; Liem & Rayman, 1982; Winefield & Tiggemann, 1990). Moreover, many displaced workers who become reemployed experience underemployment (Borgen, Amundson, & Harder, 1988; Kaufman, 1982). However, in an effort to provide assistance, most large organizations (approximately 75%) provide their displaced workers with support from outplacement firms (Doherty, Tyson, & Viney, 1993). Outplacement firms provide displaced employees with a variety of resources and services, such as job search counseling, career assessments, networking lists, resume-writing workshops, interview training, and self-marketing training (Kirk, 1994). Many organizations also provide outplacement assistance to mitigate litigation for wrongful discharge. In addition, providing outplacement assistance can aid a company's standing in the community, help boost morale of employees surviving the workforce reduction (Brockner, Wiesenfeld, & Martin, 1995), and help reduce costs of unemployment insurance (Matthes, 1992; Wojcik, 1992).

The type of outplacement assistance that displaced employees receive, however, varies dramatically. For example, less comprehensive programs may have displaced employees attend a 1-day group workshop. More comprehensive programs may provide displaced employees with individualized counseling, career assessments, and specialized resources at outplacement agencies. Although millions of employees have received outplacement assistance (Mergenhagen, 1994), very few quantitative studies have examined the effectiveness of different programs (Cowden, 1992; Hanisch, 1999; Light, Wechsler, & Kaufman, 1997). Scholars have also stressed the need for empirical research on the correlates of outplacement interventions (Leana & Feldman, 1992). Therefore, the main purpose of this study was to quantitatively examine the effectiveness of outplacement programs over time that vary by the support and services provided to displaced managers and executives. The main criteria used in this study are employment status at the conclusion of outplacement assistance, speed of reemployment, and new salary.