Outplacement Services Report Rising Demand

By Cathy Weselby
Silicon Valley/San Jose Business Journal
December 12, 2008

The demand for outplacement services has dramatically increased as a growing number of Silicon Valley companies shed workers this year.

Valerie Frederickson, owner of the human resources consulting firm Frederickson & Co. in Menlo Park, said her outplacement business has grown almost tenfold during the second half of 2008, and the majority of her clients are high-tech companies.

“Every 24 hours, there’s a call for a new reduction in force,” Frederickson said. “We’ve set up a war room just to handle the volume.”

With the unemployment rate in Silicon Valley at 6.9 percent in October, above the national average of 6.7 percent, it’s no surprise that the phones are ringing at outplacement providers. The number of unemployed in Santa Clara County alone rose by 19,300 from October 2007 to October 2008, according to the state’s Employment Development Department.

What's changed since the last downturn is the way outplacement is practiced.



“Outplacement is completely different from how it used to be,” Frederickson said. “It used to be teaching employees how to regain their employability, and now it’s providing emotional support to people during the scariest of economic times.”

Frederickson said one example is a displaced executive she’s been working with for the past seven months. Much of the time has been spent counseling.

“It took 10 weeks just to get him to update his resume, and finally he’s interviewed with a coupe of companies for a lower-level position,” Frederickson said. “It’s taken some patience and understanding.”

Amanda Dutra, senior vice president at Right Management Inc., a subsidiary of Manpower Inc., said the San Jose and Newport Beach offices are two of their busiest locations in the West. She said not only are more people seeking services, but companies are providing longer outplacement services than in the past.

Dutra said she counsels executives to consider offering employee assistance programs for severed workers.

“We’ve seen a heightened level of anxiety, and we’re providing more enhancement classes in stress management in addition to how to network online and job search,” she said.

Frederickson added that there is a fine line between career counseling and psychological counseling.

“The need for therapeutic support so that affected employees can work through their grief, reduce their anxiety and get realistic about who will hire them to do what is greater than ever, “ Frederickson said.

That mental—and sometimes physical—effect is being noticed by doctors. Kaiser Permanente Chief of Psychiatry Dr. Don Mordecai said there’s been an increase in patients requesting mental health services, and primary care physicians are hearing complaints of back pain, insomnia, stomach problems and difficulty concentrating from patients—all symptoms of stress.

Mordecai recommends that companies make available as many resources as possible to help employees through the transition.

“From a mental health perspective, this can involve making sure people know about EAP resources the company offers, and it’s also important to make sure people know about how to extend their health benefits under COBRA,” Mordecai said.

Taking care of employees also helps the bottom line and reduces risk. Charles Baker, owners of Campbell-based BEAD Consulting Inc, said he works with managers who are looking for ways to minimize the blow of a layoff. Baker counsels executives to explain to employees the strategy behind the staff reductions so that the cuts don’t seem arbitrary.

“If you can demonstrate fair practices in a reduction in force, you won’t see wrongful termination suits and will reduce turnover with the survivors,” Bakers said.

Frederickson added: “Even a little half-day workshop and some individual counseling can go a long way toward reducing the chance for litigation.”