Outplacement Services - Contracting for Employees' Future Careers while Downsizing/Reorganizing

Author(s):

Raymond T. Roe
Raymond T. Roe, Chief Operating Officer, Lee, Hecht, Harrison, Inc. Woodcliff Lake, NJ 07675, 201-782-3703
Lorrie K. Mitchell
Lorrie K. Mitchell, Relationship Manager, BellSouth Telecommunications, Inc. Atlanta, GA 30375, 404/420-6068

83rd Annual International Conference Proceedings - 1998 

Regardless of the type of company or industry, if you have not reorganized in the last three years, you will in the coming year. Additionally, if you have reorganized in the last three years and the company has indicated that's the final reorganization...don't believe it!

Given the pressures on business, companies will continue to be pressured to look at personnel as the major area to reduce expenses and thus add to their bottom line. What is interesting is that in spite of the drastic reductions over the last ten years, all the trends show a resurgent growth in mid-level manager positions. We predict that as pressures mount for profitability, companies will continue to cycle through reorganizations and downsizings.

Interspersed with these downsizings and reorganizations will be efforts on the part of HR professionals to develop career training opportunities for employees to ensure that they are better equipped to manage their own careers. The result of these dynamics is that you, the Supply Chain Management (SCM) manager, will inevitably be called in to assist in contracting for career services.

Why Supply Chain Management Involvement? In the past, at the inception of Outplacement Services, purchasing was done by a senior HR professional and the services were tailored to the needs of the executive being "downsized". These services generally included one-on-one counseling, office space, secretarial support, telephone and other typical office amenities. As companies began to accelerate their reductions, these services were offered to lower levels in management and often include blue collar and other support staff.

So, what originally was a unique benefit for only the most senior management became an expected service to all employees as they were separated from the company. Clearly, these services were adapted to accommodate the needs of different levels of employees: for example, a clerk/typist/ secretarial position would receive a two-day seminar on how to find a job which includes assistance on resume development and steps to follow in researching new opportunities. The mid-level manager may receive a three-month program consisting of a combination of seminars and individual consulting as well as the use of cubicle space and telephone support. The most senior executives continue to receive unlimited service in more appropriate surroundings. The longer duration of this service is practical in that it generally takes longer for the senior executive to find a new position than for the more junior support individual.

As contracts for performing these services grew larger because of the increased numbers of individuals involved in downsizings/reorganizations, and companies realized the expense associated with providing these services, they started to call upon the SCM staff to assist in the evaluation, negotiation, and awarding of contracts. It is quite common for SCM managers to be present, and to "manage" the contracting process with Outplacement suppliers. This can be for a specific project or for a longer-term contract providing transition services as needed.

SCM managers need to know what Outplacement is all about - what services are included, and how Outplacement firms approach the procurement process. The decision to provide job search assistance is often made very early in a company's decision to reorganize. However, the solicitation is often delayed until just before the first terminations are announced. Hence, the company loses some of the consulting capabilities of the Outplacement firm.

What are the Ranges of Outplacement Services? As previously mentioned, career transition services commonly referred to as "Outplacement" include:

RANGES OF OUTPLACEMENT SERVICES

Senior Executive Service
12 months or more, office, secretarial support

Executive Service
6-12 months, office space, or cubicle

Modified Service
3 months, group and individual consulting, cubicle

Special Programs
Resume preparation and consulting support

Group Program
2 day seminar and resume preparation

The choice of program can depend on the culture of the company, the seniority of the individual, or tenure status and the expected time until placement. The decision with regard to the choice of program and how it will be delivered should be made by the company's HR executives in consultation with a professional Outplacement firm. There is usually no charge for this consultation service. As described, the range of services are extensive and the decision as to what to use can be complex.

What value-added services can SCM managers bring to their client? The range of career transition services are extensive and companies determine their needs based on many variables: culture of the company, average length of service of the affected employee, employees' expectations, employees' age, employees' salary level, and local job market conditions. Most importantly, what does the company want to achieve and how do you want to measure success? SCM managers are in a position to assist their client to keep focused on what the business objective of Outplacement Services is.

Of course, the SCM manager can research the supply stream and manage the project, i.e., beginning with the issuance of the solicitation through implementation of the Outplacement Services, but once the contract is executed how can we be assured the client is not only getting the level of service they expected to get, but also the benefits of a win/win relationship? One successful tool is the implementation of a Performance Based Contract (PBC). A PBC provides an opportunity for buyers and suppliers to win. Additionally, a PBC provides an opportunity for shared risk while maximizing the opportunity for mutual success.

Is A Performance Based Contract Beneficial? Buyers are demanding high quality, innovation, and excellent service at fair and reasonable prices. Quality suppliers want to provide the best product/service and they expect to be rewarded for exceeding expectations. A PBC allows both parties to share success and risk.

A PBC cannot be negotiated and put on a shelf. It forces both parties to talk and become involved in their business. As a result, the quality, process, and planning benefits not to mention mutual cost savings are endless. A PBC is about developing a strong mutually beneficial arrangement where both parties have something to gain and something to lose if their "partner" is experiencing a problem. Additionally, this type of contract fosters a long term relationship with the supplier, whereby both the buyer and supplier focus on their long range financial and value-added benefits.

What Type Of Environment Is Conducive To Making This Type Of Relationship Work? Is there a strong communication and sharing of information between the supplier, buyer, and the customer/end-user? A good specifications/capabilities document describing the Outplacement Services is critical. Communication and buy-in of the customer/end-user is critical since ultimately, they will be implementing the PBC. Will these individuals possess the ability to solve deviations from the specifications/ capabilities document in an amicable/win-win manner or are they going to contact their SCM manager (to act as a policeman) every time there is a deviation from the agreed upon document? This could make a big difference in the success of the PBC.

What Do You Base Performance On? The identification and establishment of performance indicators and the associated outcome criteria are a must. Although Performance Measurements will vary, usage, customer satisfaction, and client career placement will help determine the success of the Outplacement Services. These are then the items that need to be measured.

Clear specifications, measures, and procedures for these processes must be agreed upon. Specifications must be based on customer requirements. Measures must permit the continuous assessment of process performance and the identification of peculiar situations, while procedures should include actions to be taken in these peculiar situations (or as many as can be identified at the onset of the relationship).

The use of a PBC is a cooperative relationship that has to be established in order for all parties to be successful. The establishment of a PBC is a "good business" approach to successfully working with a supplier. Developing a PBC has the potential of increasing the value of the Outplacement Services provided by raising standards. PBCs create win/win opportunities and REAL partnerships in today's environment.

The authors:
Raymond T. Roe is the Chief Operating Officer for Lee, Hecht, Harrison, Inc., a leading international Outplacement firm. Ray is a graduate of the U. S. Military Academy, West Point, New York. Ray has a M. S. Degree in Systems Management from the University of Southern California. Before joining Lee, Hecht, Harrison, Inc. in 1993, Ray served for 26 years as a professional Army officer commanding combat units at every level worldwide. Ray retired as a Brigadier General.

Lorrie K. Mitchell is a Relationship Manager in the Supply Chain Management Department of BellSouth Telecommunications, Inc. Lorrie has a B.A. in Mathematics from the University of Miami and a Master of Science in Technology Management from the Stetson School of Business and Economics of Mercer University. Additionally while at BellSouth, she was formerly a full-time faculty member at the Keller Graduate School of Management where she taught Contracting and Procurement Management and Mathematics. Prior to her work at BellSouth and Keller Graduate School, Lorrie was a Buyer for Burdines and taught Mathematics at the Secondary Level in Miami, Florida and Monterey, California. In May 1997, she presented "Performance Based Contracts - Maximizing Success and Sharing Risk" at the 82nd International NAPM Conference in Washington, D. C. Lorrie's work with and philosophy regarding Performance Based Contracts was described in "Can You Make Wider Use of Performance Based Contracts?" in Supplier Selection & Management Report, August 1997. Additionally, Lorrie was interviewed for articles relating to Performance Based Contracts appearing in the January 1998 issues of Procurement Management Magazine and Electronic Components Magazine.


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