Like everything else in healthcare, the outplacement industry is changing.  The services they offer are being scaled back based on what health systems and hospitals are willing to spend. 

iStock_000003672099XSmallThe timing couldn’t be worse.  With the arrival of the Patient Protection and Affordable Care Act, and additional reductions in reimbursement owing to deficit reduction, the number of executives and senior leaders forced into the job market is expected to spike.

I first became aware that this type of transition service existed as an executive recruiter in the early 1990s.  This was before personal computing and small office equipment was reliably available.

At that time, outplacement firms were based on a resource model.  It was a full-service operation.  The firms provided recently displaced candidates with access to secretaries, master’s of the IBM Selectric typewriter, to produce error free resumes and cover letters.  Big bulky copier machines, finicky and expensive to maintain, reproduced dozens of resumes.  They had support staff to stuff envelopes and mail the letters and resumes to potential employers and search firms.  And, there were the cubicles where the out-of-work would go to make telephone calls, supported by receptionists that would route callers and take messages. 

Recruiters used to say that they could tell which outplacement firm was representing a candidate by the quality and feel of the envelope stationery used to mail the resume.  

The outplacement firms were touted as an essential benefit and the fact they provided their clients office space to coordinate their search.  It gave the executives in transition a place to go each day to pursue their next job.

There was a downside, an immutable truth in career management.  When you get more than two out-of-work executives in the same room working in close proximity, they began to share their stories, compare notes about their respective termination experience, and then they start to vent their frustrations.  The cubicles became known in the trade as the BMW section:  bitch, moan and whine. 

In addition to the physical facility and staff resources, outplacement companies also provided counselors to advise clients on ways to improve their resume, hints for interviewing, and overall career advice.  Sometimes these sessions were on a one-on-one basis with a coach who actually knew the client’s industry.  If the client did not live in the same city as the outplacement counselor, they would fly to New York, Chicago or Atlanta and undergo one or two days of intensive counseling and training.

In recent years, as companies began to complain about fees, these specialized coaching sessions, especially at some of the national firms, morphed into general, non-industry specific classes with the intended purpose of teaching the room full of out of work executives how to find their next job.  It is cheaper for the sponsoring organization but not as effective for the executive.

In the so-called good old days, the cost for the resource based outplacement services ranged from $15,000 to $30,000 or more per candidate, plus expenses.  The term of the agreement ranged from 30 to 90 days.  Some firms would help the candidate until they landed a new job, but most had restrictions on the time they would spend as well as responsibilities of the candidates during the process.

Today, in healthcare, the fees have dropped to $5,000 to $10,000.  Occasionally, a health system will pay more for a senior executive, but that is the exception.

While some firms today will accept payment directly from candidates, the major firms, as well as the top-tier boutiques, only accept company-sponsored (paid) candidates. 

On Wednesday –  Outplacement:  A Positive Experience