Some organizations have selected to offer their employees the option of taking outplacement services and taking a cash equivalent monetary option.
Employees may be tempted to take the money. They may think that the money will help them offset any potential cash flow issues. They may also chose the money because they have no frame of reference regarding the value of outplacement service.
The cash equivalent option, while tempting, may not be the best decision when you consider four potential challenges that they may face.
This is why we recommend that HR leaders either eliminate the monetary option or provide full disclosure to their transitioned employees on the downsides of the cash payout.
They do not realize how long it will take to find another position.
We are still facing a challenging job market. While hiring rates are up it is still an extremely competitive market where candidates still greatly outnumber open positions.
They do not know what it takes to execute a successful career marketing campaign.
Many job seekers confine their search to applying to online ads and contacting recruiters. They unknowingly think that this is what it takes to land a new position. Unfortunately this approach accounts for only 33% of landed positions.
They may need expert advice on developing new skills.
Despite the large number of candidates in the market today, many hiring managers still express concern that they do not have the right set of skills to become a part of their team. An outplacement expert is knowledgeable on what the market needs are and can give expert advice on how to bridge the skills gap.
They may not realize the tax implications
Taking a cash payout rather than outplacement services is considered compensation and is subject to federal and state taxes. The taxes can be avoided if the employee takes the cash payment and personally pays for career coaching at an outside firm.
In summary, while it may be tempting to take the cash payout, an employee is much better served by taking advantage of the outplacement services provided by their employer.
