Providing assistance following redundancy

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But at an average of 3,500 (€5,600) a head for a three-month programme, outplacement does not come cheap.

When costs are being cut, what can motivate banks to splash out on employees that they are unlikely to see again?

The answer, strangely enough, seems to be concern for their former employees' welfare.

Mervyn Thomas, head of UK human resources at Citigroup, says: 'It gives us a degree of comfort to know that former employees are being well looked after.' Thomas' concern is echoed by Sandy Campbell, head of human resources at UBS Warburg.

He says: 'Outplacement not only gives individuals the opportunity to market themselves, it also gives them support through a period that can be very traumatic.'

Concern for former employees is not, however, entirely disinterested. If disaffected individuals are quickly re-employed elsewhere, they are less likely to seek compensation through the courts.

Caring for those who have been pushed out is also a crucial element of image control.

Michael Moran at the Penna group says: 'People speak more highly about their former employers if they find a new job.

'If they remain unemployed, there are going to be an awful lot of people out there saying not very nice things.'

Besmirching by former employees in the world at large is not the only impetus behind outplacement spending. Out of sight does not mean out of mind, and the knowledge that former colleagues are pounding the streets in search of work is not good for the morale of remaining employees.

Thomas at Citigroup says: 'The reality is that when people leave, some of their closest friends remain behind. There is a constant flow of information about how individuals are getting on.'

Campbell says the way that a bank behaves regarding redundancies sends out strong messages about the kind of employer it is. Doing the right thing is therefore important, and outplacement is a visible indication of concern.

Merely appearing to be concerned is not enough. If former employees are to be truly happy, they must also find new jobs. Moran says that this explains why most banks have discontinued the policy of offering redundant employees either outplacement or money. Faced with this choice, he says most employees took the money, and then many failed to make it back into suitable employment.

Nowadays, banks offer employees outplacement or nothing. But not everyone takes them up on the offer. At UBS Warburg, Campbell says that only 50% of those who were offered outplacement last year took it.

'Employees do not always understand the value of outplacement,' he says. Many bankers associate it with failure, or with simple CV improvements.

The value of outplacement is often greatest when employees want to move out of financial services altogether.

'The psychological support offered by outplacement firms is particularly valuable for career changers,' says Campbell.

Thomas agrees. He says that many bankers already have well developed networks of financial services contacts through which they can find new positions. This encourages them to seek new jobs on their own.

Outplacement providers are often best placed to provide contacts in alternative sectors.

With financial services jobs harder to come by, the take-up of outplacement is likely to increase and human resources departments are paying increasing attention to the quality of the service they provide.

Outplacement consultants need to be experts in everything from counselling and career change to derivatives and corporate finance. 'It is critical that outplacement consultants are credible individuals with the ability to make an impact upon people who are highly motivated, highly intelligent and highly articulate,' says Thomas.

Credibility demands an understanding of what clients' careers have entailed.

For all their concern, banks are not, however, prepared to dig too deep for the sake of the departed. 'Everyone looks for the best deal they can possibly get,' says Peter Murgatroyd, director of the City office of Drake Beam Morin.

Cost-cutting is not likely to lead to banks offering outplacement in house, however.

Traumatised ex-employees are not conducive to corporate restructuring. Similarly, continued contact with the former employer is not felt to assist employee rehabilitation.

'It is very important that there is a clear psychological break between the individual and the employer. When outplacement is provided by a third party, individuals can make this break,' says Campbell.