Financial Advantages
Many layoffs and restructurings occur because companies are implementing cost-cutting initiatives in an attempt to drive profits higher. For this reason, many leaders question the wisdom of paying additional money to a corporate outplacement service to assist displaced employees who are affected by the terminations. However, investing money in this valuable business tool can actually have many financial advantages for the company.
Lower Unemployment Insurance Rates
Although unemployment insurance programs vary widely by state, in general, most businesses that employ more than 10 workers are required to pay into this system. Periodic reviews of companies by the states determine how much the business has contributed to the system versus how much money was used by workers that they terminated. The faster that a business can help their displaced workers gain new employment, the less money those workers will draw from unemployment. Thus, the next time that the state examines the business’s usage rate for unemployment insurance, the lower their overall unemployment payment rate will be.
Lower Health Insurance Costs
Reducing the amount of time that displaced workers are unemployed also helps their former company reduce the cost of health insurance payments. While not every company provides health insurance coverage to former workers, some do. Additionally, many provide it for a limited time period of two to three months. Outplacement services that assist individuals with quickly securing a new position will greatly reduce the health insurance costs to the former company.
Tax Write Offs
While some monetary investment is required to engage a corporate outplacement service, businesses can regain much of the cost when filing their taxes during the next filing season. The fees paid to corporate outplacement services for things such as career coaching, résumé preparation and skills assessment are all qualified tax deductions. Therefore, these fees should simply be seen as normal business expenses for most employers. In some cases, employers can actually add the cost of outplacement service fees in the former employee’s overall compensation on their W-2, which further reduces the costs to the employer.
Flexible Package Options for All Budgets
Most importantly, Vertical Media Solutions offers multiple service packages with discounted pricing to accommodate any size business or budget. This allows business leaders to choose only the services that best fit their needs and to adjust them based on the number of terminations that are taking place. This in turn allows businesses to control expenses while providing the best help possible for displaced employees.