Fast growth for outplacement. Help for managers who get cut by cost cutting

Competition is forcing a makeover of American companies. But corporate cost cutting isn't a pretty scene for employees discarded in the process. Several months after Ward Thomas's employer laid off a large number of employees, ``it became clear [his own] position wasn't going to be continued,'' Dr. Thomas says. ``I was quasi-terminated.'' He was able to negotiate for better terms before being laid off.

Where did he go? He started his own company - Career Results - which helps terminated corporate managers and executives like himself get back on the career track.

``I saw a great need for this kind of service,'' Thomas says, who operates his outplacement firm in Winter Park, Fla.

Many others have seen a similar need. William Ellermeyer of Irvine, Cal. turned ``personal trauma'' into financial success after losing his job of 17 years. Mr. Ellermeyer discovered ``unique skills and abilities I hadn't seen before,'' he says. This revelation helped him launch Career Management Services, in Irvine eight years ago.

America's competitive drive has opened the field for the outplacement industry. Mergers and acquisitions, the drive for more efficiency and bigger profits, and economic changes are dumping thousands of managers and upper-level executives onto the unemployment list.

As a result, outplacement has mushroomed into a ``$300 to $400 million consulting business'' in only a few years, says William Morin, chairman of Drake Beam Morin, Inc., one of the largest and oldest outplacement firms in the country.

Five years ago, there were only about 80 such firms; today there are about 160, says James Kennedy, president of Kennedy & Kennedy Inc., which publishes the Directory of Outplacement Firms. And the executive director of the Association of Outplacement Consulting Firms, Jeanne O'Donnell, expects ``to take in another five or six members by next year.''

What is ``outplacement?''

Generally, these consulting firms give discharged executives and managers a place to go - a physical location and emotional support - while they look for a new job.

Paid for by the company, such ``transition centers'' come with secretarial help, equipment, and counseling. Seminars teach former executives how to assess their strengths and abilities, develop their r'esum'e writing and interviewing skills, and build a self-marketing plan.

It provides ``a sense of a job while getting a job'' and helps displaced workers overcome a ``heavy sense of failure and loss,'' Dr. Thomas observes.

``It's a very serious business we're in ... several of our clients have committed suicide,'' Mr. Morin says. But he hopes the support given by professional psychologists at most outplacement centers has prevented many more.

The services at some outplacement firms are quite simple, while others are more sophisticated, offering the use of video and computer data services, counselling for spouses, and a whole range of additional features.

Almost all the Fortune 500 companies now use some type of outplacement for many discharged employees. And the number of employees that fall into this category continues to rise.

No longer are high-level executives immune to the prospects of being discarded either, as one-fourth of the office employees at United Airlines found out earlier this year. Other big companies like Gulf Oil, American Telephone & Telegraph, General Motors, and Honeywell are slashing costs by cutting out their middle-level managers.

According to Fortune magazine, 500,000 seasoned managers have been dropped from the payrolls in the last four years. And a Washington management consulting firm estimates that this is too conservative a figure.

``There's no such thing as a safe haven anymore,'' says Joni Freedman, consultant at Executive Group, Inc. in Tampa, Fla.

As a result, outplacement, the ``executive perk of the 80s,'' is in growing demand.

Unlike career counseling, most outplacement sessions are paid for by the companies that do the firing, although about 30 percent also serve individuals, according to the Directory of Outplacement Firms.

A standard ``senior'' outplacement program - for top-level executives - costs between 15 and 20 percent of the individual's base salary. And an intermediate, or ``semi-professional,'' program can cost anywhere from $3,000 to $5,000 per person.

The fee for group seminars, used for large groups of laid-off workers, depends on a whole series of variables, says Vincent Donnelly, president of Bizet & Co., a Pittsburgh outplacement firm.

``Outplacement consulting'' began as a short-term solution, an effort to soften the blow dealt to older executives upon unexpected dismissal, Mrs. O'Donnell says. It does not, consultants emphasize, give clients a job.

Still, a fair number of people are confused about what outplacement is, says J. Bennett Taylor, president of Executive Group Inc. ``Some expect us to get them a job,'' Ms. Freedman of Executive Group notes.

But it does seem to help. ``About 90 percent of the people who come into the program get jobs,'' says Roger Putnam, vice president at Personnel Decisions, Inc. in Minneapolis.

And the industry reports the average client finds work in about 5 months. ``The higher the salary, the longer it takes,'' Mr. Morin adds. A ``good outplacement service should reduce [the time] by one-third to one-half,'' Mr. Putnam says.

But ``it's not unusual for them to go over a year,'' and if executives have severance pay, they can afford to be more choosy, Ellermeyer says.

In a tough market, and with the nature of their clients, consultants say a one-year search is normal. ``It's a full-time job to get a job ... you have to work hard at it,'' Putnam says.

And ``most of the people we work with have never looked for a job, or haven't for a long time,'' says Joseph Janotta, chairman at Janotta & Bray, a Chicago-based outplacement firm.

Outplacement clients tend to expect more - and should - because they tend to be in their mid-40s with salaries over $50,000 a year.

``As employees, we're looking for so much, demanding so much ... but looking in a smaller niche,'' Thomas says.

But companies are meeting this demand, finding it to their benefit as well. It ``helps management manage better,'' Morin says.

And it saves the company money - in legal fees - as well as in costs to internal morale, public relations, and future success, Mr. Janotta says.

More often than not, people stay in jobs they aren't happy with, thinking ``they can't do anthything about it,'' Morin says. And a recent New York Times survey showed a high percentage of Americans frustrated with their current jobs.

``Sometimes,'' Mr. Taylor says, ``a short-term loss - like losing your job - can make significant changes that are good.''