All You Need to Know About Outplacement Services Costs in Canada

If you’re considering the adoption of outplacement as part of your offboarding strategy or severance agreements, you’re probably researching outplacement services costs. You should know that, while the services offered by most outplacement providers are similar, the combination of your organization’s needs and each provider’s offerings will have a decisive impact on the amount you’ll pay at the end of the day.

In this article, we’ll dig deeper into outplacement services costs, the elements that make them vary, and what to look for (and avoid) in your next outplacement partner, so you can make sure you’re receiving the best value for your money.

What outplacement services costs should I expect?

In a nutshell, it depends. Any provider will tell you that outplacement services costs will vary according to many factors, like the outplacement services they intend to provide to individuals and the position of each terminated employee in the company – for example, an executive outplacement program will be more expensive than one for people in entry-level jobs.

These are the most common elements that determine outplacement services costs:

• Number of participants to be enrolled
• Position of the former employee in the company
• Level of support and personalization
• Skill level and experience of the career coaches

As for actual fees, if you search the internet, you’ll see providers in Canada advertising all kinds of pricing, such as “one-half to one-third the cost of traditional outplacement solutions.” However, this plan is a “virtual on-demand format,” excluding more personalized services like one-on-one coaching sessions. If this option is available, making the whole program more effective, the costs will almost certainly increase, pushing it closer to the pricing of other firms.

Be that as may, in general, outplacement services costs have recently gone down thanks to technological advancements in the job market, so it’s safe to say that the more aligned your provider is with those new technologies, the lower the final cost will be. However, the lesson here is: knowing how much an outplacement partner will charge you isn’t enough. It’s more important to assess your company’s needs and, with that information, get in touch with the firms that stand out and discuss how they can support your goals.

Do term limits impact outplacement services costs?

If two outplacement firms provide you with equal price estimates, but one of them establishes term limits in their contract, avoid it. Term limits mean that their services will only cover a limited time frame (typically around three months), even if the employee doesn’t land a job within that period. If that happens, it will impact your outplacement services costs since you’ll be investing in a service that won’t bring the desired results – and it will leave your former employee in the cold.

You don’t have that concern at Careerminds. Our program is “until placement,” meaning we’ll support participants until they find their next job, regardless of how long it takes. We believe that, for outplacement services, a people-first approach is synonymous with delivering results. After all, why pay for a service if you’re uncertain it will yield results?

Should you pay retainer fees for outplacement services?

It’s common to see traditional outplacement firms charge retainer fees, meaning that you’ll pay them even when you don’t use their service. Those providers will use retainer fees to keep your company as a customer for as long as possible, under the pretext that they’ll be there for you whenever you need them in exchange for a recurring payment. However, retainer fees are an outdated practice and an unnecessary spend with no real benefits for your company.

At Careerminds, for example, we do not charge retainer fees. We’re modern, tech-driven, and in touch with the latest trends and practices in the job market, so we’ll provide your company with our services just when you need us – and charge only for the service used. You can also rely on us as strategic partners to address future outplacement needs without drawbacks or extra fees. This way, you can use the money you’d pay someone for a retainer fee in other strategic areas.

What are the costs of not offering outplacement services?

While Canadian law doesn’t require companies to provide terminated employees with outplacement services, organizations resort to it as part of a more human approach to their workforce reduction strategies. Even so, many people may ask: why would a company spend money on a service offered to individuals no longer working for them? The reason is that the benefits of outplacement for companies and participants are worth the financial cost. Not offering outplacement could present you with higher litigation risk, negative impacts on your reputation, and lower productivity. Let’s see some of the main reasons why outplacement is beneficial:

Increasing litigation exposure

Under Canadian law, employees have the right to file complaints or pursue civil action if they consider their former company dismissed them wrongfully or didn’t comply with its financial obligations. Whether their complaint is fair or not, companies can face severe economic and reputational damage if they have to defend themselves in court or with the labour program. Also, your current workers might feel encouraged to do the same if they’re laid off in the future.

In the end, even if your organization prevails in a lawsuit, the process will be both costly and time-consuming. On the other hand, if you offer outplacement services in a severance package, the dismissed employees will probably be happier, lowering the risk of litigation. Therefore, the costs of outplacement are far less than the costs of going to court.

Risking negative exit claims

When you don’t offer support and guidance for departing employees, chances are they’ll be angry and hold grievances against your company. They may decide not to share work-related information or contribute during the transition period. When that happens, overall productivity and efficiency could suffer, which will have undesired effects on your organization’s bottom line. 

However, if you provide them with outplacement services, you’ll be showing those individuals that you’re committed to their transition to the next chapter in their careers – which could possibly be even better than their experience with your company. This proactivity will help your departed employees to take their job loss a bit more lightly and reduce the chances of negative exit claims.

Damaging brand reputation

There’s no denying that social media has a massive influence today and, in the event of a layoff, your company’s hard-earned reputation could be destroyed with just a few LinkedIn posts or comments mentioning its insensitivity in the face of job losses. That’s understandable, if you don’t offer people any support. This could damage your organization’s public image and finances, since the news of “mass layoffs” could put shareholders on the run.

In contrast, when you make it clear that outplacement services are part of your people-first culture, your company could become a magnet for top talent searching for new opportunities. This can also result in better scores and reviews on platforms like Glassdoor, which translates into more profitable business for your company (by the way, you should know that Careerminds clients score 16.5% higher, on average, on Glassdoor reviews).

Unhappy remaining employees

Layoffs have the power to impact not only the departing individuals but also those who stay in the company. Just as your external reputation could suffer if your company is perceived as cold during a layoff, your internal image can be damaged too, with the remaining employees taking sides against your organization, lowering the staff morale and causing a decrease in efficiency.

By offering outplacement services, you’ll send your surviving employees a reassuring message. You’ll let them know that if things change and a further layoff is necessary, they’ll be taken care of to find their next opportunity. This proactive attitude will lower the stress of those who stay and make your workforce more secure and happy, as employees know they’ll be treated with care and respect.

Bad business results

This aspect is implied or mentioned in some of the items above, but it’s time to make it clear: not offering outplacement services will impact your business results. Top talent will leave, recruiters will have a hard time finding new staff to fill your positions, satisfaction rates will suffer, and so will productivity and efficiency. Outplacement is a reality in the job market, and not providing it will leave your organization behind the competition.

Workers today are more conscientious than ever about corporate culture and how it reflects in companies’ treatment of their staff. With outplacement services at their disposal, they’ll be more engaged, happy, secure, and taken care of. Studies show that this has a clear business impact.

Statistical Insight:
Highly engaged teams are 14% more productive and 23% more profitable.
Source: Gallup, State of the Global Workplace: 2022 Report

Outplacement services costs: main takeaways

In this article, we saw that outplacement services costs are essentially tied to the kind of support you want to provide to your departed employees, the number of people that were terminated, and the positions they had in your company. Besides that, those costs depend on the firm you decide to partner with, the kinds of services they offer, and the conditions that apply to them.

As we’ve seen, you must avoid retainer fees and term limits since they bring no benefits to your organization or the program’s participants. Once all this is clear, the next step is to find the best-suited outplacement firm to help you achieve your goals, ensuring you’re getting the best return on your investment.

If you’re looking for a modern outplacement provider with a result-oriented mindset and personalized service, with no retainer fees and no term limits, check out our outplacement offerings at Careerminds. We offer flexible, tailored outplacement services for all kinds of organizations. Book a free live demo with one of our experts to see how we stand out!

Rafael Spuldar

Rafael is a content writer, editor, and strategist with over 20 years of experience working with digital media, marketing agencies, and Tech companies. He started his career as a journalist: his past jobs included some of the world's most renowned media organizations, such as the BBC and Thomson Reuters. After shifting into content marketing, he specialized in B2B content, mainly in the Tech and SaaS industries. In this field, Rafael could leverage his previously acquired skills (as an interviewer, fact-checker, and copy editor) to create compelling, valuable, and performing content pieces for various companies. Rafael is into cinema, music, literature, food, wine, and sports (mainly soccer, tennis, and NBA).