Is South Africa lagging behind in supportive retrenchment policies?

Harsha Gordhan

So what is outplacement and why is it beneficial?

An outplacement assistance programme forms part of the severance package provided by employers to their terminated/outgoing staff. The purpose is to support individuals through the transition out of a company, by reorienting them with the job market through the provision of practical tools, specialist insights and psychological support.

Aside from providing structure and support during an emotionally difficult time, core aspects of outplacement include career evaluation and guidance, professional CV writing, interview and communication training, assistance in developing networks, personal branding and the creation of an effective online presence.

While some HR departments do try to assist outgoing executives, there is much value in the utilisation of an external provider, where the affected individuals are exposed to market specialists and are able to develop in a neutral, confidential environment.

Risk-mitigation process

From the employer perspective, outplacement is an effective risk mitigation process, protecting the 'employer brand', minimising negative publicity and curtailing potential CCMA action.

Michael Bagraim of Bagraims Attorneys strongly supports the use of outplacement. "During times of corporate change, where staff are impacted on, judges actively look to see what the employer has done to ease the separation or retrenchment exercise. Not only does this demonstrate transparency in legislation governance, but also it embraces the spirit of corporate responsibility. Outplacement is a staple component of retrenchment/restructuring processes internationally, because it is the right thing to do."

According to PWC's 2015 report on Retrenchment and Redundancy Practices in SA, 74% of participants undertook retrenchments over the past five years, with 62% in the last 12 months alone.

Madge Gibson, MD of The Change Initiative (a South African outplacement firm) agreed with the numbers. "South African companies have been very active in restructuring and M&A activity. It's an unfortunate but natural aspect of the global economic cycle."

However, corporate retrenchments are not always the result of financial difficulty, Gibson explained, "As markets compete and evolve, companies need to refocus and restructure in order to remain competitive and relevant. Retrenchments are often a by-product of that activity."

According to the PWC report, the most prominent reason for South African retrenchments has been a decline in operations at 51%, followed closely by restructuring, optimisation, centralisation and cost savings at 44%.

More relevant HR policies

Hand-in-hand with corporate change comes the need for more relevant HR policies to support those affected. Internationally, outplacement services often fall under 'training and upskilling processes', which are supported by the SETAs.

One can hope that with the South African governments focus on getting people back to work and retaining skilled talent, that similar state support will be more widely applied in SA.

Regardless of whether government support happens or not, the responsibility for ensuring international best practice in HR processes lies in the hands of the employer.