Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


06:58 AM
Connect Directly

Easing the Pain of IT Layoffs

While economically driven layoffs of IT professionals are a sometimes necessary evil, availability of services such as outplacement help employees find new opportunities.

CIOs and other senior insurance executives can be excused for feeling as if they're getting mixed messages about the job market. Despite reports of extensive layoffs in the dot-com marketplace, as well as cutbacks by click-and-mortar companies (including financial institutions), a recent Meta Group (Stamford, CT) study suggests that IT layoffs are not increasing, nor have there been significant changes to IT budgets in 2001. The study also reports that US companies will experience a shortage of about 600,000 workers this year, half of the 1.2 million worker shortage estimated last year.

However, with few signs of an economic upturn, the reality is that insurance IT budgets—and staffs—will be feeling the squeeze. That means IT executives and managers had better brush up on the fine art of firing. The manner in which this procedure is handled, and the types of services made available to the terminated employee, can make a big difference in how the individual (as well as remaining managers and staff) responds to such usually gloomy situations.

Control the Process

According to Chris Elmes, account manager at Boston-based Drake Beam Morin, a human resource solutions provider, the principles for letting an IT professional go are the same as for other employees. "It is crucial that a consistent message be established," according to Elmes. "Managers must not allow the process to get out of hand, because things that are said may come back to haunt them."

Confirming the importance of consistency, Alan Kramer, managing consultant, Drake Bean Morin, warns against saying things along the lines of, "'I really didn't want to do this.' If every manager is consistent and says something like, 'Due to a downturn in revenue we have to pare costs, and unfortunately your job was one of those impacted,' then there is no reason for an employee to ask, 'Why was I treated differently?'" Kramer says.

He continues, "It is amazing how individuals who are being let go hear some things very clearly and don't hear other things at all. Some will get up and try to go right back to their desks thinking that everything is fine."

Although emotions ranging from anger to gratitude can be expected from terminated employees, in general IT professionals have a stronger sense of security than those in other fields, Elmes observes. "I think that they feel more secure because of the high transferability of their technology skills."

Because of this transferability, IT professionals tend to anticipate a fast move to new work, which may or may not be the case in the current market. "Moving quickly to a new job isn't necessarily the case right now because the dot-com world seems to be struggling," says Elmes.

Insurance companies can help bridge the gap between jobs with severance pay, as well as with job outplacement, a service that helps terminated employees find new jobs. "Companies used to be able to offer longer employment to their employees," says John Challenger, chief executive officer of outplacement company Challenger, Gray and Christmas (Chicago). "Employers can't guarantee that today. They can, however guarantee outplacement."

Outplacement also helps ease some of the emotions that terminated individuals go through. "It helps people to work through difficult emotions, whether it is fear and panic, or lack of motivation and sleepless nights," says Challenger.

Helping Hands

The offer of outplacement is pretty much standard throughout the insurance industry, according to Challenger, adding that it is appropriate for all levels of IT workers. "Most people don't become experts at a job search, so if a company helps you work through it, it can mean a lot," he says.

In the past quarter an IT worker looking for a new position found a new job, on average, in 2.25 months, according to Challenger.

"There is still a lot of demand for IT workers, but not like what we saw last year," according to Challenger. "Last year there were 850,000 unfilled positions and now there are 425,000."

Ninety percent of outplaced individuals have found equivalent or better jobs, according to Challenger. Outplacement services are usually paid for by the former employer as part of a benefit package. The cost of a basic outplacement program's "cost can range between $1,000 to $15,000," says Challenger.



--Communicate a consistent message. Understand that someone who is being fired may hear things selectively.

--Don't let the process get out of hand.

--Be honest—tell it like it is. Don't pass the buck.

--Facilitate movement to a new position through realistic severance and services such as outplacement.

---Demand for IT workers remains strong, but not at the levels of the past few years.

Register for Insurance & Technology Newsletters