Outplacement Firms Struggle to Do Job

(From the Wall Street Journal) When PepsiCo Inc. laid off administrative assistant Sonia Service in February 2008, she thought she'd have a leg up on her next job. Pepsi referred Ms. Service to an "outplacement" firm that specializes in helping laid-off employees get new work.

Eighteen months later, Ms. Service says outplacement was a waste of time. She says the job-search training was rushed. During a practice lunch interview, a coach chided her for ordering cranberry juice, saying it could be interpreted as a sign of a urinary-tract infection, she recalls. Her resume was sent to a prospective employer with a cover letter that included a typo and bore her signature -- which she says she never saw.

"I am embarrassed," says Ms. Service. She still hasn't landed a job.

As demand rises in the $4 billion-a-year outplacement business, providers increasingly offer standardized services, which some workers say offer little value. Businesses anxious to shed former employees quickly and cheaply impose time limits that hamper effectiveness. Few employers track whether outplacement works.

Skeptical employees are voting with their feet: Executives estimate about 40% of workers offered outplacement services don't show up; some ask for cash instead.

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