PART I
Outplacement Research and Expertise

Two papers prepared for the workshop provide an overview of the psychological research related to the effects that outplacement practices can have on employees and on reemployment, as well as the research on the effectiveness of labor market programs designed to achieve reemployment. Paper authors include: Connie Wanberg of Kansas State University and Leaetta Hough of the Dunnette Group; and Duane Leigh of Washington State University. Amiram Vinokur, a social psychologist and research scientist at the Institute for Social Research at the University of Michigan, presented the results of his research on the JOBS Project.

OVERVIEW

In "Unemployment and Outplacement: Evidence and Insights from an Organizational Psychology Perspective," Connie R. Wanberg and Leaetta M. Hough present evidence that outplacement and unemployment are stressful life events that can have a negative impact on individual and family health. They note that individuals vary in their abilities to cope with job loss, although there is evidence that the way an organization handles outplacement can mitigate individuals' negative emotions. Wanberg and Hough add that this applies to individual employees who are staying with an organization (survivors), as well as those who are leaving. As the workshop model suggests, a desired outplacement result for individuals is the effective management of stress, and it appears that the way the organization manages outplacement practices can help



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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop PART I Outplacement Research and Expertise Two papers prepared for the workshop provide an overview of the psychological research related to the effects that outplacement practices can have on employees and on reemployment, as well as the research on the effectiveness of labor market programs designed to achieve reemployment. Paper authors include: Connie Wanberg of Kansas State University and Leaetta Hough of the Dunnette Group; and Duane Leigh of Washington State University. Amiram Vinokur, a social psychologist and research scientist at the Institute for Social Research at the University of Michigan, presented the results of his research on the JOBS Project. OVERVIEW In "Unemployment and Outplacement: Evidence and Insights from an Organizational Psychology Perspective," Connie R. Wanberg and Leaetta M. Hough present evidence that outplacement and unemployment are stressful life events that can have a negative impact on individual and family health. They note that individuals vary in their abilities to cope with job loss, although there is evidence that the way an organization handles outplacement can mitigate individuals' negative emotions. Wanberg and Hough add that this applies to individual employees who are staying with an organization (survivors), as well as those who are leaving. As the workshop model suggests, a desired outplacement result for individuals is the effective management of stress, and it appears that the way the organization manages outplacement practices can help

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop achieve this result. The authors also draw distinctions between outplacement practices undertaken by the organization as part of the management process (planning, communicating, resourcing the transition, etc.) and those undertaken for departing individuals in finding jobs (emotional counseling, career assessing and planning, training, etc.). They review some empirical studies of outplacement practices, emphasizing that such evaluation is scarce. Also hard to find is information on how to evaluate the effectiveness of outplacement services offered by particular consultants. Finally, Wanberg and Hough review evidence on how the effectiveness of outplacement practices may vary with individual demographic differences (age, gender, race, etc.) and individual social psychological differences (self-esteem, limited support networks, scarce financial resources). The implication is that outplacement practices may require some customization in order to have the desired results for different groups or individuals. The second paper, "Reemployment: Labor Market Barriers and Solutions," by Duane E. Leigh provides an overview of publicly funded labor market programs designed to assist outplaced (or displaced) workers in getting reemployed as quickly as possible in jobs that offer earnings potential similar to the jobs lost. He summarizes these programs in four categories: programs to speed up reemployment, programs to replenish earnings, programs to replenish human capital (training), and programs for self-employment. Leigh reviews considerable evidence showing that job search assistance programs designed to speed up reemployment are effective and relatively low in cost. These programs encompass many of the resources typical in organizational career transition centers: career testing and guidance, workshops on job search skills, centers for job posting and advertisements, and some counseling. Job search assistance programs appear to be especially effective in speeding up reemployment if they are used shortly after a worker becomes unemployed. Leigh reviews the mixed evidence on the effectiveness of a number of other programs for reemployment, income replenishment, and training. He notes common problems in drawing conclusions about these programs. One is that unemployed people do not use the programs frequently enough, as is the case for relocation and self-employment programs. Another is that they do not use intervention programs early enough, often waiting until their unemployment or severance benefits run out before beginning job searches. A third problem is that employers do not use the programs frequently enough, as is the case for assisted on-the-job training programs. These are problems all organizations are likely to face in their efforts to outplace employees. Leigh's summary suggests that organizations should definitely fund transition centers and job search assistance for departing employees and concentrate on getting employees to use

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop these services as soon as their outplacement status is known. Finally, Leigh reminds organizations of the public resources that can be found in their communities. Part I ends with a summary of Amiram Vinokur's presentation on the JOBS Workshop and Project at the Institute for Social Research, University of Michigan. This workshop has been very successful in assisting recently unemployed people to find new, high-quality jobs and in energizing and motivating people to continue looking for work in the face of many setbacks. The importance of job search assistance has been echoed in all the papers, and the experimental evidence presented by Vinokur reinforces its importance. Vinokur outlines some of the unique features of the JOBS Workshop that its creators believe to be responsible for its success.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop UNEMPLOYMENT AND OUTPLACEMENT: AN ORGANIZATIONAL PSYCHOLOGY PERSPECTIVE Connie R. Wanberg, Kansas State University, and Leaetta M. Hough, The Dunnette Group, Ltd. Unemployment rates have been on the decline in the United States, and the number of layoffs has appeared to be on the decline as well. Then, in January 1996 AT&T announced that it was laying off 40,000 employees with 70 percent of the layoffs scheduled during the coming year (Sloan, 1996). AT&T is not alone in its intention. Apple Computer expects to lay off between 500 and 2,000 of its 13,000 employees in the next year (Manhattan Mercury, 1995). The Department of Defense is also in the midst of laying off thousands of military and civilian employees (Ricks, 1994). Indeed, the Army has reduced its active-duty force from approximately 710,000 to 540,000 and expects to cut an additional 45,000 positions over the next three years (Harvey, 1995). Restructuring, with its apparently inevitable downsizing, continues at a rapid pace as organizations in both the public and private sectors struggle to respond to rapidly changing political and economic conditions. In fact, the downsizing phenomenon has become so pervasive that we may not always associate it with unemployment. Unfortunately, we thereby underestimate the overall impact of downsizing. The impact of losing one's job and the resulting unemployment is enormous. For most, it represents a crisis. Although no two persons experience such loss in exactly the same way, if it occurs, it is likely one of the most significant events in an individual's life. In this paper, we review the psychological impact of unemployment for the individual, the trend in this country for organizations to utilize outplacement consultants, and the content and relative effectiveness of outplacement services. The Psychological Impact of Unemployment There has been a great deal of research in the psychological literature focused on the impact of unemployment. These studies, going back to the Great Depression, have shown that unemployment tends to be a stressful life event, having an impact on individuals' psychological and physical health and on family relationships. It is common for individuals to experience feelings of anxiety, depression, shock, uncertainty about the future, anger, bitterness, resentment, shame, and loss of self-respect following job loss (e.g., Eales, 1989; Fineman, 1983; Hepworth, 1980; Swinburne, 1981). Individuals may suffer from increased physical symptoms because of the strain of job loss or because of financial deprivation and resulting poorer nutrition, housing, clothing, and heating (Kessler et al., 1987; Warr

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop and Jackson, 1984). O'Brien and Kabanoff (1979) reported that unemployed participants in their study experienced a higher number of physical symptoms including allergies, bronchitis, coughs, colds, and shortness of breath, than an employed comparison group. Despite the fact that unemployment tends to be a stressful life event, there are wide individual differences in the ability to cope with job loss. Recent research has investigated what factors influence individuals' reactions to unemployment. Financial hardship (having difficulty making ends meet) and high employment commitment (meaning work is very important to the individual) have been associated with lower well-being during unemployment (see Jackson et al., 1983; Turner et al., 1991). Social support, high self-esteem, perceived control over the situation, and high time structure (the ability to keep busy and productive during unemployment) have been associated with higher well-being during unemployment (see Feather and Bond, 1983; Latack et al., 1995; Turner et al., 1991). The procedures used to manage a layoff may also affect emotional reactions to job loss. In a sample of recently laid-off individuals, Bunce et al. (1996) found low levels of mental health among those who (1) felt there had been bias in the layoff decision-making process, (2) had not been given an adequate explanation about why the layoff was occurring, and (3) were not given the opportunity to appeal their termination. In contrast, individuals who felt their organization tried to be fair and just during the layoff process experienced higher levels of well-being following job loss. While a great deal of research has focused on the impact of unemployment for individuals who have lost their jobs, fewer studies have assessed how organizational layoffs may impact individuals who are retained by the organization (layoff survivors). A recent series of studies has shown that organizational layoffs may have a substantial impact on layoff survivors (see Brockner, 1988). Productivity and job satisfaction may decrease among survivors, due to excessive workloads, feelings of guilt over the layoffs of coworkers, fear of future layoffs, and reduced commitment to the organization. For example, a study conducted at West Point found a trend for officers not laid off in the military's current downsizing efforts to show reduced commitment to the service (Ricks, 1994). Organizations that hope to reduce the impact of layoffs on both victims and survivors should strive to make unbiased, ethical, and accurate layoff decisions, communicate information about the layoff and layoff decisions clearly and respectfully, give employees advance notice of the layoff, provide opportunities to correct errors, and provide adequate severance or outplacement benefits (see Konovsky and Brockner, 1993). In recent years, outplacement firms have begun to play an increasingly large role in helping organizations to effectively plan and conduct

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop their downsizing efforts and in assisting laid-off individuals in securing employment. According to Pickman (1994), there are at least 300 outplacement firms in the United States, and revenues within these firms have increased dramatically in the past decade. A recent survey by the Association of Outplacement Consulting Firms International showed that 96 percent of Fortune 1,000 companies use outplacement firms (Mike Corbin, personal communication, November 11, 1995). Whereas in the past outplacement services were provided solely to senior executives, outplacement today is a service appropriate for individuals at all organizational levels (Sweet, 1989). The remainder of this paper discusses outplacement practices, the effectiveness of outplacement efforts, recommendations for choosing a reputable outplacement firm, the role of individual differences in the provision of outplacement services, and future research needs relevant to the provision of outplacement services. Outplacement Programs and Practices Outplacement is both an organizational process and an individual process. From an organizational perspective, outplacement includes (a) identifying individuals whose employment is to be terminated, (b) training the people who inform employees of their termination, (c) informing employees of their termination and their severance/benefits package, (d) counseling survivors to reduce the negative effect on morale, (e) communicating a message to the community designed to preserve the company's image, and (f) planning the strategy, policies, procedures, timing, and logistics of the entire organizational process. From the perspective of the individual whose employment is being terminated, needed outplacement services include (a) emotional and social support to cope with the situation and to stay motivated and committed to the job search, (b) information and advice on making financial decisions and adjustments, (c) guidance with examining and developing career goals, (d) information, advice, training, and feedback on planning and conducting a job campaign, and (e) administrative support. Outplacement consultants typically refer to the organization as the client because it is the organization that pays for both the organizational and individual outplacement services. However, the organization and individual whose employment is terminated have different and sometimes conflicting needs. Services Available to the Organization Outplacement consultants provide a variety of services for contracting organizations. The client organization determines the comprehensiveness of services desired.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop Planning the Process The strategies, policies, procedures, and timing of outplacement activities and events are very important. Considerable planning and coordination are required. One decision is, of course, whether or not to have outside consultants or internal staff provide the organizational and individual outplacement services. Consultants are sometimes brought in early enough to help the organization plan the entire outplacement process. Deselection Decisions The organization must decide on the criteria and processes it intends to use to identify individuals whose employment is to be terminated. The organization needs to decide how many and who to terminate and for what reason. (If an employee is terminated for cause, i.e., termination is performance-based, different procedures are typically needed.) The organization should think strategically about the skills and abilities needed in its workforce to compete in the future. The strategies used to decide who and how many people to terminate should be procedurally fair, perceived as fair, and legally defensible. Some outplacement consultants provide advice on performance appraisal procedures and strategic planning that may help the organization develop and implement fair and defensible outplacement strategies and policies. Training the Person Who Conducts the Termination Interview The person assigned to conduct a termination interview should receive training. Such an assignment is very difficult and uncomfortable. It can be done poorly and thereby increase the trauma for the person whose employment is being terminated as well as increase the probability of lawsuits and negative reactions from other employees and the community when word spreads about how it was ''mishandled.'' Many outplacement consultants provide training and advice on how to conduct the termination interview. Conducting the Termination Interview The employee needs to be informed of his or her termination, the reasons for it, and his or her severance package and benefits. Ideally, the person will also have the opportunity to meet immediately with an outplacement counselor to begin the process of adjusting to the new life circumstances and finding new employment. Counseling Survivors Those persons who are not terminated need to be informed of what has or is about to occur. If outplacement services are provided to persons who are terminated, part of the communication can focus on the quality of the treatment the individuals are receiving. The social conscience of the organization can be legitimately emphasized. The organization also needs to develop a strategy for helping the survivors

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop adjust to the situation. Part of the adjustment may involve performing other or more work, duties that were previously performed by the persons who were terminated. Survivors may also need to adjust to what is perhaps a new reality—the employment contract is no longer a guarantee of job security. Some outplacement consultants provide advice on what and how to communicate with the remaining staff, some provide advice on how to restructure and reassign work to the remaining staff, and some provide counseling for those survivors that remain with the company. Communicating with the Community An organization is typically concerned about its public image and correctly perceives a layoff, especially one that will affect the community, as having a likely negative effect. The outplacement consultant may provide advice about procedures that aid the community in responding to the situation as well as help draft the message that is released to the public. Services Available to the Individual Outplacement consultants provide a variety of services for the individual whose employment has been or is being terminated. The services may be provided to the individual in a one-on-one or group setting. Again, the client organization typically determines the comprehensiveness and type of service provided to individuals who are being laid off. The level of services usually depends on the organization's budget, as well as the employee's organizational level, length of service, and reason for termination (Davenport, 1984). Emotional and Social Support Reactions to involuntary job loss have been likened to the grieving process. Schlossberg and Leibowitz (1980) identified five stages: disbelief, sense of betrayal, confusion, anger, and resolution. Other people have identified other, but similar, stages. Whatever labels are attached, the individual needs to cope with the depression, anxiety, and loss of self-esteem that are well-documented reactions to losing one's job. Outplacement counselors typically provide emotional support important to an individual struggling to cope with his or her emotions. Outplacement consultants advise the contracting organizations that, the sooner this process begins, the more quickly the activities that focus on reemployment can begin. Indeed, outplacement consultants are sometimes available as soon as employees have been informed of their termination. Empirical support has been shown for the need for outplacement services to help individuals resolve some of their feelings about job loss. Spera et al. (1994), for example, found that unemployed professionals

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop who were asked to write about their thoughts and emotions regarding their job loss for 20 minutes a day for 5 consecutive days were reemployed faster than two comparison groups. Spera et al. noted that the writing generated by the professionals was full of anger and hostility. They suggest that perhaps the writing helped the individuals work through their negative feelings, and that perhaps it helped the individuals to present a more positive outlook during job interviews. One's job or work is for many people an important element in shaping their identity, self-worth, and status. Thus, one of the difficult events an individual encounters is informing friends and family. Many outplacement consultants help the individual through this stage and even provide counseling services to spouses and significant others. Once family and friends are informed and are coping with the news, they can become important contributors to a positive employment outcome. Social support has been shown to be a very important factor in the individual's self-esteem and motivation to seek and persist in seeking employment (Caplan et al., 1989; Kahn and Antonucci, 1981; Vinokur and Caplan, 1987; Wanberg et al., in press). As Caplan et al. (1989) demonstrated, consultants, peers, friends, and spouses can provide social support that is critical to the employment outcome. Another variable that impacts mental health is the ability to keep busy and structure one's time. Hepworth (1980), Feather and Bond (1983), Kilpatrick and Trew (1985), and Wanberg et al. (1996) have all shown that activity and structured and purposeful use of time are positively associated with mental health. The outplacement consultant has an important role in encouraging and supporting the individual in structuring his or her time effectively. Financial Decisions and Adjustments The individual often has a number of financial decisions to make regarding his or her severance package and benefits. Outplacement consultants often provide information about the implications of different choices or provide access to others who can provide similar advice. The individual also needs to consider the future financial impact of his or her unemployment. This typically involves changing one's lifestyle to one that requires less income, at least temporarily. Outplacement consultants often provide advice on how to assess the impact and kinds of adjustments that may be required. Career Planning Outplacement consultants provide important assistance in working through the many career planning issues that arise following job loss. An outplacement consultant can help individuals examine their strengths and weaknesses, learn about different jobs and careers, and match their needs, skills, and abilities with the characteristics and

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop requirements of different jobs and careers. The outplacement consultant may provide the individual with (a) questions to think about and answer (when the service is individualized, this is typically an interview), (b) tests and inventories that measure interests, needs, personality characteristics, skills, and abilities, (c) detailed descriptions and profiles of jobs and careers that include information about required skills and abilities and satisfied interests and needs, (d) directories of companies, and (e) data banks of vocational and job information. Ideally, outplacement consultants are trained professionals in providing vocational and career guidance. If effective, the outplacement experience can be an opportunity for an intense, positive self-examination of life goals and how such goals can be realized. Planning and Conducting a Job Campaign Once the target job or career is identified, the individual must develop a job campaign plan designed to obtain job leads, market oneself, and negotiate employment offers. Each one of these involves significant effort on the part of the individual. Setbacks and rejections are difficult and can be demotivating. The outplacement consultant provides support and inoculation to help the individual remain focused and motivated even when encountering rejection (Caplan et al., 1989). In addition, the consultant provides training and information needed to plan a job campaign, market oneself, obtain job leads, and negotiate offers effectively. Planning the search, marketing oneself, and obtaining job leads includes preparing a resume, networking, searching databases, reading newspaper advertisements, and interviewing. A plan with completion dates is helpful for focusing the individual on constructive activities throughout this phase. One of the most basic of outplacement services is help in preparing a resume. A good resume highlights the individual's special qualifications for the job. Another important feature of outplacement services is a resource library that contains reading materials and databases or access to databases on industries, companies, and jobs. The individual utilizes these resources, along with networking, to identify job leads. The outplacement consultant provides information and training on how to network and use the resource library effectively. The majority of unemployed managers and professionals find employment through networking. Although networking is not as important for clerical and blue-collar individuals, it is still an essential skill for individuals at all levels. Outplacement consultants also provide training in effective interviewing skills, on negotiating the particulars of a job offer, and how to evaluate job offers.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop Administrative Support Throughout the outplacement process, administrative support may be provided to the individual. The extent of support depends on the level of the position the individual held with the client organization. Typically, the higher the position in the organization, the more generous the administrative support provided. At a minimum, administrative support includes word processing capabilities to prepare resumes and letters. At higher levels of administrative support, phone answering service, secretarial support, personal computers, fax and copy machines, and individual office space are provided. Summary It seems evident that outplacement consulting has the potential to be beneficial to both organizations and individuals. The contracting organization receives professional advice on planning and communicating information about their layoffs, and unemployed individuals receive emotional support and assistance with financial, career, and job-seeking issues. Outplacement purports to reduce the impact of unemployment on the individual, speed the process of reemployment, and decrease the likelihood of lawsuits targeting the downsizing organization. Yet the critical reader may wonder to what extent outplacement services have been evaluated regarding their ability to adequately achieve such outcomes. The next section focuses on measures that can be used to assess the effectiveness of outplacement services, summarizing empirical research that has focused on this issue. Evaluating the Effectiveness of Outplacement Programs Empirical research assessing the effectiveness of outplacement programs and services is important and necessary, although few evaluation studies have been conducted (Leana and Ivancevich, 1987; Leana and Feldman, 1992; Kozlowski et al., 1993). Organizations that purchase outplacement services want to know to what extent they are effective and worth the money they cost. Unemployed individuals do not want to waste their time and efforts participating in services that do not benefit them. The Institute of Social Research (ISR) at the University of Michigan has conducted perhaps the largest and one of the few studies available on the effectiveness of intervention programs for the unemployed (see Caplan et al., 1989; Vinokur et al., 1991). The study focused specifically on evaluating the effectiveness of an intervention project known as the JOBS Program. The goal of the JOBS Program was to reduce the impact of

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop Worker Profiling The New Jersey Unemployment Insurance Reemployment Demonstration provided the empirical basis for congressional action taken in 1993 to require states to establish a system for profiling new unemployment insurance claimants. The intent of profiling systems is two-fold: early identification of displaced workers who are at risk of exhausting their unemployment insurance benefits and a linking of these individuals with appropriate reemployment services in a timely fashion. The 1993 legislation also requires claimants referred to reemployment services to participate in these services as a condition of eligibility for unemployment benefits. The Department of Labor recently initiated a major 4-year study of state profiling systems. Hawkins et al. (1995) presents interim findings from Phase I of the study focusing on implementation of profiling systems in Delaware, Florida, Kentucky, Maryland, New Jersey, and Oregon. (Phases II and III will present net impact estimates.) The Phase I evaluation is based on the following sources of information: site visits of the research team to each of the six states, information collected from profiling proposals and administrative reports, and a customer satisfaction survey of profiled and referred claimants in the six states. Drawing on this information, the profiling systems of most states were found to provide a sequence of services including a group orientation session; an assessment interview, usually provided in a one-on-one setting; and the development of a service plan. Four states, in addition, supplied claimants with a job search workshop. Finally, all of the local sites included referrals to other services, generally referrals for education and job skills training, but also for such supportive services as child care. The survey of customer satisfaction conducted during the summer of 1995 has the objective of providing states with early feedback on claimants' satisfaction with profiling services. Keeping in mind that profiling systems are quite new, Hawkins et al. (1995:E-9-E-10) report the following findings: Older workers generally were more satisfied with services than younger workers, perhaps because the program helped them address the added challenge they face in finding appropriate reemployment. Overall satisfaction seemed not to be related to claimants' previous wage level or job tenure. Among specific services, claimants rated development of an individual service plan as one of the most helpful. Moreover, those who reported receiving assistance in developing a plan were significantly more satisfied with the program overall than other claimants.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop More important than the receipt of any particular service was the intensity of services received. Claimants who received more types of reemployment services and those who received more hours of services were substantially more satisfied with their profiling program overall. Training Vouchers An important provision of the Reemployment Act of 1994 would have encouraged displaced workers to enroll in longer-term education and training programs by allowing eligible workers to qualify for up to one year of income support beyond the usual six-month maximum for unemployment insurance benefits.4 Although the act failed to achieve congressional approval, President Clinton has continued to emphasize the importance of long-term skill training. Specifically, he proposed in his 1995 State of the Union Address the elimination of essentially all adult training programs, with the money saved to be shifted to "skill grants" that eligible workers could use to pay for training programs of their choice lasting up to two years. In 1992 the New Jersey legislature authorized the Workforce Development Partnership Program, an important component of which is a voucher-based training program targeted to displaced and economically disadvantaged workers. (The other two key components are additional unemployment benefits during training and grants to employers for customized training services.) The maximum training grant per person is $4,000, with an additional grant of up to $1,000 if the participant requires remedial education prior to training. Training services must be provided by an approved service provider, which in practice means a proprietary school or 2-year community college. Using the unemployment insurance system, newly displaced workers are processed through a series of screens before they are admitted to the Individual Training Grant Program. The complexity of the screening process can perhaps best be visualized in the series of steps shown in Table 4 (for more detail see Benus and Grover 1995: Exhibit 1). A key element of the training program is the development of an individualized job placement plan designed to help place participants in training-related jobs. Following the completion of training, participants are also invited to attend a postprogram job search seminar. Descriptive statistics supplied by Benus and Grover (1995) in an initial report of the evaluation study indicate that of over 900,000 new unemployment insurance claimants during the July 1992 to October 1994 period, about 9 percent attended a Workforce Development Partnership Program orientation meeting, and about 14 percent of those oriented received an individual training grant. The demographic characteristics of

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop TABLE 4 Screening Process for the individual Training Grant Program 1. Benefits Rights Interview. Displaced workers file for unemployment insurance and are informed about the Workforce Development Partnership Program and other training options at their benefit rights interview. 2. Orientation. Those claimants who indicate an interest in training are invited to attend an orientation meeting at a local Employment Service office at which a more in-depth description of training options is provided. At the end of the meeting, a questionnaire is completed by all individuals still interested in training. 3. Career Reemployment Seminar. Individuals who, based on their questionnaire responses, meet targeting criteria are scheduled for a half-day career reemployment seminar. A testing and assessment interview may be part of this seminar. 4. Meeting with Counselor. A final determination of eligibility for the program is made at this meeting. 5. Agreement on an Employment Development Plan and a Training Contract . For individuals judged to be eligible, the client and counselor work out an employment development plan describing the client's training and employment goals. Then a training contract is agreed to which details the type, length, cost, and dates of training. 6. Training Begins.   SOURCE: Adapted from Benus and Grover (1995:Exhibit 1). claimants oriented and grant recipients are quite similar. Compared with the typical unemployment insurance claimant, however, the grant recipients are more likely to be female, to be between the ages of 30 and 49, and to possess a terminal high school diploma or equivalency certificate. Blacks are overrepresented among grant recipients, and Hispanics are underrepresented. Approximately half of all trainees planned to enroll in a short training program of six months or less, and another one-quarter planned enrollment in programs lasting more than one year. About twothirds of all grants ranged between $3,000 and $4,000. Net impact estimates for the individual training grant program will be available in subsequent reports. Earnings Subsidies Motivating the earnings subsidy as a policy intervention to assist displaced workers is evidence such as that provided by Jacobson et al. (1993a, 1993b) showing that displaced workers frequently suffer very large earnings losses. Because the gap between earnings losses and current

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop levels of public assistance is so large, the authors (1993b:160–69) suggest that alternative policy measures should be investigated, and their preference is for an earnings subsidy program.5 An earnings subsidy program works by paying reemployed displaced workers some fraction of the gap between their pre-and postdisplacement earnings. In this way, the greatest level of assistance flows to those suffering the greatest earnings losses. In addition, the subsidy is restricted to those who find a new job, so that displaced workers have an incentive to return to work quickly. The unemployment insurance system also targets the greatest assistance to workers who face the most difficult transition, since workers who are unemployed longer tend to have both more difficult transitions and to receive the most assistance. However, unemployment insurance has a built-in work disincentive, since assistance ends at reemployment. This work disincentive is especially strong for displaced workers who suffer large earnings losses because the benefits are based, in part, on predisplacement earnings. Thus, regular unemployment insurance benefits might be as much as 75 percent or even higher of the wages that such workers could expect to earn in their postdisplacement job.6 The Canadian government is currently conducting an experiment at five sites to test the effectiveness of an earnings subsidy program for displaced workers. As described by Bloom et al. (1995), the experiment is restricted to a carefully selected subset of unemployed people who must be new unemployment insurance claimants and have been employed continuously during the 3 previous years. Claimants who meet these criteria are randomly assigned to treatment and control groups. Those in the treatment group receive an explanation of the earning subsidy plan. They then receive the subsidy if they become reemployed in a full-time job with a new employer within 26 weeks of the date of the subsidy offer, and the reemployment job pays less than the predisplacement job. The subsidy offsets 75 percent of the claimant's weekly earnings loss up to a maximum of $250 per week for a period not to exceed 24 months from the time of the subsidy offer. To consider an example offered by Bloom et al. (1995), suppose that a member of the treatment group lost a job that paid $400 per week and then found a new full-time job that paid $200 per week within six months after receiving the subsidy offer. He or she would receive a weekly subsidy of $150 (three-quarters of the earnings loss of $200), providing a total weekly compensation of $350 for working full-time. In contrast, unemployment insurance benefits for this individual would be $220 per week. A clear work incentive exists since the earnings subsidy plan provides the claimant an earnings replacement rate of 87.5 percent for up to 24 months

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop as opposed to a replacement rate of 55 percent offered by regular unemployment insurance for up to 50 weeks. Bloom et al. report that, as of fall 1995, the earnings subsidy program is up and running in all project sites. Approximately 5,000 claimants are to be included in both the treatment and control groups. Program net impact estimates will eventually be obtained from a follow-up survey collecting information on employment and earnings which will be administered to sample members at 15 months after they enter the study. Summary and Policy Implications This paper provides an overview of major policy proposals put forward to assist the reemployment of displaced workers, subject to the limitation that the proposals discussed have been or are currently being evaluated. Broadly speaking, these proposals fall into one of two categories: policies to speed up reemployment and policies to replenish lost earnings potential. Self-employment programs, which do not fit comfortably under either heading, are also considered, but the available evidence suggests that relatively few displaced workers are interested in pursuing such programs. Expediting Reemployment Among policies intended primarily to expedite reemployment, a great deal of evidence is available on the effectiveness of job search assistance services; and more evidence is forthcoming as net income estimates become available from state profiling programs. This evidence consistently shows that these services are effective in speeding up reemployment. Given their low cost, they are also typically found to be cost-effective. Early intervention with job search assistance is a basic level of services that should be made widely available to displaced workers. The existing evidence is less favorable for relocation assistance and reemployment bonuses. A reluctance of displaced workers to relocate geographically is found to limit the usefulness of relocation assistance. Early evidence from a reemployment bonus program in Illinois indicated considerable promise that bonuses effectively speed up reemployment by offsetting the incentive of unemployment insurance claimants to delay serious job search until the end of their eligibility. Three subsequent experiments suggest, however, that reemployment bonus plans are no more effective than job search assistance programs, but at much higher cost. Earnings subsidies have also received recent attention as a policy option that meets the dual objectives of encouraging an earlier return to

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop employment and directing assistance to the displaced workers experiencing the largest earnings losses. The Canadian government is currently implementing an earnings subsidy experiment from which net impact estimates will soon be available. This experiment should help to resolve uncertainties about the labor market effectiveness and cost of earnings subsidy programs. Replenishing Earnings Potential Displaced workers found to be in need of skill upgrading in order to compete effectively for jobs in growing industries are usually referred to either classroom training or firm-based training programs. Since the employer shares in the costs, firm-based programs offer the advantage of providing training that will actually be utilized on the job. A large body of evidence using nonexperimental data indicates that there is a substantial labor market payoff to company-provided training. A similar result, but for a very small number of on-the-job training recipients, is also reported for the wage subsidy implemented as part of the New Jersey Unemployment Insurance Reemployment Demonstration. The major problem with wage subsidy schemes is not that the on-the-job training they encourage is ineffective, but that it is difficult to interest employers in hiring targeted workers. For example, Bishop and Montgomery (1986) report that employer participation rates are extremely low for four targeted wage subsidy programs in operation in the United States through 1980. Rather than the carrot of a wage subsidy, other nations, namely, France and Australia, have experimented with a stick approach of requiring employers to make training expenditures equal to a percentage of their payrolls or to be subject to a payroll training tax (see Leigh, 1995). This approach has been discussed but not implemented in this country. Results from the displaced worker demonstrations are more mixed for classroom skill training programs. Only the follow-up study of the New Jersey unemployment insurance demonstration focusing specifically on individuals who actually received classroom training services (as distinct from the random sample of all eligible individuals offered it) yields evidence of a positive effect of classroom training above that of job search assistance only. It is worth noting that the short-term, low-cost training provided in New Jersey was designed to upgrade workers' existing skills rather than to furnish training for a new occupation. In contrast, participants in the Trade Adjustment Assistance program received longer-term training intended to equip them to enter a new occupation or industry. Evaluation results for the program are positive in the sense that the longer-term investments in classroom training allowed the earnings of the train

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop ees to reach the level of earnings of a comparison group of displaced workers, most of whom may be presumed to be industry and occupation stayers. (Displaced workers reemployed in the same occupation and industry typically experience smaller earnings losses than occupation and industry switchers.) On the basis of this evidence, it seems prudent to conclude that classroom training should be limited to carefully selected workers who can be matched with training curricula tailored to their backgrounds and the needs of local employers. A training voucher program appears to be an appropriate policy for allowing selected individuals to exercise freedom of choice in choosing a training curriculum while effectively utilizing the nation's extensive system of postsecondary educational institutions. Evaluation results will be available in the near future for a voucher-based training program implemented in New Jersey. Notes 1.   The usual argument for publicly funded assistance is that, whereas society as a whole benefits from maintaining a dynamic, generally open domestic economy, the inevitable adjustment costs are disproportionately borne by displaced workers. Hence, some form of compensation is due the displaced because of "fairness" considerations and the necessity of preempting political intervention that would restrict trade and the introduction of new technology. 2.   In principle, the labor market effectiveness of a program is measured by comparing, say, the earnings of program participants with what their earnings would have been in the absence of the program. Of course, the level of earnings that participants would have earned in the program's absence is never observed, and thus it is termed the counterfactual. There are two commonly used approaches to obtaining the counterfactual estimate needed to obtain a net impact estimate. The nonexperimental approach uses an externally selected comparison group of workers and adjusts statistically for inherent differences between the treatment and comparison groups. In the alternative experimental approach, random assignment of eligible workers to treatment and control groups means that there are no inherent differences in the observable and unobservable characteristics of the two groups. 3.   Results obtained for the job search experiments are examined in detail in Meyer (1995:112–121). 4.   Providing empirical support for this provision is a widely cited study by Kane and Rouse (1995) that shows that labor market returns per year of community college credits are positive and essentially the same as the returns per year of credits at 4-year colleges and universities. Community colleges are the major subcontractor to government agencies charged with implementing retraining programs. 5.   Baily et al. (1993:204) also recommend the adoption of an earnings subsidy program to help cushion the heavy financial blow associated with displacement. 6.   Relative to regular unemployment insurance, unemployment insurance reemployment bonus schemes also increase the incentive to return to work. However, reemployment bonuses do a less effective job in targeting assistance to workers most in need of help because bonuses are either fixed in size or contingent on the claimant's unemployment insurance entitlement, whereas earnings subsidy plans directly relate the subsidy to the size of the earnings loss.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop References Anderson, Patricia, Walter Corson, and Paul Decker 1991 The New Jersey Unemployment Insurance Reemployment Demonstration Project Follow-Up Report. Unemployment Insurance Occasional Paper 91–1, U.S. Department of Labor. Bally, Martin N., Gary Burtless, and Robert E. Litan 1993 Growth with Equity: Economic Policymaking for the Next Century . Washington, DC: Brookings Institution. Benus, Jacob M., and Neelima Grover 1995 Exploring New Alternatives to Worker Retraining. Paper prepared for the 17th Annual Research Conference of the Association for Public Policy Analysis and Management, Washington, DC (November 2–4). Benus, Jacob M., Michelle Wood, and Neelima Grover 1994 A Comparative Analysis of the Washington and Massachusetts UI Self Employment Demonstrations. Cambridge, MA: Abt Associates (January). Bishop, John H., and Mark Montgomery 1986 Evidence on firm participation in employment subsidy programs. Industrial Relations 25(Winter):56–64. Bloom, Howard S. 1990 Back to Work: Testing Reemployment Services for Displaced Workers . Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Bloom, Howard S., Barbara Fink, Susanna Gurr, and Wendy Bancroft 1995 The Canadian Earnings Supplement Project (ESP): Subsidizing Reemployment Instead of Subsidizing Unemployment. Paper prepared for the 17th Annual Research Conference of the Association for Public Policy Analysis and Management, Washington, DC (November 2–4). Corson, Walter, Paul Decker, Shari Dunstan, and Stuart Kerachsky 1989 New Jersey Unemployment Insurance Reemployment Demonstration Project. Unemployment Insurance Occasional Paper 89–3, U.S. Department of Labor. Decker, Paul T., and Walter Corson 1995 International trade and worker displacement: Evaluation of the Trade Adjustment Assistance Program. Industrial and Labor Relations Review 48 (July):758–774. Hawkins, Evelyn K., Suzanne D. Kreutzer, Katherine P. Dickinson, Paul T. Decker, and Walter S. Corson 1995 Evaluation of Worker Profiling and Reemployment Services Systems . Menlo Park, CA: Social Policy Research Associates (September). Jacobson, Louis S., Robert J. LaLonde, and Daniel G. Sullivan 1993a Earnings losses of displaced workers. American Economic Review 83(September):685–709. 1993b The Costs of Worker Dislocation. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Kane, Thomas K., and Cecilia E. Rouse 1995 Labor-market returns to two-and four-year college. American Economic Review 85(June):600–614. Leigh, Duane E. 1995 Assisting Workers Displaced by Structural Change: An International Perspective. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Lynch, Lisa 1992 Private-sector training and the earnings of young workers. American Economic Review 82(March):299–312.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop Meyer, Bruce D. 1995 Lessons from the U.S. unemployment insurance experiments. Journal of Economic Literature 33(March):91–131. Neal, Derek 1995 Industry-specific human capital: Evidence from displaced workers. Journal of Labor Economics 13(October):653–677. Woodbury, Stephen A., and Robert G. Spiegelman 1987 Bonuses to workers and employers to reduce unemployment: Randomized trials in Illinois. American Economic Review 77(September):513–530.

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop REMARKS ON THE JOBS WORKSHOP AND PROJECT Amiram Vinokur Institute for Social Research, University of Michigan The JOBS Workshop is the focus of a project conducted at the Institute for Social Research over the last 10 years. The project is funded by the National Institute for Mental Health, and its mission is to create programs for job search assistance that prevent the deterioration of mental health among unemployed people, and all the negative consequences of poor mental health: child abuse, spousal abuse, poor physical health, and so forth. The project is directed by several research scientists, including myself, with backgrounds in social psychology and organizational psychology. We designed the JOBS Workshop as an early intervention to prevent deterioration of mental health among unemployed people by speeding up the reemployment process. The research suggests that, when people become reemployed, their mental health is restored to the same level as when they were previously employed. In addition to speedy reemployment, in this project we have also been interested in the quality of reemployment both in terms of earnings and of people liking their new job. The JOBS Project has been run as a scientific experiment with two very large trials—one with 900 unemployed and the second with almost 2,000 unemployed people recruited from the lines at the Michigan Unemployment Service Offices. People were approached while waiting in line and were told about two programs being offered by the University of Michigan on how to seek jobs. One was described as a self-guided booklet and the other as a 2-week series of morning sessions. Those selected had been unemployed less than 4 months and employed prior to that for at least 3 years. People 2 years short of retirement or who expected to be recalled to their jobs were also screened out. The resulting samples were demographically very similar to the unemployed population in the United States. The results of the JOBS Workshop have been dramatic. In the first 1 to 4 months after the workshop, those who participated in it had higher employment rates and higher-quality employment than those who used the self-guided booklet. The workshop participants without jobs had higher levels of self-esteem and motivation for job search than those in the self-guided group without jobs. Two years later, those who participated in the workshop were more likely to be working full time and less likely to have switched jobs. They were also likely to be earning more per month than the employed from the self-guided group. (We have found that older workshop participants have more difficulty in finding high-

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Issues in Civilian Outplacement Strategies: Proceedings of a Workshop quality jobs quickly than do younger participants.) Cost-benefit analyses of the workshops indicate significant gains over cost for individual participants (and for state and federal governments in terms of taxes collected). We believe there are several unique features of the JOBS Workshop that account for its success in terms of both speed and quality of reemployment. The first of these is the extensive training provided to the trainers or facilitators who run the workshop. The workshop is run by a male-female pair of trainers who have received 300 hours of training before beginning the workshop. This training is designed to help the trainers establish themselves as experts with their workshop participants. Trainers are also taught to facilitate self-disclosure both for themselves and the workshop participants. This helps to quickly establish an atmosphere. The second unique feature of the JOBS Workshop is the use of active learning. All participants learn how to do job search by actively engaging in practice job search sessions. These sessions are designed to directly demonstrate to each participant that he or she does have what it takes to get a job. We focus on getting each participant to think like an employer. During these sessions, participants are continually coached and their behaviors reinforced by the trainers and the other participants. A third unique feature is that all workshop sessions identify barriers that participants will encounter in searching for jobs and help them prepare to ''inoculate themselves'' against the resulting negative feelings. This feature is meant to help people maintain their motivation and energy for the job search despite setbacks. We have developed extensive documentation of the JOBS Workshop that includes all the information used to train the trainers as well as all the materials used in the workshops. Recently, we have been approached by the government of Finland to implement this workshop for those who are currently employed but may be laid off in 6 months to 1 year. One question we want to answer is, "Will people who are not currently without a job actually use and benefit from the workshop?" We will also be implementing the workshops for people who are recently unemployed at selected sites in California.