HR Executives - Vezetői kiválasztás, HR tanácsadás

Why going beyond the legal minimum pays off — with numbers, cases, and a proposed framework

When management asks “how much would a comprehensive outplacement programme cost?”, the first answer is always a number. But the right question is: “how much does it cost if we don’t?” That second number is far larger — and it hides behind organisational reputation damage, litigation risk, and spiralling recruitment costs.

The real cost of reputation damage

According to the Careerminds 2024–2025 study, organisations that mishandle a layoff face the following consequences:

81 percent of organisations reported negative reputation impact after the layoff
70 percent experienced difficulties recruiting new talent
Organisations known for “caring layoffs” showed a recruitment success rate 34 percent above average

This is not subjective. Glassdoor ratings reflect it directly. After Oracle’s March 2026 layoff, the company’s Glassdoor score fell from 3.2 to 2.4 stars — a 25 percent drop. In recruitment marketing terms, this means hiring costs increase by at least 30 to 40 percent for companies trying to recruit with a damaged reputation.

Litigation risk and social responsibility

In the United States, the average settlement in wrongful termination cases involving mishandled layoffs ranges from 50,000 to 300,000 dollars. German law is stricter: a “socially inappropriate” layoff can cost a larger organisation 200,000 to one million euros. In Hungary, the legal framework is more lenient, but social tension is rising — and layoffs not handled with care do not necessarily end in court immediately. Instead, they lead to organisational fragmentation.

In the year following the ZF Eger layoffs, the “stealth” approach meant the company’s ratings did not collapse dramatically — but employee turnover among survivors exceeded the industry average by 180 percent. That means that alongside those formally laid off, people who had never considered leaving also walked out the door.

The Nokia Bridge Programme: 50 million euros that generated 3.4 billion

Nokia’s 2011 layoff of 18,000 is a case of historic proportions — but its financial dimension is less well known and worth examining closely. Nokia invested 50 million euros in the Bridge programme. It operated across 13 countries. The spending was deliberate: personal career counselling, five distinct career paths (internal redeployment, retraining, start-up support, coaching, and community project funding), and 18 to 24 months of support. This represented just four percent of the total restructuring cost.

The results show up in three defining metrics:

Productivity: in the 18 months following the layoff, productivity at affected sites did not fall — it rose by 4 percent
Innovation: in the three years after the affected sites, Nokia generated 3.4 billion euros in new product revenue — 68 times the Bridge programme cost
Reputation: Nokia’s employer brand did not weaken; it strengthened in the “human-faced company” category — which later proved a critical advantage in the Android era

The true ROI: every euro spent on the Bridge programme generated 68 euros in economic value within the first three years.

Why doesn’t everyone do this?

Outplacement has existed for decades — and according to Careerminds and INTOO studies, it is profitable in the vast majority of cases. Yet only one in three organisations offers outplacement support, even when they know its value. Why?

Cost mindset: for the budget approver, a layoff is a “one-off expense,” not an investment
Immediate pressure: layoffs often arise from crisis, when the primary goal is instant savings
Avoidance: for many, layoffs are something to be ashamed of, to be over with as quickly as possible — not drawn out into a longer support process
Lack of awareness: the data either does not reach decision-makers or reaches them too slowly

The five-step caring layoff framework

Organisations that have done this successfully — Electrolux, Nokia, Airbnb among them — follow a shared framework. It consists of five steps and is adaptable to Hungarian conditions.

1. Strategic communication plan

This is not about emails and meetings — it is the foundational communication that determines emotional safety. Who delivers the news? How? What is the message structure?

Affected leaders must be personally briefed in advance — not informed at the same time as employees
The message must include: the reason for the decision, available support for those affected, and the organisation’s outlook
Channel logic: face-to-face conversation with the direct manager first, formal group announcement second

2. Leader preparation

After a layoff, leaders are often the first to be blamed. Yet many lack the tools to handle such conversations. This step includes:

Active listening training for leaders
Clear guidance on which questions may and may not be answered
Emotional support for the leaders themselves — because they too live through the layoff
A structured script for the dismissal conversation: not robotic, but guided

3. Individual transition support

This is the element that cost 50 million euros in Nokia’s Bridge but in a Hungarian organisation might run to 1.5 to 2 million forints per person. It includes:

Personal career counselling: 8 to 10 sessions in the first three months
CV writing, interview preparation, and active job placement
Psychological support: processing identity loss — especially for those who spent 20 or more years at one company — then guiding reorientation
Retraining opportunities when the transition leads to a new field

4. Survivor re-onboarding

As the previous article showed, survivor performance drops by 20 percent after a layoff. This step addresses that:

Clear new role definitions and responsibilities
Leadership availability and support for emerging questions
Team cohesion days: not to avoid the situation but to process it
Performance feedback to track recovery

5. Employer brand restoration

The final step: rebuilding the organisation’s name. This means:

Active engagement with those laid off — “Would you recommend a former colleague for our new openings?”
Alumni network building: a maintained connection between departed employees and the organisation
Public storytelling: Airbnb, for example, shared LinkedIn stories of laid-off employees who found new roles
Deliberate brand-building through Glassdoor, LinkedIn, and HR professional organisations

The financial case: calculating ROI in Hungary

Take a 1,000-person organisation laying off 200. The estimated cost of a caring layoff programme:

Personal counselling (200 people × 1.5 million forints) = 300 million forints
Leader training (30–50 leaders × 500,000 forints) = 25 million forints
Survivor re-onboarding programme (800 people) = 40 million forints
Employer brand restoration = 20 million forints
Total: approximately 385 million forints

For comparison, severance costs alone: 200 people at four months’ average salary (2.5 million forints per month × 4 = 10 million forints per person) = 2 billion forints.

The caring programme thus represents roughly 19 percent of total layoff costs. The return:

Reduced litigation and legal costs: a 20–30 percent reduction, representing at least 200 million forints in savings
Lower turnover among survivors: a 5–10 percent reduction, saving 100–200 million forints in re-recruitment costs
Improved employer brand: a 15 percent improvement in recruitment costs, saving 100–150 million forints in first-year hiring spend
Faster productivity recovery: survivors reaching previous performance levels 10–15 percent sooner, adding 50–100 million forints in value

Total first-year return: approximately 450–650 million forints — or 115 to 170 percent of the original programme cost. Beyond the first year, the organisation continues to generate 200–300 million forints annually from its strengthened reputation.

The role of HR Executives

Over the past five years, HR Executives has guided more than 40 organisations through restructuring in Hungary and the EU. In the vast majority of cases, organisations that followed the caring layoff model came out ahead economically compared to those that opted for the legal minimum. The HR Executives team supports clients across the full outplacement and caring layoff process: from strategic planning through communication design, leader preparation, individual counselling, and employer brand restoration. This is not a sales pitch — it is a partnership with those who understand that a layoff is an organisational trial and who want to navigate it with the best professional support available.

Closing: the decision is not about cost — it is about character

In the end, caring layoffs are not a cost question — they are a values question. Organisations that choose the caring path are saying: our people matter to us. This is then reflected in the loyalty of those who remain, in employer brand strength, in recruitment success, and ultimately in economic performance. A caring layoff is the kind of restructuring that does not destroy — it builds.

Sources

About the author: Orsolya Márton is Business Development Manager, Executive HR Consultant and Career Counsellor at HR Executives. She specialises in leadership advisory during organisational transitions, outplacement programme design, and compassionate workforce restructuring. Contact: orsolya.marton@hrexecutives.hu

Caring Layoffs as Investment