When executives of large companies get fired, they tend to look for jobs in smaller companies. So say a number of specialists in "outplacement," counseling for people whose employment has been terminated.
Robert Swain, president of Eaton-Swain Associates of New York, counsels from 200 to 300 fired executives a year, almost all from corporations with annual sales of more than $1 billion. Two-thirds of them, he says, find new jobs in companies with less than $100 million in sales; less than 10% return to companies over $1 billion. Many accept a cut in pay in their new positions in return for an ownership share in the company. Swain says their former salaries averaged $50,000 to $55,000.
Another New York outplacement specialist, James J. Gallagher of J. J. Gallagher Associates, says 40% to 50% of his clients from billion-dollar companies obtain new employment at companies of less than $100 million.
Why don't these big-business executives look for positions at similar-size corporations? Gallagher cites current economic conditions, which include sweeping white-collar layoffs at large, established companies. "These businessmen become disillusioned about the myth of security in corporate life," he says. "If they've been fired once, they figure it can happen again."
Swain notes that it often makes sense for a small company to hire someone with big-business experience. "Small companies are growing more rapidly, and they usually don't have the ability to produce in-house the talent that they need," he says.
Outplacement specialists like Swain and Gallagher are paid exclusively by the corporation doing the firing. These companies hire them in part to avoid acquiring a reputation as heartless destroyers of people's careers. Outplacement service typically involves a week or two of individual counseling for the fired executive. The counselors don't find openings or make introductions as employment agencies do; that is up to the individual executive.
"Most fired executives haven't looked for a job in a long time -- and they haven't looked for one at their current salary level or in today's job market," says Gallagher. "It's a whole new ball game for them. We help them cope with that."
But there are pitfalls in moving to a small company -- for both the executive and the small concern. The most dangerous, according to Gallagher, arises when an executive joins a family-owned company. A businessperson accustomed to dealing with co-workers on a strictly professional bais may be severely disoriented when suddenly caught up in the midst of family ties or squabbles. "We advise our clients simply not to go into a family-owned business," Gallagher says.