U.S. employers reviewing severance policies more frequently: Survey

Majority offering outplacement services for all levels
|hrreporter.com|Last Updated: 09/28/2011

Employers are nearly twice as likely to have reviewed their severance policy in the past year as in previous years, found a survey by Lee Hecht Harrison in the United States.

The survey of 650 HR professionals found 19 per cent of respondents use a graduated scale to calculate severance, compared to 24 per cent in 2008, highlighting the fact that tenure isn’t necessarily the driving factor when determining severance.  

“Survey results show that employment agreements have become more influential in determining severance in the last three years and agreements are now being seen as a high priority item on the strategic agenda of most successful organizations,” said Peter Alcide, president and COO of Lee Hecht Harrison. “Given the uncertainty of today’s economic environment it’s more important than ever when negotiating a compensation package to address the issue of severance benefits before signing an agreement.”

Similar to 2008, nearly two-thirds of organizations have a written severance policy and one-half of respondents have an informal policy.

The majority (85 per cent) of companies don't have a process by which employees can appeal or negotiate their severance package, an increase over 2008, found the survey.

The majority of respondents (67 per cent) said their organizations offer outplacement to all levels of employees as a standard component of their severance packages. Ninety per cent of respondents felt in-person seminars, meetings and coaching were the most important elements in the program, found the survey. Only two per cent of participants thought technology was the most important resource in an outplacement program.

Fifty-six per cent of respondents said that the top reason for providing outplacement is to try to maintain positive relationships with their workforce.

In today’s competitive market, it is important that organizations understand the value of consistent severance and separation practices, said Alcide.

“This year’s study provides a clear sense of key benchmarks organizations can use to update or create severance programs to remain competitive in today’s environment and ensure they are building and protecting a reputation as an employer of choice, while also providing outplacement support that offers the right blend of technology and face-to-face contact that gets people back to work faster,” he said.

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