How do your severance and separation practices stack up?
In the eighth edition of the Lee Hecht Harrison Severance & Separation Benefits Benchmark Study, we look at the reasons why severance is offered, how severance is typically calculated at various levels of employment, and what common severance and separation benefits, such as outplacement and redeployment, are offered.
A fair, comprehensive and competitive severance and separation package is a key element in ensuring you are treating employees with respect and protecting your employer brand, which in turn is essential to your ability to attract quality talent.
The 2020 pandemic has cast a spotlight on certain employment issues and workforce needs. Until this point, the US was experiencing the longest economic expansion in history, with low unemployment rates and strong growth. As businesses have been forced to close, jobs cut, and governments requiring employees to stay home, what we do, how we do it and where is being completely re-imagined.
As companies respond to dynamic forces in play, we
expect many will be putting more formal severance and separation policies and practices in place. A formal policy helps to reduce unnecessary risk and protect an organization. Informal or unwritten policies are often viewed as more ﬂexible but can leave an employer vulnerable every time an exit needs to be negotiated.
However, severance practices vary widely so transparent communication is critical.
As we start to take positive steps towards reopening the economy, employers find themselves asking questions and needing to make very important decisions regarding severance and separation practices:
Can we resume normal operations? If so, do we have the right people to achieve optimal operations?
What do we communicate to employees regarding our company’s future?
What plans do we have to reinstate any reductions in salaries and benefits?
Can we still implement our current compensation plans?
What strategies can we use to retain employees during the reopening and recovery periods?
Will we need to restructure our workforce, and if so, how can we do that in a way that’s fair and equitable?
The results of our latest severance and separation practices benchmark study shed light on many of these questions. What we have learned: