Organizations Are Boosting Severance Benefits as They Look to Retain Talent in a Tight Labor Market

RiseSmart finds HR leaders are expanding severance and internal transfer options to project positive company culture

To gain an edge in a competitive labor market, more companies are expanding severance packages and offering job placement assistance to separated employees. According to RiseSmart‘s 2019 Guide to Severance & Workforce Transition survey, 44 percent of all companies surveyed now offer some form of severance benefits to all employees, not just senior managers—a 6 percent rise from 2017—as employers seek to project an employee-first culture.

The Guide, an annual survey of 1,500 HR professionals around the world, provides rare insight into trends shaping severance and outplacement services.

“In a world where companies’ reputations affect their ability to hire and retain talent, organizations have to maintain a competitive edge at every stage of the employee journey–including upon separation,” said Dan Davenport, president and general manager of RiseSmart. “Severance is a great benefit because it can also help protect a company’s brand when layoffs are unavoidable.”

The survey found corporate leaders are increasingly responsive to negative online comments by former employees that could damage their company’s reputation. A full two-thirds of HR professionals surveyed said they monitor employee websites like Glassdoor and Indeed for negative reviews – a 10 percent increase from 2017. While 50 percent of companies with severance policies offer outplacement as part of those packages, 68 percent have additional brand protection mechanisms in place.

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As part of the effort to protect their company’s brand, employers are also turning to redeployment or “in placement” benefits. Sixty percent of all survey respondents claim to have programs designed to match employees with as many open internal positions as possible, as an alternative to separation.

“Giving workers the mobility to move within a company can incentivize performance and build a culture where managers seek to hire from within,” said Alison Hernandez, RiseSmart’s Australia and South East Asia director. “It is becoming a popular way to keep talent from looking externally when they want a change – all part of the push to make workplaces more appealing so companies can avoid the rising costs associated with hiring new talent.”

The survey includes insights from HR leaders at Fortune-ranked organizations and examines severance benefits and trends across 20 industries, including healthcare/life sciences, professional services, wholesale/retail and banking/financial markets.

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Findings include:

  • 48 percent of HR leaders cite company culture and the need to take care of employees as top reasons for offering severance to displaced workers
  • About a third of all companies offer between one and three months of severance and a fifth of all companies offer between three and six months
  • 63 percent of surveyed companies offer outplacement to non-exempt employees
  • More organizations now offer outplacement services for employees that are terminated
  • Just under 70 percent of companies monitor employer sites like Glassdoor and Indeed to assess the comments of separated employees
  • 38 percent of employers see an increase in negative reviews on social media following a layoff
  • 60 percent of organizations surveyed have programs in place to help employees find open internal positions

Benefits Offered Upon Involuntary Separation

Since RiseSmart’s last study, an increasing number of companies have decided to include benefits outside of health care, such as financial planning, as part of their efforts to remain competitive and attract new talent. The following benefits are currently offered to employees upon involuntary separation:

›       Health benefits or COBRA
›       Retirement benefits and planning
›       Payment of bonuses or commission
›       Outplacement services
›       Life Insurance
›       Short-term disability
›       Long-term disability
›       Education or retraining
›       Continuation of stock options
›       Financial planning

To get more insight into severance trends, request a copy of RiseSmart’s 2019 Guide to Severance & Workforce Transition.

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