When you lay people off, the last thing you want to do is ask them to stick around. The sheer discomfort of seeing them after laying them off makes that a bad idea—even if it's the right the thing to do to give them time to look for another job and aid in transitioning the responsibilities they left behind to remaining employees. With the foul whiff of layoffs in the air, Right Management offers new research into severance practices around the globe. Here are some of the high (or should we say low?) points of what was found:
• Reduction in workforce (77 percent) and organizational restructuring (75 percent) are the main triggers for activating the provision of severance.
• Severance and termination policies are governed primarily by a combination of company policy and local/national law (62 percent). In the event of employee termination, most companies (63 percent) are required by law to give a certain amount of advance notification to the employee. Just more than half (58 percent) of those surveyed said their company had a formal, written severance policy.
• Eligibility for severance differs by region, with more than half of companies in the Americas (54 percent) having no minimum requirement and far fewer companies in Europe (32 percent) and Asia-Pacific (34 percent) saying the same.
• Top executives earn the most severance per year of service, whether they are voluntarily separated (3.39 weeks per year) or involuntarily separated (3.52 weeks per year). Regardless of position or type of separation, severance most frequently is offered throughout the world as a lump sum payment. More than half (56 percent) of the companies surveyed put a cap on the severance calculation.
• Regardless of employee level, the most common benefits included in a severance package are assistance programs (such as outplacement and financial planning); continued benefits (such as health care and financial compensation); and, to a lesser extent, company resources such as an office or car. Seventy-three percent of terminated employees are required to sign a waiver or release before they can access severance benefits. Although not legally required, most companies (73 percent) provide outplacement services.
• "The fast-changing and demanding global market is placing increased pressure on companies to compete more effectively," notes Douglas J. Matthews, president and chief operating officer of Right Management. "The subsequent result may be frequent restructuring, downsizing, or cutbacks. When those initiatives are implemented, departing employees need to be supported with severance practices that are aligned with the company's sense of corporate responsibility and values."
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