Employers are using severance packages to protect their brands
Tuesday, August 20, 2019
The employee experience has typically included the recruitment and hiring process, onboarding, and how workers are treated on a day-to-day basis. However, the employee experience has now evolved to also include how companies handle severance and workforce transition.
According to a recent report, 44% of all companies surveyed now offer some form of severance benefits to all employees, not just senior managers. These are some of the trends pertaining severance and transition.
Why severance is growing in popularity
What’s fueling this growing trend? "The No. 1 reason given by the companies surveyed was the need to project an ‘employee-first’ culture," says Emily Elder, senior manager of practice development at RiseSmart, a global outplacement and career development firm.
Elder says companies want to protect the employer brand in order to attract and retain top talent. "83% of HR workers said they had difficulty recruiting suitable job candidates in the past 12 months."
So, companies who want to protect their brand want to ensure they’re taking care of employees at every stage of the employment cycle, and this includes how they handle separation.
"Recent employee engagement trends and the expectation by employees that companies will take care of them is another impetus behind the trend to offer severance to more employees," Elder says.
The top severance elements
So, which elements of severance matter the most? Obviously, continuation of salary is important. But next to that, both employees and employers consider health to be the benefit that requires the most attention.
"Also rising in importance are retirement benefits and retirement planning services," Elder explains. "In response to the changing workforce and a large number of mature-age workers continuing in their careers, a fifth of the companies that we engaged in our study view some retirement benefits or retirement planning assistance as a top severance element to consider revising."
Other benefits that employers give serious consideration to include the payout of bonuses and commissions, outplacement, and life insurance.
In lieu of letting employees go, some companies are turning to redeploying employees. "The cost of onboarding new workers is rising, and employers are becoming increasingly adaptive and creative in tackling the war for talent," Elder says.
Companies have critical roles that need to be filled and they’re looking at career development combined with redeployment programs to move internal candidates within their organizations.
It can take a considerable amount of time for new hires to get up to speed, and until their performance reaches the desired levels, companies can experience a significant decline in the quality and quantity of work.
"Redeployment can alleviate much of this headache by incorporating an internal hiring component into a company’s talent acquisition strategy," Elder explains. "Of course, this doesn’t mean that a company will stop external hiring, but rather will devote energy toward hiring internally; promoting regularly; allowing workers to learn and train for more exciting positions; and encouraging managers to look for talent in adjacent departments before looking externally."
Matching employees with open internal positions as an alternative to separation helps both parties. "Redeployment capitalizes on current employees’ institutional knowledge, cultural awareness, and commitment to the organization’s mission," says Colleen Torell, J.D., vice president of Keystone Associates, a Boston-based career transition company.
"From the employee’s perspective, they feel valued; some marquee-name corporations move employees among functions and business lines according to defined strategic plans as a way to infuse new ideas and a fresh perspective."
When employees do leave, they can have a significant impact on an employer’s brand — either positively or negatively.
"Since former employees have special insight into operations and personalities at their previous companies, it’s important to part ways as amicably as possible," Elder warns. Social media allows anyone to share their severance experience with the world, and this can have a detrimental effect on an organization.
"We’ve all seen Twitter campaigns throw companies like Uber and United Airlines into chaos and reputation-renewal mode," Elder says. Websites like Glassdoor also create opportunities for current and former employees to rate their companies, often providing specific details.
"Outgoing employees are less likely to tweet or leave negative reviews online if they are given support to find a new job through outplacement services in combination with a few weeks or months of salary, healthcare, and other benefits while they’re out of work."
Some companies are also making former employees their brand ambassadors. "This is most common with older workers who prefer a diminished role but still want to contribute," Elder says.
Regardless of your specific strategy, it’s wise to create an "employee-first" culture from the time employees walk in your door until they walk back out of it.
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