Severance Snapshot: Severance and Outplacement Trends in Health Care

In October of last year, RiseSmart published the 2014 Guide to Severance and Workforce Transition, which outlines the results of an organic study examining the state of severance across U.S. industries, geographies and company sizes. For the study, RiseSmart surveyed over 250 HR professionals, more than one-third of whom came from Fortune-ranked companies and at least one-quarter of whom were VP-level and above, including CHRO titleholders.

Of the industries surveyed, 17% of respondents were from the health care field, which is a leader in offering severance and outplacement and often ranked significantly higher than the study averages:

  • 85% of health care organizations responded positively that all employees are eligible for severance resulting from involuntary separation, compared to the study average of 61%
  • 81% of health care organizations have a formal, written severance policy in place, compared to a study average of 69%
  • 86% of health care organizations have a program to place impacted employees into internal positions, compared to a study average of 52%
  • 86% of health care organizations offer outplacement services as part of severance, compared to a study average of 70%
  • 43% of health care organizations responded positively that the cost of outplacement is approximately the same for all employees, compared to a study average of 24%.

The top three reasons health care organizations provided for offering severance packages to displaced employees were in line with the most common answers across all of the industries surveyed. Those responses included caring for employees, limiting company liability, and protecting brand reputation. In addition, health care organizations also listed maintaining a positive relationship with the displaced employee as a potential rehire or potential customer as key reasons for offering severance packages.

The health care field varies from other industries surveyed in that the primary reason health care organizations offer severance packages to impacted employees is due to organizational restructuring, rather than the elimination of a position.

While health care organizations are leaders in offering severance, 70% of respondents said that severance plans differ according to level, title or position, compared to 52% across all industries. Other metrics in which the health care field underperforms in terms of severance and outplacement include:

  • 71% of health care organizations offer traditional outplacement, while the majority of survey respondents offer a technology plus a full service model of outplacement
  • Only 14% of health care organizations monitor employer review sites such as Glassdoor for positive and negative comments by employees during a major layoff event, compared to a study average of 40%.

The complete study expands upon these findings and offers in-depth benchmarking data and analysis for companies to compare severance, benefits and outplacement across industries. Download RiseSmart’s 2014 Guide to Severance and Workforce Transition to learn more about the role severance and outplacement play in the health care field: www.risesmart.com/GuidetoSeverance.

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