RiseSmart’s Guide to Severance and Workforce Transition

The expectation to build a great employee experience and positive brand reputation has sparked organizations around the world to make significant changes in how they run their HR and business processes. These changes, and other significant trends, were uncovered in RiseSmart’s 2017 Guide to Severance and Workforce Transition. Throughout the survey, respondent’s answers reflected the need to show fairness and create an atmosphere of caring and trust with current, future, and past employees. These findings reflect the growing importance of projecting an “employee-first” workplace culture in every industry among companies with at least 500 employees.

The Guide outlines benchmarking data regarding the state of severance, and highlights the positive changes employers are making to plan for, and implement, competitive severance packages and employee benefits programs. The research supports what we’ve always assumed: although organizations offer severance packages that include outplacement services to mitigate legal risks following a separation, other considerations have taken on greater importance.

The transparency provided by the internet and the need to recruit and hire the best talent has caused a surge in the importance placed on former employee sentiment. In addition, as the workforce becomes more industry-centric, laid-off workers often become customers, partners, or even competitors – further increasing the focus on positive alumni sentiment.

The highly competitive nature of the global economy means that most organizations have either already reduced or restructured to some degree, or will need to in the future. Whether due to budget cuts, changes in strategy, or mergers and acquisitions, eliminating positions is often unavoidable. Severance packages, including outplacement services, help maintain a positive employer reputation among employees, future talent, customers, and prospects. So how are severance packages changing to support the evolving workplaces? And what are the top trends in HR for creating a positive employee experience?

We’ve recapped five major trends highlighted in RiseSmart’s 2017 Guide to Severance and Workforce Transition. You can download the full guide here.

Trend #1: Severance projects an “employee first” culture

 Survey data showed the top two reasons companies offer severance packages to transitioning employees are to project an “employee first” company culture (54%), and protect brand reputation (54%). In the pursuit of establishing positive brand sentiment and becoming a great organization to work for, top organizations know the value of offering outplacement services. Through offerings, such as outplacement, organizations live out their values by taking care of employees when they’re leaving as well as when they are first joining the team. These companies are committed to workplace culture and understand the impact of former employee opinion on that culture and on the employer brand.

As we know, offering severance is a win-win for employers and employees. Building an employee-first culture naturally establishes your business as a great place to work, do business with, and invest in. Even when business decisions force companies to reduce the workforce, severance packages help mitigate some of the hardships of being laid off for employees.

Exiting and remaining employees are both positively impacted when organizations offer severance packages. Talented employees will want to join your team when they know they’ll be taken care of and hear positive feedback from former employees. Remaining employees will take pride in the goodwill of their employer and return to productivity faster than when transitioning employees are not offered the support they need.

TREND #2: More employees receive severance

 The results of our 2017 study mirrored the results we gathered in 2014—in most organizations, not all employees are eligible for severance benefits. In fact, 90% of organizations offer severance, but only 38% offer it to all employees. There seems to be a major opportunity to improve efforts to plan and orchestrate separation with employees, especially given the liability, brand equity, and talent acquisition, and liability ramifications businesses risk when they choose not to offer severance.

The study also points to company size and its role in determining what levels of severance is offered across the organization. Not surprisingly, the bigger the company, the more likely it is to offer some sort of severance package. Interestingly, it is often the administrative or clerical employee that will take revenge on a company through social media sites such as Glassdoor or Twitter. As such, we found this to be an area of opportunity for employers.

Offering severance to all employees is the best defense for an organization hoping to protect the employer brand and positively influence alumni sentiment. When employees are offered severance packages that include outplacement, they are focused on moving forward and taking positive steps toward their next beginning, instead of focusing on negative feelings associated with their separation from the company.

In the coming years, organizations that want to recruit and retain talent will need to extend severance and outplacement services to all employees, regardless of their position within the company and regardless of company size. As social responsibility continues to take on greater importance, only organizations that have established reputations as entities that live the corporate values will be able to attract business partners and operate successfully in the marketplace.

TREND #3: Benefits influence the employee experience

Employee benefits may take many forms, but healthcare and insurance have historically been the focus for most employees. Most companies offer these standard benefits during the employee’s tenure, and also as part of a severance package. The percentage of organizations offering a standard severance package to employees, regardless of their position, has actually remained the same since 2014 at 49%. As employee fairness practices and a desire to fully engage and form positive relationships with all employees continues, we see this as an area of opportunity for a majority of organizations.

Although who receives severance hasn’t changed much in three years, what is offered has changed. The study uncovered a trend toward offering more complete severance packages. We found that companies, in order to remain competitive in the market and attractive to future talent, are relying on benefits outside of healthcare as part of their severance packages. Nearly half of the organizations surveyed, for example, realize the many benefits of offering outplacement services as part of their severance packages.

Going above and beyond the standard healthcare and insurance benefits to provide additional benefits and services is becoming a best practice by organizations looking to make an investment in the future of the brand.

TREND #4: Redeployment helps retain talent and cut costs

The war for talent has created a need for organizations to retain valuable employees, even when their positions are being eliminated. To this end, a growing number of companies have established redeployment programs designed to keep talent, intellectual property, and institutional knowledge inside the organization.

Nearly half of companies surveyed—45% to be exact—have a dedicated redeployment program for laid off employees, and 46% of companies don’t have a dedicated program, but do allow employees to reapply for a new position in different divisions or departments across the company. Organizations around the globe are doing more to retain valuable employees by placing them into new roles, thereby protecting the employer brand, positively impacting morale across impacted and non-impacted employees, and reducing the high costs of hiring and onboarding.

Having an established redeployment program in place, allows employees to identify internal jobs, connect with the right people, and receive coaching to successfully land a new position within the organization.

We’ve found that organizations see even greater success with their redeployment programs when they are managed through a third-party vendor. Few companies have the resources to make the job transitions successful, like job matching technology, social network capabilities, and employee coaching for example. When leveraged correctly, redeployment can keep valuable employees around long term while positively impacting the employee experience and employer brand sentiment.

TREND #5: Outplacement for a positive employee experience

As organizations around the globe are discovering, it’s crucial for companies to keep current employees happy and maintain good relationships with former employees.  The growing need to create a positive employee experience and maintain strong relationships with all employees has prompted a trend toward offering outplacement to more employees, regardless of their role. We found a growing trend to offering outplacement in 2017, and nearly half of those surveyed understand the positive impact offering outplacement to transitioning employees can have on preserving employee relationships and employer brand reputation.

In addition, the study found that companies are choosing to offer outplacement to a greater number of employees in a variety of roles. Approximately two-thirds of those surveyed now offer all employees either three or six months of outplacement services, an increase from 2014.

Although we did identify an increase in best practices of offering outplacement, we also identified an opportunity to offer outplacement to all employees, regardless of role or time with the organization. Businesses that have adopted outplacement as a standard best practice are actively ensuring a positive company brand image and attainment of bottom line goals.

As organizations in all industries are discovering, the employee experience does not end when workers walk out the door. There are big areas of opportunity for organizations looking to bring their severance policies up to speed with evolving industry trends and best practices. For more benchmarking data and best practices based on today’s trends, download the 2017 Guide to Severance and Workforce Transition.

For insights into the severance guide, watch our recent webinar, “Do Your Severance Packages Measure up? Benchmark Your Offerings Against Recent Findings.”

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