8 Steps for Creating a Successful Severance Policy
When it comes to employee benefits, employers are often more keen on talking about the perks of employment than the ones given after employment has ended; however, a well thought out severance strategy can provide long-lasting returns for companies seeking employee retention, higher employee morale and a strengthened employer brand, even during times of downturn. Follow these eight simple steps for long-term success with your severance policy:
1. Plan As Far Ahead As Possible
Try not to wait until layoffs are looming. Planning ahead gives you more time to ensure you can align with long-term company objectives, seek out and take advantage of legal counsel, and broadly communicate policy so employees know what to expect if and when layoffs happen.
2. Evaluate Your Current Severance Offering
Take a look at what you are or are not offering today. Based on a recent severance study, almost 40 percent of companies today do not offer severance. Yet companies in general place a lot of stock in employee morale and invest significantly to ensure that morale stays high. Initiating or expanding a severance offering sends a positive message to employees.
3. Define Company Severance Objectives
What specifically is important to your company when it comes to severance? Is it about taking care of employees, retaining talent for potential rehire, establishing an attractive benefits package for talent acquisition or limiting company liability? Severance packages come in all shapes and sizes, and your investment should align with expected returns.
4. Create A Formal Severance Policy
Create and document a formal policy that supports the objectives on which the company is aligned. Apply a standard formula across the board. Severance offerings can vary by individual based on employee seniority, job type or management level, but it is highly important that you clearly communicate the qualifications for each package and ensure they are easy for employees to interpret.
5. Be Consistent in Your Delivery
Once the policy is defined, don’t waiver or encourage one-off negotiations. Departing employees talk to colleagues who are both leaving and staying at the company, and perceptions of unfairness can quickly erode the goodwill a severance package is ultimately designed to cultivate, as well as potentially lead to legal action against the company.
6. Communicate Your Severance Policy In Advance
Rather than keeping your severance policy locked away in the human resources file cabinet, publish and promote it. Communicate it in new hire packages and make it available on the company intranet, for instance. You can even position your severance package as an employee benefit. Severance is compensation and should be viewed as part of the company’s appreciation for employee service and willingness to support employees through transition.
7. Provide High Touch Outplacement
Speaking of transition, providing assistance in the form of outplacement communicates an investment in employee future wellbeing that goes beyond immediate financial compensation or extended health benefits. Having an outplacement provider that engages with employees during a challenging time and reduces the time it takes to land a new job reinforces a message of support and ongoing commitment to employee wellbeing at all stages during the employee lifecycle.
8. Monitor Feedback About Severance Policy
According to the severance study, 61% percent of companies who say they offer severance in order to protect their employer brand do not actually monitor employee review sites and social media. Monitoring employee and former employee feedback is especially important in times of transition. Everyone is watching – current employees, partners, customers and event competitors and investors—so ensure that you understand what is being said about your company and addressing the comments and reviews appropriately.
A successful severance policy can be one of your most powerful tools for protecting both your employees and your company during a layoff of any size. Put first things first by planning in advance and assessing the current state of your policy. Make sure it aligns with your company objectives, set a formal policy and communicate your offerings sooner rather than later. Follow through on the commitment to your employees’ wellbeing at all stages of the employee lifecycle with high touch outplacement and then close the loop by monitoring feedback on social media to help you gain insight on how you can continue to improve and best leverage your company severance policy.