Severance Policies Reflect Current Employment Trends
When you think of severance plans and policies, you rarely thank about hiring trends. However, as the employee experience continues to evolve beyond an employee’s tenure at a company to include the stages of offboarding and beyond, companies are seeking ways to improve experiences. Those same companies are looking at severance as a way to project an employee-first culture and thereby improve the overall culture and brand.
The findings of RiseSmart’s 2019 Guide to Severance and Workforce Transition support the supposition that employers are continually focusing on improving benefits as a way to improve attraction and retention of talent. Severance benefits are no different in that they reflect the company’s values at a time when employers of the past no longer felt an obligation to those who are leaving the company.
The study revealed four major trends:
- An increase in redeployment as an alternative to layoffs and voluntary exits
- More companies offering severance benefits to all employees
- The inclusion of non-exempt, hourly, employees in outplacement services
- A growing awareness and monitoring of Glassdoor and other employer review and social media sites
While more benefits are being offered to more employees, our survey indicates there has also been a decrease in the number of employers with formalized severance plans in the last two years. As HR leaders are focused on employee benefits and are leading their organizations to be more inclusive and fairer, they may have missed the opportunity to establish cohesive, inclusive, and formalized plans for severance. Even in a strong economy, companies need to have plans in place to accommodate shifting workforce needs and trends.
The companies we surveyed offered these top six reasons for offering severance to displaced employees:
- Project an ‘employee-first’ company culture
- Take care of employees
- Protect brand reputation
- Limit company liability
- Recruit talent
- Maintain an ongoing employer/employee relationship
If your organization is looking to have an advantage over the competition, HR leaders can consider the following four recommendations for improving severance policies and retention programs.
#1 Establish uniform eligibility policies that include more people
Our survey shows that many organizations are already rethinking severance eligibility. As employment tenures are naturally shorter, only considering employees with a tenure of 5 years or more is no longer practicable. Companies who continue to view employees with a shorter term at the organization as less deserving of an equitable solution when positions are eliminated are missing an opportunity to garner loyalty and the possibility of an employee’s return when appropriate positions open up again. As boomeranging (returning to a company after a tenure outside of the organization) becomes more common among talented employees and more accepted within organizations, offering fair severance packages to all exiting employees is an investment in the future success of an organization.
For organizations with distributed workforces around the globe, local laws often dictate how you take care of your employees. Knowing these will help to inform the creation of a uniform severance policy that ensures your employees will be taken care of, no matter where they reside.
The first step to establishing and maintaining a stellar employer brand and ensuring that your future, current, and past employees reflect well upon your organization when they network or comment on Glassdoor is to create inclusive and fair benefits policies for every stage of your employees’ tenures with your company.
#2 Offer outplacement as a standard element of severance
Interestingly, organizations with formalized severance policies are the same companies that offer outplacement as a standard element of those programs. Within the most forward-thinking companies are HR leaders who know the value of being prepared. It’s those leaders that form partnerships with the best outplacement providers and other business partners such as law firms and career development providers before their services are needed.
When the labor market is tight and layoffs are less common, it’s easy to ignore the possibilities of workforce restructures. But these events happen even in the best of times. Changes in product, mergers and acquisitions, and automation are all positive developments that require adjustments to the workforce. In fact, many organizations find that layoffs are a natural part of the ebb and flow of business and allow the company to continue to operate at peak efficiency to remain competitive. When change is the only constant, having a plan in place that creates positive outcomes both for the organization and its employees seems like the only logical response.
Just as severance policies have continued to evolve over time, so has the outplacement market. If you haven’t reviewed your current outplacement provider recently, now might be a good time. If your outplacement partner is still operating with the same models established 50 years ago, it may be time to consider a more contemporary solution that includes 24/7 connection and mobile accessibility that match the way job search is conducted today.
#3 Provide effective redeployment programs
The trend toward offering internal mobility is one of the greatest trends we uncovered in our 2019 study. In fact, the number of organizations offering redeployment opportunities has risen 14 percent in the last two years and include 60 percent of the companies we contacted. Given the shortage of talent, the uptick in redeployment programs comes as no surprise.
What we did discover is that organizations are struggling to make these programs effective on their own. Allowing employees to change roles within an organization is one thing, matching employees to relevant job openings is another. Rarely do companies have the systems in place to make this work and most employees are lucky to be able to identify matches on their own. Another advantage to establishing a partnership with a contemporary outplacement provider is the opportunity to use the technology and services already developed to match employees to job openings for internal mobility. In addition to delivering updated company job opportunities, redeployment programs prepare internal employees with resume writing services and career coaching to prepare them to compete against external employees for open positions.
Organizations providing internal redeployment programs on their own, identified the following five top areas for improvement:
- Effectively matching employees to open positions
- Providing resume support
- Providing career coaching
- Partnering with an outside consultant
- Having job search-related webinars
When the stakes are as high as they are now, and retaining institutional knowledge and remaining competitive depend upon an organizations ability to attract and retain the best talent, redeployment programs are no longer just ‘nice to have’, they are critical to success.
#4 Proactively protect your employer brand
Before you dismiss this as obvious advice, consider this: Two years ago, we recommended that more HR leaders monitor employer review sites and social media for negative reviews. While that number has improved significantly, today 32 percent of organizations still do not have programs in place to protect and improve the employer brand—which begins with reviews.
Given these statistics, we have to ask, “why?”. Could it be that organizations don’t have the means to effectively monitor and respond to comments, or is it that companies aren’t following best practices to avoid damage to the employer brand? While the answer may include a little of both unmet challenges, there are things HR leaders can do to improve their chances of stopping negative sentiment before it starts.
One such solution is met through RiseSmart’s Alumni Sentiment Rating software program. As part of the RiseSmart Insight™ solution, HR professionals have access to an updated alumni sentiment score. Much like an NPS score, the Alumni Sentiment Rating displays alumni survey responses in a continuum of detractors, passives, and promoters to arrive at an overall sentiment rating. In addition, organizations can anticipate the types of comments that might appear on Glassdoor through the specific comments included in the tool. Often, employees who are allowed to express their frustrations and concerns via the RiseSmart platform no longer feel the necessity of going to an outside source.
In addition, those who receive outplacement support feel less negative and more hopeful about the future. With the support of technology and three dedicated professionals, impacted employees are busy moving toward the future and tend to spend less time focused on the past.
Understanding the importance of the employer brand in every economic environment is the first step to building a name that attracts potential employees while engaging and retaining those who remain. The second step is creating a plan to ensure that every employee is treated fairly at every stage of their association with the organization and the final step is to have the programs in place that support corporate and employee goals.
The 2019 Guide to Severance and Workforce Transition is a benchmark by which HR leaders in organizations of every size and in every industry can compare the competitiveness of their policies and move one step further to being known as an employer of choice and delivering ‘employee-first’ experiences.