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Right Management's Global Severance study helps employers manage talent

The study from the company, part of ManpowerGroup, includes input from more than 1,800 senior executives and human resource professionals from 19 countries and 19 industries and sets benchmarks for employee termination and severance practices by country, region, company size and industry.

"The increasing importance of talent to an organization's success has created a new focus on how severance practices, as part of a broader workforce strategy, can impact a company's brand value," said Bram Lowsky, Right Management's Group Executive Vice President and Global Head of Career Management. "The need to continually realign and right-size talent persists in today's uncertain economic environment, and companies that have competitive severance practices in place are ahead when it comes to future retention and recruitment efforts and engagement of remaining employees after a restructuring."

Severance practices vary by country and industry. Three out of four companies surveyed said their company had a formal, written severance benefits policy. Companies in Asia Pacific show a noticeably higher incidence of formal policies (82 percent), compared with 73 percent of companies in the Americas and 72 percent in Europe.

"Regardless of location and industry, we're seeing an evolving and strengthening connection between competitive severance practices and favorable brand image in the marketplace. Organizations that provide outplacement support and demonstrate fairness, care and respect for those leaving not only ensure a positive restructuring outcome, but also realize an improved brand value that ultimately attracts new and retains current employees," continued Lowsky.  

Key findings from Severance Practices Around the World include: 

•             Across all regions, severance and termination policies are frequently governed by a combination of company policy and local/national law (52 percent).

•             In the event of an employee termination most companies (62 percent) are required by law to give a certain amount of advance notification to the employee.

•             Three out of four companies said their company had a formal, written severance policy.

•             Top executives earn the most severance per year of service no matter whether voluntarily separated (3.53 weeks per year) or involuntarily separated (3.48 weeks per year).

•             Regardless of position or type of separation, severance is most often offered as a lump sum payment.

•             More than half (55 percent) of the companies surveyed put a cap on severance calculations.

•             Sixty-six percent of separated employees are required to sign a waiver before they can access severance benefits.

•             Although not legally required, most companies (68 percent) provide outplacement services.

•             A majority of employers (60 percent) reported they offer outplacement instead of monetary benefits.  As few as 35 percent of employers offer cash in lieu of outplacement.

•             For employees who remain after a downsizing or who need to be retained for a designated period, bonuses are most frequently offered when top executives are voluntarily separated (75 percent) compared to involuntarily separated (67 percent).

Right Management, the talent and career management experts within ManpowerGroup, advises employers to reassess how severance practices influence their workforce strategies to attract, retain and transition talent.

About the Study

International Communications Research, Media, PA, was retained by Right Management to conduct the survey of business leaders and HR executives in 19 countries during April and May of 2013. Of the 1,859 survey responses received, 32 percent were from the Americas (including 313 from the U.S.), 40 percent were from Europe, and 28 percent were from Asia Pacific.

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