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The Benefits You Aren’t Talking About (But Should Be)

If you are reading this blog, then you probably already know that while salary is important, benefits can potentially make or break your talent attraction and retention strategies. But while many companies strategize over the competitiveness of the benefits of working for their organization, few take the time to consider the benefits they offer upon separation.

Because planning severance involves thinking about layoffs, severance packages carry a certain stigma. It can be much more exciting to talk about more positive events, such as recruiting and hiring, yet severance can have just as great an impact as salary on the perception of your employer brand or your ability to take care of your workers throughout the entire employee lifecycle.

We live in a culture of openness and sharing—and with employer review sites and social media paving the way for communication about your employer brand, it is easy for potential candidates and current employees to find out how their peers are treated when they are let go. With thousands of layoffs, mergers, acquisitions and restructuring events continuing to occur across the country each year, planning for an eventual separation simply makes good business sense.

After an extensive study of the severance practices of 250 U.S. HR professionals across over 15 industries, RiseSmart identified severance benchmarks by industry, as well as an unexpected disconnect between why companies offer severance and how severance benefits are actually being implemented.

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To help you put together the most competitive severance offering, here are a few key takeaways:

Severance is More Than Just Pay

While payment of a few weeks or months of salary following termination of employment can certainly contribute to maintaining an impacted employee’s quality of life during a transition, adding benefits to the package can help further decrease the financial and emotional burden.  The RiseSmart survey indicated that at least 70 percent of organizations, for example, offer some kind of COBRA or health plan continuation as a part of their severance package.

Moreover, many companies see the payment of previously eligible bonuses, retirement planning, continuation of stock options and a host of other benefits as necessary parts of their severance offering. When considering your own severance package, you (and your employees) may be well served by benchmarking the benefits offered by your competitors and peers to help make sure you are offering a robust, competitive, and appropriate severance package to each of your employees.

Many Companies Who Want to Protect Their Employer Brand…Aren’t

One of the top reasons companies cited for offering severance was the benefit it conferred upon their employer brands. Offering severance is one factor that indicates that your organization plans to take care of your employees, even during potentially difficult economic times. Competitive severance (and remember: your potential candidates and current employees have the tools to do the research online) indicates that you not only plan to take care of your employees, but you also have a good plan in place for them.

The results of the RiseSmart survey indicated that 61 percent of those employers who responded that employer brand was their top priority do not monitor their employer brands online during a layoff. In other words, their goals (employer branding) are unmeasured, leaving those employers with little or no way to determine if their strategy (severance) is actually creating ROI. The lesson we can take away from this is simple: As a best practice, design your severance package with overarching goals in mind and actively monitor your employer brand during major events, such as layoffs.

Outplacement is a Benefit

During a reduction in force, one of the most important benefits that you can offer your impacted employees is the opportunity to transition into a new job more quickly. Severance pay and benefits continuation can certainly help reduce the burden for employees during the transition, but helping those employees discover ways to shorten the amount of time it takes to get a new job goes a long way.

Currently, the average job search can take about eight months—likely outlasting the average household savings ($25,000, according to the Employee Benefit Research Institute) – much longer than most standard severance packages.[1] Perhaps some of that time could be attributed to the fact that job searching can be a job in itself.  Many workers, while skilled in their current roles, are not professional job seekers. An effective outplacement program not only provides coaching tips to help impacted employees refine their job search skills (such as networking and interviewing), but also help with resume writing and job sourcing, so the impacted employee can focus on landing a job, and not just looking for one.

At least 70 percent of RiseSmart survey respondents indicated that their organization offered some form of outplacement as a part of the severance package. That means that the majority of companies may recognize outplacement’s ability to take care of the employee and the employer brand: if outplacement helps makes the transition easier or faster for the impacted employee, then the employee may go on to recommend their former employer to potential candidates or potential customers.

For most of the organizations we surveyed, outplacement clearly has a place at the benefits table and can help increase the competitiveness of any severance package that you offer in the years going forward.

While they may not be fun to contemplate, restructuring events and reductions in force continue to happen. They are a part of the fabric of our business landscape, and it is generally better to acknowledge and plan for the eventuality and help protect your employees and company in the process. Severance—along with packaged benefits like health insurance or outplacement—can give you the competitive edge in your talent attraction, retention and branding strategy, so it’s never too late to start having the conversation.

To receive a free copy of the Guide to Severance and Workforce Transition, click here.

 www.risesmart.com

 

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[1] The RiseSmart survey found that the average severance payouts are two months for professionals, three months for management, and six months for senior executives.

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