How Severance Policies Can Help You Attract, Retain, and Redeploy Employees

August 23, 2019

As RiseSmart’s global 2019 Guide to Severance and Workforce Transition revealed, severance policies can be a lot more than a simply a benefit provided at the end of employment. As pressure mounts to find ways to keep existing talent, companies are expanding their use of severance benefits to re-engage and redeploy talent, as well as to drive the overall employee experience.

In a recent SmartTalkHR webinar, 2019: The Year of Exceptional Employee Experiences, RiseSmart’s Emily Elder, Alison Hernandez, and moderator José Ortiz covered the three big trends in severance benefits that were revealed by the study and offered three recommendation for HR leaders who seek to transform their workplaces by delivering exceptional employee experiences. Emily is a Senior Manager of Practice Development; Alison is the National Director of RiseSmart Australia and Southeast Asia; and José is the Director of International Marketing.

The survey spanned 20-plus industries and included over 1,500 HR professionals in the U.S., Europe, and Asia, 40 percent of whom represent Fortune-ranked companies and 58% of which have geographically distributed workforces.

This recap of their conversation has been edited for length. Listen to the webinar here to get the complete story.

Trend #1: Severance benefits are part of creating an employee-first culture

As companies seek to distinguish themselves as employers of choice, more (45 percent) are offering severance benefits to all employees. Half offer outplacement as part of a formalized severance plan and 63 percent of those offering outplacement provide it for non-exempt employees.

Emily: It's all about creating exceptional five-star experiences for employees. If we want to be an employer of choice, that experience needs to show up during the full life cycle of the employee, from the offer point to when they exit our organization.

If we want to be an employer of choice, that experience needs to show up during the full life cycle of the employee, from the offer to when they exit our organization. @EmilyM_Elder #SmartTalkHR @RiseSmart https://bit.ly/2Zmk7LF

Alison: We are seeing an increase in both focus and investment in the employee experience across our region with many large employers appointing dedicated employee experience managers. They're beginning to realize that the exit experience is just as crucial as the attraction, recruitment, onboarding, training, and ongoing development experience within the employee life cycle.

Emily: The trend toward an employee-first culture partially due to the low unemployment rate, as companies recognize the value of keeping the best and brightest. Even with the trend in hiring, companies are faced with a difficult decision of exiting employees in one area while trying to hire in another area for different skill sets, or maybe in a different region. We are seeing a trend towards expanding those severance programs as well as expanding the benefits within those programs.

Alison: Australia has a contingent workforce, which is close to a third of the overall employee base. Organizations are becoming more inclusive in providing transition support, and offering longer-term contractors access to programs.

Trend #2: Enhancing retention with a longer notification period

The work-through period—the time from when an impacted employees is notified that his or her job is going away to when the actual exit from the organization takes place—is being extended with the goal of providing smoother transitions and helping employees find jobs internally in other regions or other departments that may be hiring.

Emily: As companies extend the period of time between the notification and departure from the organization, they are looking for ways to make it easy for employees to stay by allowing them to work while still exploring other options. These may include flexible work arrangements so that employees can focus on looking for work, or a retention bonus if employees stay until a certain date.

Alison: People want to feel that they have control over their own destiny, time, and career. Providing workplace flexibility is one way that companies can demonstrate their understanding of these basic human needs.

Emily: This trend is really around using internal mobility as a way to retain valuable talent. There are not enough employees to fill the critical roles of the future and there is a significant case for supporting investments in reskilling people and helping them find new homes within the company.

I think the sentiment is ,‘Let's work on keeping our employees beyond just trying to keep them during the work-through period. Let's work on retaining them within our company, but maybe in a new role needed by the company.’

Alison: Sixty percent of companies surveyed have redeployment programs in place, and yet 42 percent do not rate their redeployment program as effective. Redeployment does take a bit of time. There may be a need for a slightly longer period of time between notification and exit, but we also need to support employees by creating a culture of mobility within the company and giving employees the assistance they need to make internal transitions successfully.

One organization we're working with has been investing up to $7,000 per employee in reskilling, retraining and redeployment support, as opposed to their previous policy of an immediate proceed-to-exit, which cost of around $70,000 for an average severance package. The investment of $7,000 versus $70,000 is a huge return on investment for every redeploy that they manage to retain.

Emily: One of the areas highlighted by respondents in our study was their inability to effectively match employees to the appropriate internal openings.

If you're spending a lot of time and resources doing this manually on your own, it doesn't make sense. Companies are now looking at ways to do it more efficiently, either through technology or partnerships with organizations that do this for a living. That way, they can really focus their energy on areas that add to the ROI.

Another issue is that employees often don't know how to show up for an internal interview. They may know the people with whom they are interviewing and show up a little too casual for an important interview. HR can also improve employee support by making sure that in addition to matching employees with job openings, they have resources available to prepare employees to be successful in those internal job searches. This includes knowing how employees are responding to internal applications, whether they have resumes and how these look, and whether they know how to interview properly. If you're only focused on the technology aspect and not on providing the individualized support employees need, that can be a barrier to success.

Alison: One of the common frustrations that we hear from employees is that the support [from employers] was too late. We know that employees need and want support within 24 hours of that change notification. Our outreach team will give an initial well-being check to provide the employee immediate advice and support. We quickly follow that up with access to further support resources online and then, ultimately, with the coach and resume writer. It's like a first-responder triage. If we can support employees quickly after a notification, we can help them move from a place of relative fear and uncertainty to actually having a great experience and help them achieve more certainty as soon as possible. I think that has a really big impact on the ultimate employee experience.

If we can support employees quickly after a notification, we can help them move from a place of fear to actually having a great experience. I think that has a really big impact on the ultimate employee experience. @alisonrisesmart #SmartTalkHR @RiseSmart https://bit.ly/2Zmk7LF

Trend #3: Supporting mature-age employees in their employment choices

As low unemployment collides with the aging of the workforce, organizations are seeking ways to retain their most experienced employees longer by promoting creative pathways to retirement that may include work, but in a new form.

Emily: Our research found that, in some organizations, workers aged 50 and over constitute over a third of the workforce, and employers simply don't have the talent pipeline to replace them. Companies are becoming more creative about supporting mature-age workers by helping them plan different pathways to retirement, perhaps working longer but working differently.

Alison: This can be a myriad of things: reduced hours, a condensed working week, or even retiring and then returning as a contractor during peak periods of the year. More employers want to create intentional strategies to support older workers to help them stay, or at least to support them in making a positive and productive transition toward future retirement.

Emily: When people exit a company because their position is being eliminated, their expertise is so much broader than their individual position. I think that's why we're seeing retirement benefits and retirement planning at the top of the list of items currently being offered [as part of a severance package], and an openness to allowing people to work differently, or just to be available to fill that knowledge gap that may occur when an aging worker leaves the organization.

Alison: Age is one of the diversity pillars that is inclusive of all of us. We have an opportunity as HR practitioners to create the future we ourselves will move into. Employers are starting to experience an increase in [knowledge and skills] loss due to retirement as baby boomers retire.

Emily: Organizations are realizing they need help addressing the unique needs of the individuals that make up their multi-generational workforce. They’re asking if the firms they're partnering with as they move through these organizational changes have the tools and the skills to support people at any age.

Alison: The first step is really about awareness; that is, understanding the risks of loss due to retirement—of not being able to replace key skills and talent, and also balancing that out with what are the commercial opportunities of workforce aging to look into. There is an untapped talent pool and an opportunity to lift engagement and productivity through supporting employees with creative career and retirement planning tools.

Employers approach us to help them in three distinctive ways. First, to understand the business case by looking at the data and pulling together an age workforce strategy. Second, to support mature-age workers with career planning and transition-to-retirement planning tools that help them make informed decisions. Third, to identify those ‘single points of risk’ across the organization—people with critical knowledge, deep smarts, and often long tenure—and to find ways to transfer knowledge to future workforce generations, as well as share knowledge across the organization.

Three Actions HR Can Take to Improve Severance Plans

Put the severance policy in writing: Regardless of the economic environment, layoffs still happen, and it’s important to be prepared. Mergers and acquisitions, as well as automation, can cause redundancies that results in layoffs.

“If an organization puts the policy in writing, giving clarity, then it's also an opportunity to review benefits for fairness and inclusivity,” Alison says.

Give severance benefits to all: The trend today is to give benefits to all employees, not just top executives, given the focus on fairness and the importance of protecting the employer brand. Severance can be extended based on life stage and tenure, rather than hierarchy.

“Offering severance to all employees isn't just the right thing to do; it's actually good for business,” Allison says.

Adds Emily, “Intuitively you know there are certain roles that will need more time to find their next position and it's not always based on level.”

Work with a qualified business partner to provide effective redeployment programs: Taking care of employees at every stage of their journey, either within or out of your organization, is the most significant differentiator between best-in-class companies and all others, according to Emily and Alison.

Providing effective redeployment programs through a qualified business partner as part of a severance package is difficult to do internally due to the time and expertise required to assist impacted employees

It's more time- and cost-effective to partner with an organization that can provide career coaching, resume optimization, and job search assistance to help employees land the right roles internally and to enable organizations to retain critical skills and institutional knowledge.

“Finding ways to keep the talent you have can have huge cost benefits, Alison says. “It will establish a culture of talent mobility and keep employees engaged and positive about their association with your company. It's a win-win scenario, to be sure.”