Second Round of Cutbacks Likely
The so-called Severance & Retention Practices: 2001 Survey, which examines executive employment agreements and companywide severance pay practices, was undertaken by Unifi Network, a subsidiary of PricewaterhouseCoopers.
The sample comprised 114 companies, approximately 50% of which have downsized within the last year and a half. Of these, half plan to downsize again within the next 18 months.
The manufacturing industry is most affected by downsizing, with 61%, of the 38 respondents in this industry reporting downsizing or plans to downsize within the 18-month timeframe. In contrast, only 8% of respondents from the not-for-profit industry reported the possibility of downsizing again.
Survey results also show that 88% of the sample has some type of severance policy, while 62% of respondents offer employment agreements to their executives. Of those who offer agreements:
- more than 90% have agreements for CEOs
- more than two-thirds have agreements for senior management
- 44% of those with a severance policy have a minimum years of service requirement in order to receive severance payments
- more than three-quarters of these include a minimum requirement for senior management.
« EU Ministers Agree on New Employer Disclosures