Severance Alive and Well Despite Downturn

April 14, 2009 (PLANSPONSOR.COM) - Employers grappling with the pressures of the economic downturn are nontheless paying stepped-up attention to outplacement and severance for departing employees.

That was a key takeaway from a new survey by human resources consulting firm Lee Hecht Harrison (LHH) in Woodcliff Lake, New Jersey.

“There is a strong correlation between how a company treats departing employees and its ability to attract and retain top talent now and in the future, particularly when the economy rebounds,” Barbara Barra, executive vice president of operations for LHH, said in a statement. “Providing a socially responsible and compassionate career transition service is more than the right thing to do, it’s the smart thing to do.”

According to the survey 65% of companies have stayed with their severance policies, and 19% have even made them “more generous,” the report said

Reasons Cited

Among the surveyed HR executives, 69% said avoiding litigation is the top driver of their company severance policies – consider that in 2008 93% of surveyed employers required employees to sign releases in exchange for severance, compared with just 76% in 2001.

Otherr reasons cited included 43% who wanted to remain “employers of choice”, and 25% who said their top motivator in the area of severance policies was keeping former employees as future customers.

In addition, more employers are offering outplacement assistance as a solution to preserve their employer brand and reputation, according to LHH. In 2001, 53% of companies offered outplacement services to all officers and all senior executives, compared with 67% in the latest report.

The study was based on responses from 1,072 human resources executives.