The Times Are Changing in Severance Arena

September 7, 2005 ( - A severance package offered to separated employees today is likely to be slimmer than one in 2001, according to a new survey.

A news release from HR consultant Lee Hecht Harrison found the three of the four job categories examined saw the number of employers offering two weeks pay for each year of service decrease, said. Senior executives dropped from 57% in 2001 to 54% in the latest poll, executives declined from 55% to 51% in the latest data, and professionals gave ground from 40% in 2001 to 38% in the latest survey. Administrative staff getting that level of severance actually bumped up a few points from 29% in 2001 to 33%.

Lee Hecht Harrison Executive Vice President Bernadette Kenny said in the news release that this year’s survey might show some retrenchment in severance and separation benefits given the downturn American industry weathered in recent years. In fact, Kenny said, the survey found that only 33% of organizations changed their severance policies in the past three years, and of those, 52% indicated that they had actually become more generous.

Among the other findings:

  • At the vast majority of organizations, full-time senior executives, executives, professionals and administrative employees are eligible for severance. Forty-nine percent offer severance to at least some part-time employees, up from 39% who offered severance to part-timers in 2001.
  • Organizations that do not calculate payments solely on the basis of years of service use a variety of formulas, with years of service as the most common component. Salary/grade level is a frequent component for professional and administrative employees, while title/level is slightly more frequently considered at the senior executive and executive levels.
  • Most organizations continue to set minimum and maximum severance amounts.
  • Median minimum severance has remained relatively stable since 1998 at four weeks for senior executives and executives, three weeks for professionals and two weeks for administrative staff.
  • Median maximum severance has increased to 52 weeks for senior executives and to 28 weeks for executives, both up from 26 weeks. Median maximum severance for the professional and administrative levels has remained at 26 weeks.

The 2005 study is based on a survey of 1,030 human resources executives from a sample of US-based organizations. The company surveyed similar populations in the spring of 2001 and 1998.

An executive summary of the survey is here .Requests for the complete report should be made by calling 800-611-4544.