Editor’s note: You may download the 2021 technology industry severance and workforce transition report here.
Among the causes of employee separations – revenue downturns, workforce restructurings, M&A activity – add another to the list: global pandemics. In fact, the unprecedented disruption of COVID-19 has put organizational policies around severance and workforce transition in the spotlight as never before.
How have tech companies responded to the challenge? In what ways are policies changing? And no less importantly, with recruitment a top priority at 81% of tech firms globally, how are they aligning their severance and workforce transition programs to improve strategic talent outcomes generally?
Let’s find out. In this post, we’ll break down the state of severance and workforce transition in tech at the moment, starting with high-level trends and then turning to key learnings.
five high-level trends in tech
To unpack the latest high-level trends around severance and workforce transitions, we surveyed HR leaders with different levels of seniority (from HR managers to CHROs) at best-in-class tech companies around the world. After crunching the numbers, what did we conclude?
The following five high-level trends stood out.
#1: Increased focus on employee experience continues to drive change.
Improving the employee experience was the most-cited reason for updating severance benefits.
#2: Once reserved for leadership, severance is being democratized.
So much so, in fact, that many tech companies now offer it to all of their employees. That’s a significant shift.
#3: Redeployment programs are big – but they’re often under-resourced.
While most tech companies (84%) have redeployment programs in place, 42% of respondents agreed that partnering with external consultants could make their program much more effective.
#4: The global pandemic has led to a significant uptick in outplacement.
Nearly three out of four tech employers began offering outplacement in the wake of COVID-19. Interestingly, this change doesn’t appear to be playing out to quite the same degree in other industries.
#5: Despite attempts to control employer branding, fallout remains an issue.
Most respondents continued to suffer upticks in negative sentiment, whether on company review sites or social media, in the aftermath of layoffs.
connecting the dots: severance eligibility, employee experience and employer brand
Consider for a moment the fact that 57% of job seekers say they won't even apply to companies with negative online reviews. In other words, the stakes where employer branding is concerned are almost impossible to overstate. Moreover, evidence of a causal relationship between employee separations and negative sentiment, whether on review sites or social media, is simply too strong to ignore.
Increased severance eligibility is one move many tech companies are making with an eye toward their employer brands. Explicitly so, in fact – 'protecting brand reputation' was among the top three motivations cited by respondents. On the flip side, nearly half viewed expanded eligibility and enhanced severance benefits as potentially valuable lures to help them attract talent.
But simply from an employer brand perspective, what can tech companies do to protect their employer brand reputations more effectively if and when unfortunate events like separations occur?
Gauging employee sentiment would be a good place to start. Indeed, that most tech companies lack key metrics in this arena is among the more surprising takeaways from our survey. Notably, for example:
- Three quarters of respondents said they aren’t currently conducting formal exit interviews when layoffs occur.
- Still more surprisingly, another 70% indicated that they don’t have programs in place to measure sentiments or get feedback from affected employees.
This lack of visibility into how employees feel, or what they think, at the time of separation is something that companies should look to address. Taking action in the near term could lead to significantly better outcomes, including less of a negative impact for employer brands, down the line.
retention, redeployment and outplacement bring agility – and challenges
When COVID-19 made landfall, unprecedented uncertainty, disruption and instability – varying only by degrees – were made into new normal for virtually every business. Tech may have weathered that storm better than most, but the industry was by no means immune to the bigger-picture trend.
In light of the veritable ‘war for talent’ in the tech space being waged right now, and with the overall volume of tech job postings up by as much as 16%, what more can tech companies do to retain valuable talent during a layoff?
Offering retention incentives is a lever many businesses in the tech space have put into place to great success. From greater flexibility in working arrangements to retention bonuses, such incentives have grown in popularity over the past two years.
The tech industry is also increasingly turning to redeployment. Our survey found that 84% of organizations in the space offer programs to rapidly redeploy employees or share employees with partner organizations to address changing business needs and avoid layoffs. Maintaining an optimal program requires tremendous efforts and resources, however – with the majority of respondents noting they want to improve their organization's program when it comes to matching employees to job openings and providing more robust career coaching and resume support.
And when it comes to outplacement, leveraging strategic partnerships is an area to explore. After all, only around half (54%) of tech companies currently manage their programs via external partners or a hybrid of both service providers and internal stakeholders, compared to 82% of companies in the chemical/utilities/energy space and 79% of nonprofits. So there are clear ways that tech companies could enhance outplacement, and in so doing, ensure that it delivers maximum value not only to impacted employees, but to their businesses as well.
Given the scope of existing hiring challenges – not to mention the magnitude of risks facing tech companies from an employer brand perspective – organizations that lean on the expertise of external partners when it comes to both outplacement and redeployment stand to gain a competitive advantage down the line.
key takeaways for tech
We’ve broken out five high-level trends in severance and workplace transition in the tech industry, then narrowed our lens to look at a few key learnings from our survey of global HR leaders. But this is really just the tip of the iceberg.
From the latest in severance policies and plans to severance cost concerns, you’ll find that and more in the full report. For deep-dive, granular insights into the state of severance in the tech industry, download your free copy today.