automotive and transportation industry: 2021 guide to severance & workforce transition.

automotive and transportation industry: 2021 guide to severance & workforce transition.

What are the trends that have emerged in the past two years? Download this report to get the full picture.


Editor’s note: You may download the 2021 automotive and transportation industry severance and workforce transition report here.

The impact of COVID-19 on automotive and transportation companies so far has been remarkably uneven. While car buying has been up, for example, many employees in the field, from onsite production workers to taxi drivers, experienced the same kinds of setbacks and challenges that befell the economy at large. 

Now, as the dust finally begins to settle, it's worth checking in to take the pulse of the industry, specifically in the context of severance and workforce transition. What's changed since the onset of the global pandemic? What hasn't? And where are we going next? Here's what we found out.

four high-level trends

To help answer those and other questions, we surveyed HR leaders – ranging from HR managers to CHROs – at automotive and transportation companies around the globe. After crunching the numbers, here are the major trends that emerged.

#1: Severance isn't just for high-ranking leadership anymore. 

In fact, two out of three automotive and transportation employers now offer severance to all employees, nearly double the number from two years ago. Interestingly, the field also ranks second among the 18 industries surveyed when it comes to offering severance to administrative and clerical workers.

#2: Outplacement is on the rise. 

Outplacement is a powerful tool that can help employees land on their feet following an involuntary separation – and with the onset of COVID-19, the majority of automotive and transportation employers began offering it. 

#3: Redeployment programs appear to be effective, but they're often under-resourced. 

While 73% of respondents rated their organization's redeployment programs as effective or very effective, there's also clear room for improvement, evidenced by the 33% who said partnering with an external consultant would lead to improvements. That's double the number who said the same two years ago.

#4: Automotive and transportation employers continue to overlook a key element of employer branding. 

While more than two out of three employers in this space are actively working to protect their employer brands, many aren't using exit interviews to better understand how soon-to-be-former employees view their companies. 

related content: how to improve and manage your employer brand on employee review sites.

severance in flux: expanded eligibility, reduced benefits 

Earlier, we noted that an increasing number of employees in the automotive and transportation industry are now eligible for severance. And while that should be an unequivocally good thing for impacted employees, the full story is a little bit more complex.

Namely, the rise of expanded eligibility for employees coincides with a reduction in the benefits being offered by employers in this space. Of the 36% of automotive and transportation companies that made changes to their severance plans, for example, benefits were actually reduced in nine out of 10 categories. The three hardest-hit areas? 

  • payment of bonuses
  • financial planning
  • short-term disability

Any one of those could constitute a major financial burden for impacted employees. 

From the standpoint of talent attraction and retention, of course, it's too early to know how these and other changes will play out. But it is noteworthy that, for an industry well-acquainted with talent pain points – one in which retention is a focus area for nearly three out of four companies, according to our survey – these wholesale benefit reductions stand in stark contrast to what we're seeing in other fields. In fact, across all industries, employee benefits either held steady or increased in seven out of 10 benefits categories. 

Down the line, these benefit reductions might ultimately create more cost-related headaches than they allay in the short term.

related content: 2021 guide to severance and workforce transition.

zooming in on how retention and redeployment bring agility – and challenges

Having the right leadership in place is critical for any business, and even more so during times of economic crisis. So it should be no surprise that organizations across the automotive and transportation sector are eager to retain them.

That doesn't mean only holding on to the business's current leadership team – it also means retaining those who are shaping up to be the leaders of tomorrow. And this industry has proved especially savvy in this regard. More than half (53%) of respondents said their organization offers retention incentives to keep those with leadership on board, something only 40% said across all industries surveyed.

Automotive and transportation employers are also leveraging redeployment to protect their business and their people. 

To strengthen the bottom line, 50% of organizations have addressed quickly shifting business demands by rapidly redeploying employees to other areas of the organization. And to help avoid layoffs or reduce the number of impacted employees, roughly the same number (46%) have temporarily shared talent with outside or partner organizations. In fact, in 2020, Qantas Airlines joined forces with grocery retailer Woolworths and American Airlines partnered with Deloitte in what represented two of the biggest talent-sharing success stories we've seen in any industry, showcasing the enormous value such redeployment partnerships can have during times of crisis.

related content: how top employers embrace redeployment and retention initiatives to engage employees and promote brand.

key takeaways for automotive and transportation

It's clear that automotive and transportation have made significant headway in how they handle workforce transitions, for example, by better positioning impacted employees for future career success. Still, along with these gains, automotive and transportation companies have opportunities to engineer improvements in several areas. Partnering with external consultants on redeployment programs is one. Leveraging the power of exit interviews to manage redeployments – and in so doing, enhancing their employer brands – is certainly another. 

If you're looking for more insights into severance and workforce transition in the automotive and transportation space, we've got you covered. Click here to download your free copy of our latest report today.  


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