Editor’s note: Randstad RiseSmart is hosting a webinar, ‘how to promote employee experience, retention and redeployment with severance and workforce transition planning,’ on Tuesday, September 21 at 3 p.m. ET/12 p.m. PT. Register for the webinar here.
HR professionals spend a significant amount of time and resources on attracting and retaining qualified talent to meet evolving business needs. Just as it’s important to offer an employee-first experience throughout the recruitment and hiring process and during an employee’s time with an organization, it’s equally important to extend this experience to individuals as they exit the organization.
Forward-thinking organizations understand the benefits of offering employees impacted by workforce restructuring robust severance and outplacement benefits – including helping individuals land on their feet and highlighting a positive employer brand. With so much focus now on attracting and retaining talent, updating severance plans is likely not among the top-of-mind activities of most HR professionals. Yet, if the pandemic has taught us one thing, it’s the value of being ready for change. Being nimble requires preparation – and it’s always better to be ready than to be scrambling.
To learn more about severance trends, Randstad RiseSmart surveyed almost 2,000 HR leaders from eight countries and a wide range of industries. Considered a benchmark report by HR professionals, the biennial ‘Guide to Severance & Workforce Transition’ provides a global snapshot of the shifting trends and attitudes toward severance, separation, outplacement, retention and redeployment – and the impact on employer brand. Below, we’ve highlighted a few of the top trends unveiled by the report.
more organizations care about the employee experience
Throughout the survey, there was a noticeable trend toward improving the employee experience and taking care of employees. Over the past two years, more employees have started receiving severance benefits and tenure for eligibility has decreased at many organizations. Additionally, 27% of organizations have updated their severance policies, with seven of the 10 areas of coverage – such as education/retraining, financial planning, life insurance and outplacement – either expanding or remaining the same overall.
Across all respondents, 63% began offering outplacement or continued to offer it in the past two years, with 60% indicating that COVID-19 affected their decision to do so, which shows a high degree of corporate responsibility and empathy during what has been a challenging period. When asked why organizations offer outplacement, the top reasons all tie back to the employee experience – including maintaining employee morale and productivity, valuing an employee-first culture, maintaining a positive employer brand and competing for talent.
severance eligibility has expanded
Eligibility for severance has expanded, not just in the overall numbers of employees eligible, but in the type of roles eligible and in the shorter length of service required to receive eligibility. The main reasons for this are tied to taking care of the workforce and safeguarding employer brand.
In the past two years, organizations have expanded severance plans to cover more employees – 64% of respondents offer severance to all employees, compared to only 44% in 2019. In additions, those in administrative and clerical positions are more likely to receive severance (42%) than previously.
The service time required for eligibility has also shortened, as shown with a 13% drop in the number of companies requiring at least five years of service time, from 38% to 25%, and the increase in the percentage of employees eligible for severance with less than a year of service (10% in 2021 versus 3% in 2019). Additionally, nine percent of companies do not require a minimum service time.
more employees are receiving severance – but it became a luxury for some
While there was an expansion of severance overall, some companies, particularly those with fewer than 1,000 employees, had to cut their severance benefits due to the economic downturn from the COVID-19 pandemic.
The survey showed a 20% increase in the number of organizations offering severance to all employees (64%), but 27% of organizations changed their severance policies to cut costs. In fact, while coverage expanded in seven out of 10 areas, as highlighted above, it decreased across three areas – eligibility, retirement and payment of bonuses.
Looking ahead, when asked whether they plan to make changes to their severance plans in the next 12 months, 26% of organizations said ‘yes.’ Among the benefits slated for change are health benefits continuance, eligibility and retirement benefits. While some organizations have had to cut severance costs due to the pandemic, severance offers organizations a variety of benefits related to talent attraction, retention and employer branding. We are optimistic that as the economy and labor market bounce back, many companies will reinvest in severance benefits they might have been pulled back during the pandemic.
redeployment is front-and-center – but still under resourced
Redeployment has gained a lot of traction as a valuable business tool and is no longer used primarily as an option before outplacement. Nearly 80% of organizations have formal redeployment programs in place to help workers find new roles internally, a 28% increase compared to 2019. Additionally, 56% of respondents noted that they’ve used redeployment to rapidly address changing business needs in the past two years, while 44% used redeployment to help employees expressing a desire to move internally to find new roles.
The survey also found that 88% of organizations encourage team members to apply for other opportunities internally. These programs are clearly working, as 97% of respondents with these programs in place indicate that they are at least somewhat effective.
As more companies adopt formal redeployment programs, there is room for improvement, however. According to the survey, top ways redeployment programs can be enhanced include matching employees to open roles, career coaching, resume writing and partnering with external consultants.
with retention, flex is in and cash is king
While many organizations are doubling down on efforts to preserve jobs, such as increasingly embracing redeployment, in many cases, reductions in force are unavoidable. And when valued employees are let go, it can lead to a decline in morale, engagement and productivity among remaining employees. Some may even lose focus on their current roles and start seeking opportunities elsewhere – which is an even greater concern to organizations given the current ‘Great Resignation’ trend in which, according to one survey, 95% of workers are considering changing jobs.
With retention a top issue for employers, being prepared to keep your valuable employees when an involuntary separation is announced is critical. Companies have broadened their retention targets in the past two years, with far more offering flexible work arrangements and cash incentives. Most organizations surveyed (86%) offer retention incentives – which shows that employers are taking turnover risks seriously and want to show remaining employees that they’re valued. Of employers that offer retention incentives, the top benefits include more flexible work arrangements (52%), payment of upcoming bonuses that employees would have been eligible for after termination (43%), retention bonuses (39%) and additional paid time off (31%).
While some employees might still choose to leave the organization even if these incentives are offered, they will be more likely to move on their next opportunity while viewing their previous employer in a positive light, which can help preserve the organization’s employer brand.
employer brand is reaping the benefits of an employee-first focus
There are many factors that affect how an employee or a former employee views their company. While we can’t say that there is a definitive link between a decline in negative company reviews online after an involuntary separation and the expansion in severance, redeployment and outplacement, when companies put employees first, it pays off in many ways.
Employer brand takes a long time to build but one wrong move that captures public attention can have negative long-term impacts. Given the widespread impact of the COVID-19 pandemic, organizations – such as Airbnb, Intuit and Mozilla – that did right by employees impacted by workforce restructuring by offering severance, outplacement and other benefits have stood out in a positive way from an employer brand perspective, while some other organizations received backlash for not handling layoffs with empathy and compassion.
related content: reduction-in-force layoff letter to employees: template, sample and best practices.
As severance, redeployment and outplacement expanded, our survey revealed an 11% drop overall in negative online reviews following a layoff compared with two years ago. While there was a seven percent uptick in negative reviews on social media sites such as Facebook, Twitter and LinkedIn, there was an 18% plunge in negative reviews on employer review sites, from 64% in 2019 to 46% in our latest survey. Taking an employee-first approach to career transitions can improve an organization’s employer brand and ability to retain and attract talent, while also reducing talent acquisition costs in the long run.
The pandemic has accelerated workforce changes, including driving a renewed emphasis on caring for employees and employee wellness. A severance plan that aligns with altruistic corporate values will enable organizations to promote a consistent approach to employee welfare. For additional details on the latest severance and workforce transition trends, download our global report.
lindsay witcher.
svp of sales and customer success, incoming managing director
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