wholesale/retail and CPG industries: severance and workforce transition trends, risks and opportunities.

Editor’s note: You may download the 2021 wholesale, retail and consumer packaged goods severance and workforce transition report here. 

Few industries felt the sting of COVID-19 so quickly or convulsively as the wholesale/retail and consumer packaged goods (CPG) sector. From spiking e-commerce demand to unprecedented in-store health and safety challenges, an avalanche of change happened practically overnight – and compelled these companies to overhaul their operations almost as quickly. 

What impact has all of that volatility had on organizational policies around severance and workforce transition? To find out, we connected with HR leaders (from HR managers to CHROs) at wholesale/retail and CPG companies around the world. 

Here's what they told us. 

four high-level trends

To quickly bring you up to speed, let's start with the high-level view. After crunching the numbers, four things stood out about the big picture in the wholesale/retail and CPG space: 

#1: Employee experience has become the 'true north' for policy. 

If and when wholesale/retail and CPG organizations are making changes to their severance programs, the majority are doing so with employee experience top of mind. We'll break down what this means in practical terms in a moment. 

#2: Severance is expanding – and getting more generous. 

A significantly larger number of employees (not just executives) are now eligible for severance. In fact, employees with less than a single year of service are eligible for severance at more than one in three companies – that's 3.5x the average across all of the industries we surveyed.

#3: Redeployment programs are working, but they could be even better. 

Almost four out of five (78%) wholesale/retail and CPG companies have redeployment programs in place, and nearly the same number (81%) of respondents in our survey said their organization's program is effective. While that's certainly great news, there's one caveat at play: Almost half (42%) of the respondents whose companies are managing redeployment in-house said partnering with an external consultant would make those programs more effective — three times the number who thought so two years ago. 

#4: Employer branding is now more important than ever. 

Nearly four out of five wholesale/retail and CPG companies report implementing formal programs to protect (and improve) their employer brands, which is the highest percentage we saw across all industries. There's a clear connection between employer branding and talent attraction, hiring and retention – and this industry is way ahead of the curve in ensuring their brands have a positive impact on hiring.  

related content: 2021 guide to severance and workforce transition.

finding success with talent retention and redeployment 

It's hard to overstate the importance of having the right leadership in place. In times of crisis, of course, that's probably more valuable than ever. In light of the recent past, then, it should be no surprise that organizations in the wholesale/retail and CPG space are desperate to retain them. 

What is surprising, however, is the extent to which this retention priority reaches out across the org chart, extending even to employees who, while not technically leaders today, have demonstrated a capacity to lead in the future. 

Indeed, the numbers don't lie: More than half (53%) of wholesale/retail and CPG employers indicated that they want to retain employees with 'leadership potential.' On the other hand, only 40% of employers across all industries said the same. 

Redeployment has also proved a powerful force for companies to retain valuable employees and help avoid layoffs altogether. In fact, 81% of respondents rated their employer's program as effective or very effective – a great sign of the industry's maturity in this area, given that only 62% said the same in 2019.

But while redeployment offers innumerable benefits for companies and talent alike, maintaining a successful program requires tremendous expertise and resources – which, in turn, add incredible strain on teams managing redeployment internally. What would help minimize HR's burden and ensure an optimally effective program? Nearly half of respondents cited partnering with an outside consultant, being able to better match employees to open positions and providing career support.

related content: Talent scarcity weighing you down? A redeployment strategy is your pick-me-up.

a closer look at how the industry is improving the employee experience

We noted above that wholesale/retail and CPG organizations appear to be adjusting severance programs with an eye on employee experience. And while that sounds wonderful in theory, what does it look like in practice?

For one, it means severance policies are changing. Nearly half of these companies now offer outplacement services during workforce reductions, and among those that do, their decision to build an outplacement program was clearly motivated by the pandemic-driven disruption. In fact, 72% explicitly stated that COVID-19 influenced their decision to offer outplacement.

related content: what are the benefits of outplacement services?

Another indicator that employee experience is truly the focus: the level of cash-friendly generosity you'll find in severance packages in this industry. We mentioned earlier that employees with less than a single year of service are eligible for severance at more than one in three companies in this sector, but many employers are going even further. For example, nearly 40% of wholesale/retail and CPG employers indicated they usually offer four to six months of salary to separating employees. That percentage was only 31 percent across all other industries, by contrast. 

What we're seeing, in other words, is solid evidence that wholesale/retail and CPG employers aren't just talking the talk when it comes to employee experience. They're walking it, too.

key takeaways

Despite the watershed disruptions of COVID-19, employers in the wholesale/retail and CPG sector appear to be successfully pivoting their strategies, shifting their operations – and making changes to their severance and workforce transition policies that align with these new priorities.

Perhaps the one missed opportunity to mention in closing: redeployment. While it's true that more than half (56%) of wholesale/retail and CPG companies are now leveraging the expertise of external consultants to manage their redeployment programs, those that keep the myriad responsibilities in-house appear to be suffering for it. In fact, 42% said that partnering with an external consultant would make their redeployment more effective – triple the number (14%) who said the same in our 2019 survey. So in this last area, at least, there's still room for improvement. 

Ready to go even deeper into our analysis? Download your free copy of our full report on the state of severance and workforce transition at wholesale/retail and CPG companies today.