Post-Employment Practices Remain Important Despite Economic Improvement
The recent BenchmarkPro 2011 survey by Compdata Surveys has revealed that nearly 61 percent of companies have a severance pay policy. The proportion of companies with severance policies in place varies depending on industry.
Companies participating in the survey revealed that the industries with the highest rates of severance policies were insurance and healthcare companies, reporting 71.2 percent and 62.4 percent, respectively. Service employers and nonprofits had the lowest rates at 58.5 and 45.6 percent, respectively. Other collected data also indicate that employers still make post-employment practices a priority, despite the continuing decline of the unemployment rate.
Approaches to severance pay differ from company to company with almost 43 percent of respondents claiming that they base the amount of a severance on years of service. About 35 percent of companies determine the amount by considering a combination of years of service and a fixed number of weeks. Employer discretion was the method at about 15 percent of companies and using a fixed number of weeks only was the least used formula, used by 4.1 percent of companies. Regionally, severance payout differs significantly. Midwest companies use employer discretion when determining severance 18.9 percent of the time, while companies in the West use the method 14.6 percent of the time. Companies in the Northeast, South Central, and Southeast regions use the employer discretion method even less at 13.7 percent, 11 percent, and 10.2 percent, respectively.
Amy Kaminski, Director of Marketing for Compdata Surveys stated, “Employees at many organizations are under a great deal of stress, dealing with increased workloads due to staffing deficiencies coupled with the fear of another economic downturn. Employers can help alleviate a little of that angst by implementing a clear set of post-employment practices, providing employees with an added sense of security in the event they are separated from their job.”