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3.0 from 140 votes

Severance Payments Remain Unchanged By Most Employers

Date: September 14 2011

Boston - September 14, 2011Most organizations have not reduced the amount of severance they have been giving to terminated employees during the past three years even though many have been trimming their workforces and cutting expenses, according to a survey by ClearRock, an outplacement and executive coaching firm headquartered in Boston.
Since 2009, two-thirds of surveyed employers have not changed the amount of severance terminated employees receive per year of service, according to the survey.
Outplacement career counseling is the severance benefit granted most frequently to terminated employees. More than 7 out of 10 surveyed organizations give outplacement Assistance to displaced workers.
Payments toward health insurance are made to all levels of employees by more than 4 out of 10 surveyed employers.
The survey was conducted in June and July 2011 and received responses from more than 100 mid-sized and large employers that currently provide or have offered outplacement to employees. To receive a copy of the report, email "Severance Survey Report" to
"Organizations have been trying to ease the transition of displaced employees to new jobs and careers with severance payments and outplacement career counseling," said Annie Stevens, managing partner with ClearRock ( 
"Outplacement serves as a bridge between the uncertainty of today and brighter futures for both employers and employees by enabling them to move forward and improving the morale of displaced and remaining workers," Stevens added. 
Among the key findings of the survey are:
*  Amount of severance: 67% of respondents report that the amount of severance terminated employees receive per year of service has remained unchanged during the past three years. 
*  Factors determining amount of severance: Years of service with the organization is the most common factor that determines amount of severance (used by 91% of respondents), followed by: title or organizational level (71%); salary grade or level (35%); and employment agreements in place (33%).   
*  Severance calculation: The severance calculation companies utilized most often for non-exempt employees is one week of severance per year of service, used by 33% of respondents. Middle managers receive one week of severance per year of service from 26% of organizations and two weeks of severance per year of service from 23% of companies. For senior-level executives, most surveyed organizations do not use a calculation formula, base severance on the circumstances of termination, or have no written policy. 
*  Outplacement career counseling: 77% of respondents provide outplacement assistance to employees of all organizational levels. 
*  Payments for health insurance: Senior-level executives receive payment toward health insurance from 51% of organizations. Middle managers receive health care assistance from 46% of employers and non-exempt employees receive this from 43% of organizations. 
*  Circumstances for providing severance: Reductions in force and job eliminations are the top reason why organizations provide severance (96%). Discharges due to poor fit to organization or job are the second most common circumstance for which severance is provided (60%).
*  Waivers: 88% of organizations require employees to sign a waiver or release of liability prior to receiving severance. 
About ClearRock
ClearRock is an outplacement and executive coaching firm that is recognized for genuinely caring about the people we work with.  We customize our approach to each individual and our track record speaks for itself - repeat business, long-lasting client relationships, rapid re-employment for our outplacement clients and numerous advancements for our coaching clients.  Our mission is to become long-term advisors to our clients, while providing the highest quality career consulting and executive coaching services in the industry.


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