Severance, Health Care Cushion Pain of Layoffs

By Stephen Miller Mar 7, 2009
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It’s not surprising that 88 percent of laid-off employees rate their employer’s handling of the reduction in force as “poor or very poor,” according to Telonu, a rating and review site for the workplace. In data collected since October 2008, laid-off employees rate how their layoff was managed at just 1.9 out of 5. Written reviews accompanying the ratings at Telonu’s Layoff Talk site attribute the low scores to the suddenness and impersonal nature of layoffs.

The silver lining is that the 12 percent of respondents who rated the experience as fair or better cited the following reason: fair or better severance payment and health insurance support.

“While it is understandable that most employees laid off will rate the experience as poor or very poor, at companies that are giving good severance, employees seem to think that the company had to take drastic action—but was ‘fair’ to them,” comments Telonu CEO Bari Abdul. Those employees who thought the experience was handled in a fair manner were most likely to indicate that they would consider working at the company again as the economy recovers.

For Most, value of Outplacement Support Is Low

More employers have begun offering outplacement services in an effort to preserve their reputation and reduce litigation risks, according to talent management consultancy Lee Hecht Harrison, which reports that 67 percent of U.S. companies in 2008 offered outplacement support to officers and senior executives and that 55 percent offered these services to all exempt employees (see Severance Best Practices Lessen Litigation Risk).

But according to Telonu, the value of the outplacement support provided to laid-off workers scored a low 1.3 overall, with 94 percent of laid-off workers rating it as poor or very poor. Interestingly, however, the 1 percent who rated the handling of their layoff as “very good” correlated highly with a positive view of the outplacement support they received. “Companies scoring high [in their management of layoffs] are the ones that are giving people time to find other opportunities,” including opportunities that might be available inside the company, says Abdul.

Stephen Miller is an online editor/manager for SHRM.

Related Articles:

Severance Best Practices Lessen Litigation Risk, SHRM Online Benefits Discipline, March 2009

Severance Remains Generous, Despite Recession, SHRM Online Benefits Discipline, March 2009

Amid Global Recession, Severance Seen as Strategic Tool, SHRM Online Benefits Discipline, March 2009

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SHRM Online Benefits Discipline

SHRM Online Compensation Discipline

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