NEW YORK, Aug. 27 /CNW/ -- Organizations find that separation benefits
provided to terminated employees impact the morale of remaining employees,
according to a new study, Global Trends in Separation Practices. The research
findings were released today by DBM, a leading global outplacement, coaching,
and career management firm, and the Human Capital Institute (HCI), a global
professional association and educator advancing the science of strategic
The study of more than 1200 business leaders from 45 countries shows a
company's decisions about separating employees, including severance pay,
outplacement support, and other continuing benefits, can create ripple effects
across the entire enterprise long after the departing employees have left the
organization, even affecting the company's brand and public image. Key
-- Companies consider separation practices as part of an overall strategy
to preserve and strengthen the relationship between the organization
and its disparate constituents.
-- Most organizations provide severance to at least some of their
employees with almost half offering severance to all of their
employees, including part-time employees.
-- Most organizations with 100 or more employees provide outplacement to
some terminating employees.
"In today's marketplace, organizations recognize that support for
departing employees is a requirement of business rather than an option," said
Robert Gasparini, CEO and Chairman of DBM. "Separation policies are now viewed
as integral to business strategy, helping to safeguard the company brand and
reinforce relationships with employees, consumers and stockholders."
While all organizations must conform to their local laws and regulations,
the study shows there is an underlying global understanding that separation
practices, as necessary elements of an overall business and talent strategy,
can help preserve and strengthen the relationship between the organization and
its disparate constituents.
-- Virtually all organizations reported problems resulting from a
reduction in force, particularly noting decreased levels of morale
(71%) and reduced loyalty (62%) among remaining employees.
-- According to 95% of human resources professionals, the morale of
remaining employees is the most important indicator of a successful
-- When determining separation policies, companies place the greatest
emphasis on consideration of departing employees (84%) and protecting
the morale and commitment of remaining employees (82%) over financial
considerations such as budget (68%) and return on investment (40%).
-- Most organizations (81%) believe providing higher levels of separation
benefits most significantly impact the morale and productivity of the
Most organizations (85%) provide severance to at least some of their
employees with almost half (45%) providing severance to all of their
employees, including part-time employees. Organizations that provide severance
-- Most (66%) pay severance in lump sums instead of as continued salary
-- Half (54%) increase severance benefits for terminations resulting from
organizational change events, such as mergers, acquisitions, closures,
outsourcing and the sale of the company.
-- Years of service (85%), followed by level within the organization
(50%), are the most frequently used factors for determining severance.
-- Approximately half of organizations provide senior executives (48%)
executives (49%) with three weeks or more of severance for each year
service; managers and below generally receive two weeks or more per
year of service.
-- The majority of companies set maximum severance payments to 12 or more
months of salary and minimum payments to at least 2-4 weeks of salary.
-- In some countries, severance formulae are impacted by local employment
laws, most notably in parts of Europe and Latin America, where social
legislation plays a large role in determining the severance formulae.
"Our research shows that differences exist in how companies from various
regions of the globe provide severance support for separating employees," said
Allan Schweyer, Executive Director and SVP of Research at HCI. "However there
is a high degree of similarity with respect to why they provide such support."
Outplacement services are provided to some terminating employees by 75%
of organizations with 100 or more employees. Organizations that provide
-- The primary motivation cited for providing support is corporate values
(76%) while less than 10% identify labor relations or legal
considerations as a rationale.
-- Level within the organization is the factor most often used to
determine outplacement support (63%), followed by years of service
-- More than half (58%) increase levels of outplacement support under
certain circumstances, such as mergers, acquisitions, and facility
closings. Increased support is often determined on a case-by-case
-- Globally, at least 90% of human resources professionals agree the most
valued features of outplacement programs include support, coaching and
guidance from consultants; self-marketing materials; skill building
coaching; job leads and networking connections; and access to online
-- Some variations in findings concerning the importance of job leads as
part of an outplacement program were reported, influenced by
legislation in some European countries and cultural differences in
Latin America. Networking and job lead connections are most commonly
valued in North America, where 47% of human resources professionals
believe such support to be an essential element of outplacement
"When employees leave an organization, they don't just become
ex-employees," notes Gasparini. "Departing employees become customers,
referral sources, competitors, and perhaps even future employees returning to
the organization. By well managing employee separation, companies can fortify
loyalty and mitigate retention risk among the remaining workforce."
About the Study
DBM conducted a research study in partnership with the Human Capital
Institute to determine global trends in separation practices. The participants
represent a wide cross-section of industries. Global variations were
investigated on all survey items and the respondent countries were grouped
into four global regions: Asia Pacific, Europe, Latin America and North
America. Of those participating, 91% were human resources professionals.
DBM is a leading global outplacement, coaching, and career management
firm providing services to private and public companies, not-for-profits and
governments. Visit www.dbm.com to learn more.
The Human Capital Institute is a global network of more than 115,000
members in 40 countries committed to shaping the world's new talent economy.
Visit www.hci.org to learn more.
For further information:
For further information: David Keathley of DBM, +1-212-692-7728,
firstname.lastname@example.org Web Site: http://www.dbm.com