A comprehensive study, “Severance Practices Around the World,” with input from over 1,000 senior executives and human resources professionals from 19 countries, has just been released by Right Management. The study advises employers to reassess how severance practices influence their workforce strategies to attract, retain, and transition talent.

"The increasing importance of talent to an organization's success has created a new focus on how severance practices, as part of a broader workforce strategy, can impact a company's brand value," said Bram Lowsky, Group Executive Vice President and Global Head of Career Management at Right Management.

"The need to continually realign and right-size talent persists in today's uncertain economic environment, and companies that have competitive severance practices in place are ahead when it comes to future retention and recruitment efforts and engagement of remaining employees after a restructuring."

Severance practices vary by country and industry. Three out of four companies surveyed said their company had a formal, written severance benefits policy. Companies in Asia Pacific show a noticeably higher incidence of formal policies (82 percent), compared with 73 percent of companies in the Americas and 72 percent in Europe.

"Regardless of location and industry, we're seeing an evolving and strengthening connection between competitive severance practices and favorable brand image in the marketplace. Organizations that provide outplacement support and demonstrate fairness, care, and respect for those leaving not only ensure a positive restructuring outcome, but also realize an improved brand value that ultimately attracts new and retains current employees," continued Lowsky.

Key findings the from “Severance Practices Around the World “ study include:

• Across all regions, severance and termination policies are frequently governed by a combination of company policy and local/national law (52 percent).
• Three out of four companies said their company had a formal, written severance policy.
• Top executives earn the most severance per year of service no matter whether voluntarily separated (3.53 weeks per year) or involuntarily separated (3.48 weeks per year).
• Regardless of position or type of separation, severance is most often offered as a lump sum payment.
• For employees who remain after a downsizing or who need to be retained for a designated period, bonuses are most frequently offered when top executives are voluntarily separated (75 percent) compared to involuntarily separated (67 percent).
• More than half (55 percent) of the companies surveyed put a cap on severance calculations.
• Sixty-six percent of separated employees are required to sign a waiver before they can access severance benefits.
• A majority of employers (60 percent) reported they offer outplacement instead of monetary benefits. As few as 35 percent of employers offer cash in lieu of outplacement.

To request a copy of the Global Report, a 250+ page resource with benchmark data by country, region, position title, company size and industry, please contact your local Right Management office to schedule a meeting to discuss the research