Results of a new survey can help you determine how your own severance program compares to other companies in your location or industry. Compensation Resources' 2008 Severance Survey sought information from companies large and small, and included data from non-profit, privately held, and publicly traded companies.
Less than half of the responding companies have a formal, written policy for severance pay, according to the survey. Larger companies, in terms of number of employees or revenue, are more likely to have a written severance policy than are small companies. Many (78%) of the survey participants indicated that their severance policy has been in place for more than 3 years.
Publicly traded organizations were most likely to have had a policy for more than 3 years, at 82.8%. However, a significant number of survey respondents said they don't review their severance policy very often. A little over half (57.9%) said they review it on an as-needed basis, and just 21% said they review it every year.
Two-thirds of the companies participating in the Compensation Resources (www.compensationresources.com) survey make severance payments to employees who are terminated due to a reduction in force or a restructuring of the corporation.