Employee Severance, Friend or Foe

January 16, 2014 by Raymond Lee

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Employee severance packages have been around for a long time and come in many shapes and sizes. I would say that most all companies provide some form of severance package when an employee is either laid off or retire from their employer. Employee severance packages generally include additional severance pay and outplacement benefits that help the employee transition to their next opportunity.  Employee severance sends a message to the exiting employee that the company cares about them and wants to see the employee land successfully.


Other benefits that can be included in a severance package are things like , medical, dental or life insurance, relocation benefits,  retirement benefits, or stock options.

It seems the trend with employee severance packages is to load the package with a cash benefit versus some of the other benefits thinking that the more runway an employee has the more time and cushion they have to find their next job; therefore spending less in benefits such as outplacement services or career transition.

What is interesting is the older workers, over 50 as example, are the ones getting the bigger employee severance packages… such as six months, one year, and up of severance pay. These same workers sometimes feel they need to “take a break from the working world” and the severance pay allows them to take advantage of that before determining their next career path or job. This can be detrimental to the displaced employee especially when they fall into the over 50 category. With a long severance package and little to no outplacement services, this can really work against a person in transition because the longer the employee waits to reenter the workforce, they may be labeling themselves as not employable. Why? Because, companies typically like to hire people who are not actively looking for their next opportunity. Good employees who are laid off from a company typically have no problem reentering the workforce because of their track record, but if they decide to wait recruiters may begin to wonder if there is a problem.

I think severance packages that have rich pay benefits should also include outplacement services with an unlimited timeframe so the displaced employee can engage in an outplacement program early on that teaches them about the challenges they may face with putting the job search off six months. Careerminds outplacement services are timeless and have unlimited career consulting. Something as easy as networking and attending events during your early time off are fundamentals of job search that pay dividends later on when you’re ready to begin applying to jobs. People in career transition should understand that its critical to stay active during your transition because losing skills and becoming complacent sends a negative message to a company who is ready to hire.

Raymond Lee

Raymond Lee

Raymond Lee is the President of Careerminds, a global outplacement company based in Wilmington, Delaware. He has over 20 years of human resource, outplacement, and career consulting experience. He has his bachelor’s in psychology and holds a Master’s Degree in Industrial/Organizational Psychology from Louisiana Tech University. He is active in SHRM and ATD. Raymond’s been featured on SiriusXM Business Radio, CareerTalk, and the Wall Street Journal and he’s published a book titled, Clocking Out: A Stress-Free Guide to Career Transitions.

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