HUMAN RESOURCES

Benchmark: Severance Policies

Some data showing how companies calculate severance pay packages for different types of employees.
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Downsizing affects small companies as well as large ones. In a recent survey, 66% of all companies with fewer than 100 employees said they had a severance policy, and 51% of those policies were in writing. Severance was based solely on years of service at 31% of the companies. Here's how the companies with policies calculated severance pay for different types of employees:

Percentage that paid that severance to . . .

Executive Exempt Nonexempt
Severance calculations employees employees employees
1 week's pay per year 59% 62% 72%
2 weeks' pay per year 19% 29% 25%
3 weeks' pay per year 5% 1% 0%
1 month's pay per year 11% 7% 4%
More than 1 month's pay per year 6% 2% 0%
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Note: Numbers have been rounded.

Source: "A Benchmark Study: Severance," Lee Hecht Harrison, New York City, 1995.

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Last updated: Jul 1, 1996

DONNA FENN | Inc.com Contributing Editor

Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.




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