Do the Math

The following example demonstrates the cost efficiencies that can be achieved with Severance Solution. It assumes that 1,000 employees are terminated with average severance payments of $20,000 per worker, that state unemployment benefits are 30 percent of salary, and that another job is found 80 percent of the way through the severance period.

Given:

• Number Terminated: 1,000
• Severance Spend: $20,000,000

Resulting Savings:

• Option 1 only = $1,000,000
• Options 1 and 2 = $6,000,000 (Including $5,000,000 from Option 2 and $1,000,000 from Option 1)
• Options 1, 2, and 3 = $10,000,000 (Including $4,000,000 from Option 3, and $6,000,000 from Options 1 and 2)

National averages indicate that, even without a downsizing event, employers experience an annual involuntary turnover rate of two percent. (Source: Saratoga Institute, 2000 Human Capital Benchmarking Report.) Severance efficiencies, and the more effective allocation of resources, are available to organizations at any level of churn. Evaluating needs and establishing an informed severance program enable an organization to proactively manage workforce needs, human resources policies, and business objectives. And, at whatever future point a larger-scale layoff might be required, the organization is positioned to assist terminated employees with career transition.