Kansas City, Kan. – The Bureau of Labor Statistics recently reported the national unemployment rate dropped to 8.5 percent in December 2011, the lowest it’s been in nearly three years. Although the rate of unemployment continues to slowly trend downward, it remains important for employers to have a defined set of post-employment practices in place. The Compdata Surveys BenchmarkPro 2011 survey results found 60.5 percent of companies currently have a severance policy.
This rate varies by industry as 71.2 percent of insurance companies report having a severance policy in place, compared to 62.4 percent in healthcare. Services employers have severance policies at a rate of 58.5 percent. Organizations in not-for-profit report having them the least, 45.6 percent.
“Employees at many organizations are under a great deal of stress, dealing with increased workloads due to staffing deficiencies coupled with the fear of another economic downturn,” said Amy Kaminski, director of marketing for Compdata Surveys, the nation’s leading pay and benefits survey data provider. “Employers can help alleviate a little of that angst by implementing a clear set of post-employment practices, providing employees with an added sense of security in the event they are separated from their job.”
The formulas used to pay severance differ from company to company. Nearly 43 percent of companies base severance on years of service. A combination of a fixed number of weeks and years of service is used by 35.3 percent of companies, while employer discretion is used by 14.9 percent. Using only a fixed number of weeks is the least common severance formula at 4.1 percent.
Differences in how severance is paid out can also be seen across regions. For example, 18.9 percent of companies in the Midwest use employer discretion to determine severance. Organizations in the West utilize this method at a rate of 14.6 percent, compared to companies in the Northeast, 13.7 percent. More than 11 percent of South Central companies use employer discretion to pay out severance, while companies in the Southeast region of the country use this method the least at 10.2 percent.
About the Survey
BenchmarkPro 2011 contains cross-industry data on over 300 benchmark job titles. Data was collected from nearly 3,700 employers reporting for more than 18,000 locations across the country. The results provide a comprehensive summary of pay data and pay practices with an effective date of March 1, 2011.
Compdata Surveys is the nation’s leading compensation and benefits survey data provider. Thousands of U.S. organizations provide data each year ensuring the reliability of our results. Compdata Surveys has been providing comprehensive data at affordable prices to organizations from coast to coast since 1988. For further information about their compensation and benefits surveys, contact Michelle Willis at (800) 300-9570.