Survey: Companies Focus On Severance Policies

OLATHE, Kan. -- The unemployment rate continues to climb towards nearly 10 percent, increasing the importance companies place on severance policies, according to the 2009 BenchmarkPro survey by Compdata Surveys.

Companies in the manufacturing sector report having severance policies at a rate of 66 percent, compared to the insurance industry's 61.9 percent. The healthcare severance rate was 53.6 percent, while utility companies offer it at 45.4 percent.

By region, companies in the Northeast offer severance at a rate of 58.5 percent, followed by the Southeast at 55.4 percent. The Midwest and West offer a rate of 55.1 percent, while the South Central region offers severance at a rate of 51.7 percent.

"Even as the national unemployment rate begins to level off, having a well-defined severance policy in place remains important to both employees and companies alike," said Amy Kaminski, manager of marketing programs for Compdata Surveys, a compensation and benefits survey data provider. "Providing severance pay not only provides a crutch for outplaced workers seeking new employment, but may also protect companies from potential lawsuits filed, as a result of layoffs."

Additionally, companies used different methods to calculate severance. Paying severance by years of service was utilized by 43.5 percent of companies, while using a fixed number of weeks was employed by 3.5 percent of organizations.  A combination of both years of service and a fixed number of weeks was used by 33.6 percent of organizations surveyed.  Companies paid out severance based on the employer's discretion at a rate of 16.8 percent.

For more information on the study, visit

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