Monday, January 28, 2002
Severance pay grows, says survey
Half the companies surveyed in a recent poll about severance packages have changed those offerings in the past three years, and most of the changes put more cake on the plate.
Seven of 10 of the companies have become more generous, according to Lee Hecht Harrison, which has conducted a nationwide survey on corporate separation packages every three years since 1995.
This would reflect what we are seeing locally as well particularly recently, given the recession, said Lee Rooney Hoffheimer, senior vice president of the Lee Hecht Harrison office in Kenwood.
As a slowing economy brings layoffs, the survey from the leading global career services company that specializes in outplacement and career development becomes important for the insight it offers workers.
Severance packages are not just for those at the top even though the highest-level decision-makers still get the sweetest packages.
Chief executives at large corporations typically receive a severance package of 24 months of salary with health and dental benefits.
Severance bonuses for chief executives vary widely according to contract, but the average multiple of three is applied to most contracts.
About 80 percent of the severances are paid out in a lump sum.
Officers now typically get 36 weeks of severance, while the median payout for all others is 26 weeks. (The median is the point at which half the sample is above and half below.)
The study, a 31-question survey of 925 U.S.-based companies, is accurate to plus or minus 3 percentage points. Information was also gleaned from an analysis of 100 public Fortune 500 chief executive contracts.
About half the companies pay a bonus to ensure continued service by terminated employees, and three of four said retention bonuses kept workers productive. Ms. Hoffheimer said because the report is the third in the past decade, it offers a clear window into trends that shape compensation packages for retention, separation and, ultimately, motivation.
Companies and employees in increasing numbers recognize that lifetime commitments are no longer expected. Companies are willing to welcome an individual's skills and abilities it's just not forever, she said.
The best industry for severance packages is, not surprisingly, the one with the closest ties to government spending. 100 percent of the survey respondents in the aerospace and defense industry have severance policies.
Copies of the report are available by calling 891-0666.
Students at work
Who is more realistic about work, income and wealth: boys or girls? Girls by a long shot. A recent survey from Junior Achievement finds that two of three boys think that they will be millionaires by the time they are 40. One in three girls believes the same.
Margin of error? That has to be wide because no teen-aged boy has ever told the whole truth on an anonymous survey.
The nationwide poll of 1,559 middle and high school students also suggests that three of four students realize that they need to go to college to obtain a dream job.
A third of the students in the largest poll ever undertaken by the service club figure they will need a postgraduate degree.
E-mail email@example.com. Past columns at Enquirer.com/columns/eckberg.
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