Do the Right Thing, Be Fair

I’m not sure anyone ever has warm fuzzies over the separation pay decision because in the end, it means someone is losing their job.

It’s easy to think you need to save money “in today’s economy” (sorry for that overused phrase!) when you have to consider releasing a staff member.  The reality is that any time you have to let someone go, really consider what is offered to off-boarding staff members as separation pay.  DON’T consider this an area for serious “cost saving” measures. 

In the past it was said you’ll tell a good thing to two or three people, a bad thing to maybe 10-15. With the explosion of social media, you can multiply those figures by as much as 100x. 

If a typical package for someone who worked for your company for more than a year is four weeks of separation pay, don’t decide to save money by paying them two weeks with some rationalization, for example, that the employee got paid some stock and vacation time.  That is a compensation FAIL. The vacation time and stock options were earned, and don’t think for a second the terminated employee doesn’t recognize this.  Oh, and by the way, they talk to others who also have left the company involuntarily, just like they discuss their compensation package when they’re employed.  The exiting staff member is/has been potentially (and was quite likely) loyal, an advocate of your product/service.  Do you think this behavior will continue after you let them know you’re offering them two weeks separation pay for their four-plus years of service?

Look elsewhere for cost savings: have more virtual meetings rather than flying all over to meet in person, switch to energy efficient lighting or place greater limits on expenses. Don’t save money on the back of a soon-to-be-former staff member by reducing the separation package.  Be fair, but don’t be cheap.  You have no idea what the public relations reach of this soon to be former staffer is, and in the long run, it may cost you way more than the “typical package” would have.

Terri Albee is a seasoned independent consultant whose practice has a primary focus on total compensation.  She has worked in a variety of industry verticals from start-up/entrepreneurial organizations to the Fortune 500, with both domestic and global responsibility.  Her experience encompasses design and implementation of total reward plans at all levels, from the Board of Directors on down.  She earned her B.S. in Business Economics from Regis University.

Comments

[Vita Taylor]

Great points, Terri.

I find that too often companies reside in the "us" - "them" mentality - where the surviving employees are part of "us," and the terminated employees are part of "them."

While it is never easy to let an employee go, they will be quite understanding if you give them the respect they are due.

With social media what it is today, a company can't afford disgruntled ex-employees. Somehow, it doesn't enhance their "brand." Let your actions be your brand.

[Terri Albee]

Vita, thanks for your input. All of your points are right on.