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U.S. Severance Packages Lowest in the World

Dec. 4, 2008 — The world over, employees in the United States who are laid off are paid the least amount of severance no matter what their level of seniority is or amount of tenure with the company.

The Right Management study of more than 1,500 human resources professionals and senior managers responsible for making severance decisions in 28 countries found that top U.S. executives earned as little as 2.76 weeks of severance per year of service compared to an average 3.39 weeks per year of service for other countries.

Mean Weeks of Severance Per Year of Service:

  United States Worldwide
Voluntarily Separated:    
Top Executives 2.76 3.39
Senior Executives 2.23 3.29
Department  Heads/Managers 1.55 3.00
Professional/Technical 1.39 2.79
All other employees 1.23 2.65

 

  United States Worldwide
Involuntarily Separated:    
Top Executives 3.04 3.52
Senior Executives 2.49 3.33
Department  Heads/Managers 1.78 2.93
Professional/Technical 1.60 2.75
All other employees 1.44 2.59

Other key findings from the study:

  • U.S. employers are more likely (68%) to enforce a cap on severance payments than the rest of the world (56%).
  • Ninety-six percent of separated employees in the U.S. are required to sign a waiver before they can access severance benefits.
  • Unlike in other regions, 61% of companies in the U.S. tend to offer severance right away with no minimum tenure required, compared to 42% doing so in the rest of the world.

Survey Methodology
Right Management engaged International Communications Research to conduct the study in 28 countries between July and September 2008. Of the 1,524 survey responses received, 45% were from the Americas (including 456 from the United States), 34% were from Europe and 21% were from Asia Pacific. A broad cross section of industries was represented.

Contents © 2008 WorldatWork. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.


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Wed December 31, 2008 9:47 AMReport Abuse
Ken Gatesman
Compensation Mgr
Member Since: 5/1/1999
Comments: 15
 
Summaries of surveys in Newsline, are always too light in content to be helpful as desired. I went to learn more about a recent survey promoted in Newsline, and found I needed to shell out $700, oh well. Such "articles" are more advertisement than news.
 
Mon December 22, 2008 4:41 PMReport Abuse
Windsor Lewis
Compensation Manager
Member Since: 11/1/2004
Comments: 117
 
We all know that the devil is in the details and this is a prime example of summary statistics being completely useless (to a group of compensation professionals). I sort of expect to see something like this featured in USA Today, not on a professional website.
 
Wed December 17, 2008 12:07 PMReport Abuse
Karine Charbonneau
Global Compensation Specialist
Comments: 1
 
there are so many differences from one country to another one, from industry, size of companies. 3 weeks for Top executive ... I don't believe this in a company with more than 1000 employees.
 
Tue December 16, 2008 1:56 PM (edited 12/16/2008) Report Abuse
Don Smith
HR/Compensation Specialist
Member Since: 9/1/2001
Comments: 4
 
I agree with George. Not only that, I believe some countries mandate severance requirements. I don't recall exactly which ones, but France and Australia come to mind. Don't quote me. I do remember in some countries, some of the minimums were well over the typical 1 or 2 week per year "norm" found in at lot of US companies. There is not enough information in this article for useful comparisons.
 
Tue December 16, 2008 12:43 PM (edited 12/16/2008) Report Abuse
George Bailey
General Manager, Human Resources
Member Since: 5/1/2001
Comments: 1
 
In many countries, the principles guiding severance (expressed as weeks notice) are based on tenure, age & hierachical level, all with a view to determining how long it might take the individual to find a similar position. Rather than blend the rest of the world in one giant melting pot, it would have been useful to see a breakdown by major geographic region, as well as the basis for determining severance amounts.
 
Tue December 16, 2008 10:39 AMReport Abuse
Dan Nogal
Member Since: 3/1/2002
Comments: 1
 
Would be good if there were some additional specifics based on market segments, such as hospitality and gaming.
 
Tue December 16, 2008 10:18 AMReport Abuse
Linda Herman
Principal Consultant
Member Since: 10/1/1998
Comments: 2
 
Good perspective!
 
Tue December 16, 2008 10:13 AMReport Abuse
Chris Crater
Sr Director Compensation & HRIS
Member Since: 2/1/2003
Comments: 2
 
Does not provide enough information. While other countries may offer longer severance periods, the real comparator is the dollar value of the severance package. If US salaries are more the value of the package could still exceed that of other countries for a longer period of time.