Why Should Severance be Outsourced? Part 2: Use Existing Infrastructure

Posted by Lana Mellis on May 18, 2017 2:36:00 PM

The first in our current "Top 5" list named Regulatory Expertise as a primary reason for a company to outsource its severance programming. The second reason a company should outsource severance is leveraging the existing infrastructure of the firm you choose to partner with.

A challenged or changing company will not often have available resources to dedicate to change – whether that change be the design of a new severance program offering alternative benefits to employees or the implementation of a nationwide regulatory tracking system to ensure up-to-date program compliance. Partnering with a firm specializing in severance management, from plan design to employee care, allows a company to decrease the internal administrative burden involved with severance and change while ensuring quality program administration.

The Current State of Severance

Over half of companies in the United States maintain formal, written severance policies, and about 30% of companies in the country plan to make changes to current severance plans. Yet doing so often requires more than a mere policy change, often including such things as systems updates, integration of new practices into a company’s culture, and new process and employee monitoring. Many companies include severance plan provisions to cease benefit payment upon reemployment, yet because these companies have neither the infrastructure to monitor employment status of terminated employees nor the time required to follow up with employees who refuse to freely report employment status, payment cessation rarely occurs and additional dollars needlessly spent. A standard offering by a boutique severance management firm is the ability to track reemployment of a company's former employees, saving a company significant cost and time.

Leverage Existing Infrastructure

When might the payoff outweigh the time and cost of changing a severance plan? With a partner firm, typically immediately, as processes already in place to manage all functional aspects of severance allow a seamless transition from one program to another. Our next topic addresses costs directly, those involved with a standard severance offering and those associated with alternative separation benefits plans.

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Tags: Severance