Why Should Severance be Outsourced? Part 4: It Benefits HR

Posted by Lana Mellis on Jun 15, 2017 3:01:00 PM

Make Severance Easier for your Human Resources Team

The mere thought of severance is often enough to frustrate any HR professional - not only because itsunderlying meaning points to organizational difficulty, but also because the administrative challenges posed by the process place more burden on an already-struggling Human Resources team. In the case of a reduction in force, maintaining employee goodwill is typically one of a company's concerns - how a termination is handled is a significant determinant of that outcome.


What an employer faces in a typical severance situation is a quick, fixed-sum payout made upon termination. Other types of separation benefits programs, such as Supplemental Unemployment Benefit Plans, while allowing an employer to save significant costs, require ongoing contact with, and record-keeping for, each terminated employee. When managed internally, these processes increase an the administrative burden faced by an HR team already managing an often sensitive severance program. Clearly this is why employers choose to approach severance with an "out of sight, out of mind" attitude. A quick fix may seem like the best solution during challenging times, yet typically results in both high costs and negative workforce relations.

HR outsourcing has become a common practice in recent years, as organizations recognize the depth of expertise boutique firms and HR service providers have in specific employee-related issues. Outsourcing allows employers to place focus on business issues and avoid the bog of time-consuming programs such as payroll, benefits administration, and employee call centers. Because severance is often handled like bad medicine – quickly, at the last minute, with distaste, and without deliberation - outsourcing its administration hasn't yet occurred in the way it has with other benefits.

Challenged companies are often forced to make quick cuts and large payouts, significantly increasing Human Resources and internal workforce management teams' workload until those employees are out the door and off the payroll. Outsourcing the administration of severance to a speciality firm can reduce that workload, and, if well-handled, still maintain the necessary employee goodwill. More important, however, is the high level of expertise and program flexibility offered to a company by a firm specializing primarily in separation benefits management. Options which can enhance the separation benefit offered to terminated employees while significantly reducing the monetary cost of that benefit. Reduced burden and reduced cost? Two quite good reasons to outsource separation benefits. 

Our next discussion examines why outsourcing severance is a highly effective strategy for ongoing economic recovery. While strategizing workforce management and acquiring talent to fill gaps created during the recent huge layoffs, companies must plan to strategize avoiding huge future losses by making the same mistakes with severance when our cyclical economy turns again.

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Tags: Severance