The percentage of architecture, engineering, and environmental services firms offering severance packages to laid-off employees has hit 80 percent, according to ZweigWhite’s 2009 Policies, Procedures & Benefits Survey of Architecture, Engineering, Planning & Environmental Consulting Firms. This number had been steadily declining since 2005, but has reversed for the latest edition of the survey.
It isn’t surprising that firms have been forced to lay off employees recently, as the A/E industry has been hit hard by the economic crisis. But, why are firms choosing to allocate spending toward former employees when they have little access to capital or credit?
According to Shaw-chin Chiu, a consultant with ZweigWhite specializing in human resources and outplacement services, "Severance packages are investments that prevent potentially costly consequences." Severance packages can be offered as just severance pay or a combination of pay and other assistance designed to increase the displaced employee’s chance of landing a job elsewhere such as retraining allowance or outplacement services. According to Chiu, there are three main reasons why firms are opting to offer severance packages:
1) Client and employee retention—Laid-off employees will most likely still have contact with current clients, which can be damaging for the firm if the laid-off employees do not feel like they were treated fairly. This same consideration applies to current employees.
2) In case the firm needs to rehire in the future—When work starts picking up, it’s going to pick up quickly, and firms will have to hire fast to meet an increased workload. If employee relationships end on good terms, it will be much more time- and cost-efficient to reach out to former employees, who immediately come with organizational knowledge, than to recruit new talent.
3) To prevent lawsuits—Former employees are more likely to sue a company if they feel that they were treated unfairly.
"Despite the tough choices and competing priorities companies face in today’s economy, most feel that a few thousand dollars for severance packages can be a very good investment in the long run," said Chiu.
ZweigWhite’s 2009 Policies, Procedures & Benefits Survey of Architecture, Engineering, Planning & Environmental Consulting Firms is a comprehensive report on human resources issues and expenses in the A/E industry, covering topics such as health, dental, and life insurance; compensation; staffing; paid time off; and HR costs. zweiggroup.com/store division works with firms to assist laid-off employees in their job searches, offering career counseling, a network of industry contacts, and compensation data for a variety of positions and locations.