Severance? Sorry.

SEATTLE, WA (November 5 , 2007) – If you are let go from your job for performance reasons at most companies, you can kiss a severance package goodbye, according to a recent study conducted by the Institute for Corporate Productivity (i4cp). While 62% of the 410 companies responding to the study said they do have a defined severance policy, 60% of those do not offer severance packages for employees terminated due to performance issues.

Companies are not heartless, though. The majority of organizations still offer various benefits to employees turned away for performance lapses, and the terminations are not done by happenstance. A full 86% employ progressive discipline measures before an employee is terminated for performance reasons, and 62% provide continuing contributions toward benefits (such as medical coverage) after the employee is let go. In addition, 54% offer outplacement services.

The survey also shows that, among companies that have defined severance policies, 2 out of 5 respondents say their organizations provide severance pay for those released for performance reasons. Why? Sometimes companies want to be fair to long-term workers who “haven’t kept up with the pace” or to workers who “have tried to be successful but are unable to perform the tasks of their job,” according to respondents. In other cases, there are legal considerations or contractual obligations. A number of companies also make a distinction between performance problems and actual misconduct, offering severance to poor performers but not to people who have committed actions such as fraud, theft or harassment.

Jay Jamrog, i4cp’s Senior Vice President of Research, posits that another reason some companies offer poor performers severance packages is that more of today’s organizations place a premium on good will. “In the Age of the Internet,” he notes, “it’s easier for disgruntled former employees to tarnish the corporate brand, so it can make sense for companies to try to settle things in an amicable way, and severance packages are one way of doing this.”

The Severance Policy Practitioner Consensus Survey was conducted by i4cp, in conjunction with, in October 2007.

For more information about this study, please contact Greg Pernula at or via phone at (727) 345-2226.

About i4cp, inc.

Building on the 35-year history of its predecessor (the Human Resource Institute), the Institute for Corporate Productivity (i4cp.) improves corporate productivity through a combination of research, community, tools and technology focused on the management of human capital. With more than 100 leading organizations as members, including many of the best-known companies in the world, i4cp draws upon one of the industry’s largest and most experienced research teams and executives-in-residence to produce more than 10,000 pages annually of rapid, reliable and respected research and analysis surrounding all facets of the management of people in organizations. Additionally, i4cp identifies and analyzes the upcoming major issues and future trends that are expected to influence workforce productivity and provides member clients with tools and technology to execute leading-edge strategies and “next practices” on these issues and trends. i4cp is a for-profit company with its headquarters in Seattle, WA, and research offices in St. Petersburg, FL.

Greg Pernula
Membership Services Director, i4cp, inc

(727) 345-2226