Firing an employee is an expensive process as seeking a new hire can be quite costly in itself. Accordingly, an employer, who chooses to offer severance pay, may want to seriously consider changing such a policy. On the other hand, severance pay might actually offer a form of compensation for employers when it comes to long-term interests. In terms of money, offering severance pay can seem quite foolish, yet more is at stake than a handful of cash, especially for a professional firm.
When an employee is let go that individual may well become a liability as many employees know sensitive things about their employers or can do things that might hurt them. Although legal barriers like nondisclosure agreements may encourage workers to stay quiet on certain subjects, damage can be done in untold ways, such as by substantiating claims of poor ethics. As such, it is always best to part ways in good terms. Offering severance pay allows former employees a small consultation prize that may help dissipate anger as they move onto their next employment opportunity.
For future hires, demonstrating a firm shows respect toward employees, instead of treating them like garbage that is easily thrown out, can attract better recruits. A business, which behaves spitefully, is not a place quality employees will seek out. Aside from showing a lack of professionalism, how an employer treats its former employees clues current and future employees into how they are regarded as well as how they can expect to be treated when it is time for them to move on.
Meanwhile, not all discharged employees are let go over workplace conflicts. Tough economic conditions require businesses to slim their ranks, yet better times entail hiring new workers. Since all businesses in all industries can struggle with finding quality employees, recalling ex-workers becomes a lot easier when they are let go with some sort of lifeline. Severance pay can be a nice little cushion between jobs and unemployment benefits as well as an incentive for an employee who may someday return.
Offering severance pay is somewhat of an old fashion idea. In a world where employees tend to move on in a few short years and fire-at-will contracts are becoming the norm, severance pay can often be an unnecessary expense in an already expensive rehiring process. On the other hand, offering severance pay may well provide some very important benefits. While severance pay is an immediate expense with few, if any, direct benefits, the policy does allow for very significant future returns.
