More Than a Quarter of Companies Anticipate Layoffs in 2006, Yet Many Don't Have Severance Plans, Say WorldatWork and Aon Consul
14 Dicembre 2005 - 3:30PM
PR Newswire (US)
Those With Plans Fail to Review Regularly CHICAGO, Dec. 14
/PRNewswire/ -- As companies plan for the new year, many are
anticipating layoffs. However, a number of companies may part with
employees without providing severance pay, according to WorldatWork
and Aon Consulting. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) With
nearly 500 major organizations surveyed by WorldatWork and Aon
Consulting, results show that 28 percent of companies are planning
layoffs in 2006, while 26 percent are unsure if reductions in force
will be necessary. Meanwhile, of all the employers surveyed, 30
percent don't have a formal severance plan in place. "The job
market is more volatile than ever, with the competition for top
talent extremely fierce," said WorldatWork President Anne Ruddy.
"To attract and retain the best employees, companies need to offer
key rewards like severance plans, which may be a make-or-break deal
for those employees." In addition, this study reveals that of those
employers offering a severance plan, 85 percent use the number of
years served as the basis for determining the amount of severance
provided to employees. Nearly one-third of companies (32 percent)
offer one week's salary per year of service, while approximately a
quarter of employers (23 percent) provide two weeks of pay for
every year served. Other factors considered in determining
severance include an employee's position (23 percent) and
compensation (20 percent). Few Companies Review Severance Plans
Annual reviews of non-executive severance plans are rare, according
to this study. In fact, 63 percent of organizations have not
reviewed their severance plans in at least the last 12 months.
Specifically, for 22 percent of employers, a severance plan review
has not occurred during the past 12 to 24 months. For 29 percent of
companies, it has been more than 24 months since they examined
their severance plans, while 12 percent of organizations have never
reviewed their plans. Of those that do assess their severance plans
on a regular basis, 61 percent report making no changes to their
plans during the most recent review, while 11 percent decreased the
pay provided and another 11 percent increased the pay opportunity.
"Change is the norm in today's corporate environment, so companies
should review their severance plans at least annually, to ensure
alignment with their current business objectives," said Pete Lupo,
senior vice president with Aon Consulting. "For example, we're
beginning to see an increase in merger and acquisition activity.
M&As require significant focus from employees, whether these
workers are asked to complete the terms of the transaction or
remain steadfast in their traditional job requirements. It would be
difficult for employees to accomplish their goals without knowing
what it ultimately means for them. In this type of situation, a
well-developed and well-communicated severance plan is essential."
About WorldatWork WorldatWork is the world's leading not-for-profit
professional association dedicated to knowledge leadership in
compensation, benefits and total rewards. Founded in 1955,
WorldatWork focuses on human resources disciplines associated with
attracting, retaining and motivating employees. Besides serving as
the membership association of the professions, the WorldatWork
family of organizations provides education, certification
(Certified Compensation Professional - CCP(R), Certified Benefits
Professional -- CBPTM and Global Remuneration Professional -
GRP(R)), publications, knowledge resources, surveys, conferences,
research and networking. WorldatWork Society of Certified
Professionals and Alliance for Work-Life Progress (AWLP) are part
of the WorldatWork family. About Aon Aon Corporation (NYSE:AOC) (
http://www.aon.com/ ) is a leading provider of risk management
services, insurance and reinsurance brokerage, human capital and
management consulting, and specialty insurance underwriting. There
are 47,000 employees working in Aon's 500 offices in more than 120
countries. Backed by broad resources, industry knowledge and
technical expertise, Aon professionals help a wide range of clients
develop effective risk management and workforce productivity
solutions. Aon Consulting is among the top global human resources
consulting firms, with 2004 revenues of $1.247 billion and 7,000
professionals in 120 offices throughout the world. Aon Consulting
delivers integrated consulting solutions to help clients with
employee benefits, human resources outsourcing, compensation,
communication and management consulting. This press release
contains certain statements related to future results, or states
our intentions, beliefs and expectations or predictions for the
future which are forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from either historical or anticipated results depending on a
variety of factors. Potential factors that could impact results
include: general economic conditions in different countries in
which we do business around the world, changes in global equity and
fixed income markets that could affect the return on invested
assets, fluctuations in exchange and interest rates that could
influence revenue and expense, rating agency actions that could
affect our ability to borrow funds, funding of our various pension
plans, changes in the competitive environment, our ability to
implement restructuring initiatives and other initiatives intended
to yield cost savings, our ability to implement the stock
repurchase program, changes in commercial property and casualty
markets and commercial premium rates that could impact revenues,
changes in revenues and earnings due to the elimination of
contingent commissions, other uncertainties surrounding a new
compensation model, the impact of investigations brought by state
attorneys general, state insurance regulators, federal prosecutors,
and federal regulators, the impact of class actions and individual
lawsuits including client class actions, securities class actions,
derivative actions, and ERISA class actions, the cost of resolution
of other contingent liabilities and loss contingencies, and the
difference in ultimate paid claims in our underwriting companies
from actuarial estimates. Further information concerning the
Company and its business, including factors that potentially could
materially affect the Company's financial results, is contained in
the Company's filings with the Securities and Exchange Commission.
Contacts: Jeffrey J. Kros, Esq. Joe Micucci WorldatWork Aon
Consulting 480-922-2027 312-381-4786
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation;
WorldatWork CONTACT: Jeffrey J. Kros, Esq. of WorldatWork,
+1-480-922-2027, or ; or Joe Micucci of Aon Consulting,
+1-312-381-4786, or Web site: http://www.aon.com/
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