Severance, what's reasonable?

Caroliso · January 2003

We recruited someone to head one of our divisions, and after 6 months it appears it may not work out. Her leadership style has not inspired confidence from th senior leaders who work under her, and this is essential. The President has been discussing this with her but not sure this is going to work out.
I will contact an employment lawyer to make sure if we have to terminate we're on solid ground, but what i want to ask you all is about how to think of severance. She did not relocate for the job, but she did put her consulting business on hold, so we want to offer some sort of limited continuation of salary that is fair. I don't know of a precedent at our company (which isn't to say there is none), but don't mind opening the door in this case.
Thoughts?

Rockie · January 2003

I think you have to look at these things on a case by case basis,depending on the position the individual holds, why they are being terminated, etc. I believe the "old" standard was a week's severance for each year worked as a general rule, but in today's economy, that may need to be adjusted.

Our practice just goes on a case by case basis. Remember also, you will get into legalities when you are terminating anyone over 40 and they will need 21 days to consider the severance package and then another 7 days after signing to "reconsider".

In your case, at the level of this employee, and given the fact that her business was put on hold, we would probably give a month's severance.

I know this is vague, but it may give you a little insight.

Gillian · January 2003

You will soon find the upper limits of the range when she is told that it is not working out. Then you will end up with something between your idea and hers. It is a case by case basis.

JEBtrois · January 2003

Caroliso, some additional questions that may be of help...a division head is a high-rolling position; accordingly, in your industry, how long would it take this EE to find other employment of like rank? I have some concerns with the notion of 1 month. As I read your post, she is being terminated because her leadership style has not inspired confidence in her subordinates. This is rather subjective since someone is evidently end-running her and asking her subs how they think she's doing in only 6 short months. Her leadership style should have been ferreted out by the hiring manager and matched to the needs of the job. This sounds like a mistake in hiring based on personality, not on ability to do the job since 6 months is hardly enough time to really effect any real change. Is it possible that the Division Head IS getting the job done, and her subordinates don't like HOW she does it? I know that in the current environment it's an employers market, but as the CEO of a company, my personal policy for something like this, particularly for what appears to be a VP level position, and a mistake in hiring by the employer and not a failure to do the job by the employee, I would consider 3-6 months a minimum.
JEB

Theresa Gegen TX · January 2003

3-6 months would be very generous, considering she only worked at the company for 6 months (which I think needs to be a factor).

You may want to retain her for, say 3 months, as a consultant (since that may be the business she is going back into). Then you will be paying her for some services (help in transitioning, ect).

Good Luck!

Balloonman · January 2003

I agree with JEB, if the job is getting done, or measurable OBJECTIVE goals are being completed there would be some risk of letting a person go over lack of fit within the organization. I am not saying it should not be done. In fact if the fit is not right, you need to let her go as quickly as possible. But the company should have considered "fit" as important as skills when filling this or any other position. The hardest thing I do is pass on talented candidates with the skill sets I need because they will not fit with the organization.
That said the company I would not consider how long she worked for you, but like JEB said, what is the norm for finding a job of this level in your field. Then of course you need to consider if the person is in any protected classes.
Well my $0.02 worth once again.
DJ The Balloonman
:-)

ritaanz · January 2003

Would the reverse be also true? If the employee could go out and get another job the next day, there would be no severance? I think the severance package should take into account the length of employment and the company policy on severance pay not the job market.

Gillian · January 2003

Everything needs to be taken into account including the risk of litigation, the risk of adverse publicity etc. etc. etc. Everything that has been mentioned about policy, the labor market etc. is all speculation which will go out the window once the person is told. She may say "I didn't think it was working out either" and just leaves or she may take the other approach "you talked me into giving up my consulting practice to come here and it is hard to start it up again", at which point the company has to make decisions which are also influenced upon her demands, especially if the company wants this to go away quietly.

Severance, what's reasonable?

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