Those Parachutes Are Deflating

Severance payments for laid-off employees have fallen as much as 60% in the last five years, according to a survey by Manchester Partners International, an alliance of outplacement and career management firms. Its survey of 460 U.S. companies found that workers who lose their jobs are being compensated in other ways, including health insurance, access to employee assistance programs and job-search help. Among other conclusions, the survey found that the maximum severance pay for senior executives fell from two years’ pay in 1992 to 42 weeks’ pay in 1997, a 60% decline; managers’ maximum severance payment fell 36%, from a year’s pay in 1992 to 33 weeks in 1997. In addition, the survey found that 75% of employers provide outplacement help to senior executives, 70% offer it to managers, and 50% make it available to front-line employees. About two-thirds of companies extend health insurance to senior executives and managers, while about 60% provide it for front-line employees.