As companies try to cut costs, they are turning to voluntary severance and early retirement programs, known as employee buyouts, to reduce the size of their work forces -- often before resorting to outright layoffs.
More than 40 percent of employers canvassed in a national survey earlier this year said they were trying to eliminate employees. Of these, 42 percent were using voluntary buyouts as part of their work force reduction strategies, according to a survey of 125 companies conducted by Hewitt Associates, a Lincolnshire, Ill.-based benefits consultant.
And increasingly they're becoming more deliberate in crafting such packages: Instead of just trying to reduce total employment, companies are targeting positions -- or even particular individuals -- they want to remove.
"First identify who the limpers are," says Charles Commander, a consultant in the Wellesley, Mass., office of the Wyatt Co., a benefits consulting firm. "Then define objective criteria that targets that group."
For employers and employees, voluntary severance programs have pluses and minuses. Companies can avoid the blow to employee morale and company image that usually accompanies involuntary layoffs. But the company usually must pay more than it would if it instituted across-the-board cuts.
As for employees, they can retire early or use their lump-sum payment as an opportunity to change jobs. But they may find that leaving the corporate womb is difficult, both financially and
Preparing for layoffs
In today's rocky economy, no employee is safe from layoffs. Loyalty, it seems, is no longer rewarded, and employees at all levels are responding accordingly.
"When we talk to midlevel executives, we never have any difficulty in getting them to listen to us these days," said Richard Maglio, an executive recruiter in Orlando, Fla. "Everyone wants to keep their options open."
"I think it is a time when people need to start building their own survival kits, really managing their own careers," said Dale Ferguson, Orlando regional managing director of Drake Beam Morin Inc., a human resources consultant based in New York.
Kathryn Barnes, Central Florida managing director for Right Associates, a personnel consultant based in Philadelphia, says, "People have to take responsibility for their own career paths."
L The top three ways to do that, the experts agreed, are these:
* Develop a broad range of skills.
* Go back to school.