Voluntary separation package offers were common in 2022.
ResumeBuilder estimates three in four companies offered voluntary buyout packages to employees last year, as a first step to avoid involuntary layoffs. And three in five are expected to offer more separation agreements in 2023 than they did in 2022.
Employees who receive such an offer should be given ample time to think over such a big decision. Elon Musk’s infamous ultimatum to “work extremely hardcore” or take some severance and leave came with just one day to decide, which ResumeBuilder called high-pressure and void of any sense of empathy.
How much time to think about it is fair?
“Employees typically give companies two weeks. It should be the same for the employer. And as an employer, you want the time to be short because people will already begin to check out while they look for other jobs,” said Dennis Consorte at ResumeBuilder.
Voluntary separation packages typically aren’t offered company-wide, but rather targeted toward certain groups.
“The highest paid employees are going to be offered these agreements, as well as those who are the least productive. It sends a signal to people that they are not valued, or are being paid more than the company wants to pay them,” Consorte said.
Those employees most recently hired and those closest to retirement are also often those who receive separation agreement offers. Buyout packages target employees in specific departments.
Employers almost never need everyone who receives a voluntary separation package offer to take it. The most common answer given by companies is 15% to 20%. Those goals aren’t often disclosed with the entire group of employees receiving the offer. ResumeBuilder said it’s OK to tell them up front though.
“If the number is low, than it can give the employees who do decide to stay the sense that the company can make it after the (voluntary) layoffs,” said Consorte.
The voluntary buyouts most often work, according to ResumeBuilder, with 95% of businesses able to avoid involuntary layoffs.
For companies, there is one big downside risk to voluntary separation agreements. There is no way of knowing who will take the offers, and it could end up costing companies some of their best employees. That could end up being a game of chicken for employees.
ResumeBuilder says often companies who have offered separation agreements in 2022 offered a higher salary to a high-performing employee who wanted to accept the separation, but opted to stay for that higher compensation.
Check out ResumeBuilder’s full report.
