Technology Support for the Separation Process
What to look for in a Technology Solution
Workforce transitions, such as reorganizations, reductions in force or merger integrations are never easy. Technology, however, can help. By managing the processes and workflow, securing the information and producing reports and severance packages, the right technology solution can serve to mitigate risk and prevent financial disasters.
A few things to look for in evaluating a technology solution include:
Consistency and Transparency
- Supports equitable treatment of all employees and clear oversight of the process
- Maintains consistent separation processes for all involved personnel
Risk Management and Compliance
- Maintain documentation of all processes, decisions and decision criteria
- Manages a process that complies with regulatory statutes and company best practices
- Provides the data needed to make decisions and take action
- Efficiently processes the transactions associated with reductions in force such as payroll processes or outplacement notification
Workflow and Auditability
- Manages transactions through the review and approval cycles
- Creates and maintains an audit trail for all key decisions
Reporting and Analysis
- Enables modeling of “what if” scenarios to understand actual vs. projected expenses
- Provides insight into progress toward plan with quick reference dashboard reports
- Provides compliance and other regulatory reports
Benefits of Using a Technology Solution
Avoid Risk and Uncertainty
By introducing uncertainty, workforce transitions place companies at risk. The stress and pressure caused by workforce transitions can damage morale, stagnate productivity, introduce confusion, risk loss of top talent, generate significant costs.
Even when implemented successfully, such events can be turbulent. If mishandled, a RIF event can spark financial, legal and personnel ramifications that can threaten a thriving company.
Prevent Unnecessary Expenses
Among the many challenges presented by a separation event, delays in off-payrolling employees, inadvertent overpayments and unplanned administrative expenses can cause significant damage.
Without a clear transition plan, companies may also experience other financial challenges, including:
- Off-payroll delays - Decision changes, reporting delays, administrative errors frequently delay severance dates resulting in keeping employees on payroll for an additional cycle. A minor delay of two weeks in a 1,000 employee severance event would cost a company about $2 million (average $50k salary).
- Mistaken Overpayment - Manually calculating severance, or updating systems, exposes you to potential human errors that result in overpayments. Improperly calculating severance, vacation hours and bonus payments, or failing to stop payments to ex-employees can result in millions of dollars in erroneous costs.
- Administrative Costs - the magnitude of the situation increases when you add the administrative challenge of analyzing, managing and reporting the sheer volume of information relevant to a major transition
Unfortunately, numbers and paperwork cannot adequately quantify more pervasive personnel issues.
- Top Talent Retention - to rehire lost talent, companies pay roughly 140 percent of their previous salary, including overtime and severance.
- Legal and Compliance Issues - WARN Act standards demand strict regulatory compliance, requiring accurate data and ironclad defensible processes to avoid litigation.