MARK BARNES: Voluntary severance packages don’t work and never will
The most valuable employees tend to leave and the least valuable stay behind because they have no choice
Voluntary severance packages (VSPs) are back in the news again, as they seem to be every so often, usually when the economy is facing headwinds. VSPs are proffered as a quick fix for a failing firm, but they aren’t.
We can control costs by immediate dictate (within regulatory boundaries and contractual obligations), so is that a quick fix? Cutting costs is often not the cure, and it may even accelerate the demise of the firm, particularly if it is done recklessly, But employee salaries are often the biggest operating cost so that’s our first port of call...
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