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The standard, tenure-based severance package is being put to the test.
NBCUniversal is offering separation pay that isn’t tied to employees’ number of years on the job, an atypical move that some leadership experts say risks denting worker loyalty in the long term.
The media giant told employees this week that if they don’t want to comply with a new return-to-office mandate, they can leave and take a severance package comprising eight weeks of base salary, Business Insider first reported. The financial part of the arrangement is unusual, experts say, because severance packages are normally aligned with employees’ length of service.
An NBCU spokesperson previously declined to comment on internal communications and policies and didn’t respond to a request for comment for this story.
Eight weeks for all
If other companies follow NBCU’s example, workers may become less inclined to stay with any one employer for more than a few years, cautioned Raj Namboothiry, head of staffing firm Manpower’s US division.
That’s because a potential future severance package would exclude the kind of safety net they could count on with a traditional package, he said. Since standard packages are tied to tenure, the longer an employee stays with a company, the bigger the payout they would receive.
To be sure, NBCU is providing its eight-week pay-for-all packages on a voluntary basis. Companies including Amazon issued RTO mandates without granting any severance pay to workers who choose not to comply.
Extending fixed payouts after more general layoffs would be dicier as far as loyalty goes, said Namboothiry, since workers would have no choice in the matter.
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An employer’s market
These days, fixed severance packages after either layoffs or RTO mandates may not pose a problem for most leaders since job opportunities are scarce, said Nicole Kyle, cofounder of CMP Research, a research and advisory firm focused on the future of work. More people are currently unemployed and actively looking for work than there are job opportunities, according to the US Bureau of Labor Statistics.
“Employers have the leverage right now,” Kyle said.
But should the tables turn down the line, fixed packages may discourage people from seeking jobs at firms with a reputation for offering them in lieu of the standard tenure-based kind, Kyle added.
“The labor market is going to remember,” she said.
‘Extremely hardcore’
There is some precedent to companies offering fixed payouts as part of voluntary separation agreements, but it is rare.
In late 2021, online mortgage startup Better abruptly laid off about 900 employees and provided them with 60 days of severance pay, regardless of tenure.
A more high-profile example occurred about five months after Elon Musk bought Twitter in 2022. The billionaire sent the social-media company’s employees an email instructing them to fill out a form asking if they wanted to remain at the company and be part of an “extremely hardcore” culture, Business Insider reported at the time. Employees who didn’t opt to stay would be given three months of severance, Musk said in the email.
Many Twitter employees took the deal.
The risk for employers
NBCU’s package is available to US and UK staffers at the vice-president level and below. They must accept it by October 3 and stay through the end of 2025.
By giving nearly four months’ notice, NBCU is letting its work-from-home aficionados get a big jump-start on their job search in a tough market, said Anna Tavis, New York University’s department chair of human capital management.
While eight weeks of pay isn’t a large sum for those at the VP level, Tavis said it could be an enticing offer for lower-level employees, which she believes may be NBCU’s intention.
It also might be more enticing for newer employees, said Kyle. Offering the same number of weeks’ worth of severance pay for all departing staffers would likely appeal less to longterm employees who’d be eligible to receive far more money with a tenure-based package, she said.
Employers looking to trim their workforces may be using return-to-office orders as an alternative to layoffs, expecting some employees to quit rather than comply, as Business Insider has reported. Tavis said that the approach is “less painful and more humane” than mass cuts.
Still, the move poses risks, she added, as companies could see top talent walk out the door and land a job at a competitor that allows remote or more hybrid work.
“You often first lose the people who have other options,” Tavis said.
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