Why Executives Should Build Severance and Outplacement Benefits into Your Employment Agreement
Career pop quiz: When is the best time to negotiate your exit strategy?
If you’re a C-suite executive or senior leader, it’s often at the beginning of your relationship with a new employer.
It may seem counterintuitive to consider your exit just as you’re making an entrance. But, agreeing upfront on separation benefits and terms lets you start your new role on the right footing. It also removes some of the risk, stress and emotion—for employee and employer—if a future layoff or unexpected termination does occur.
At the Beginning, Think About Your Ending
Anne Sample, CEO of Navigate Forward and a former Chief Human Resources Officer (CHRO), explains there’s no need for these upfront conversations to be contentious or uncomfortable.
In fact, good faith employment negotiations are akin to the role a prenuptial agreement plays in a relationship.
“No one goes into a new job expecting it to end, but if you define that ending up front, it allows the ultimate transition to be more successful for the company and the executive,” Sample explains. “It mitigates risk for all sides.”
Attorney Beth Bertelson agrees. She practices employment law in Minneapolis, Minnesota, and regularly counsels senior leaders on employment contracts and severance packages.
Good faith employment negotiations are akin to the role a prenuptial agreement plays in a relationship
“Execs really need to think about leaving the company at the beginning, so they can move forward productively in their careers,” Bertelson said.
Having an objective legal resource helps you avoid blind spots that can hinder your career opportunities.
“When people are signing on to work for a company, they may be signing on to restrictive covenants that can impact their career going forward, like non-competes or non-solicitations, without receiving consideration on the back end,” Bertelson explained.
She added, “Upfront negotiations can also clarify issues related to long-term incentives, bonuses, roles and responsibilities, and avenues for each party to exit the relationship.”
Clarity Brings Benefits for Employers and Senior Leaders
Identifying departure benefits early on yields benefits for executives and their new employers. It injects transparency into the work relationship. It can also reduce the stress, emotion and negativity that often accompany negotiations during a layoff or departure.
Benefits for executives:
- Start your new role with confidence
- Develop a strong and transparent relationship with your employer
- Reduce unnecessary disruptions in your career path
- Provide more choice in outplacement services
Benefits for the organization:
- Demonstrate goodwill and support for new executives
- Protect the employment brand in the market
- Reduce the risk of litigation during separation
- Create more amicable and efficient departures
Executives Often Overlook Outplacement Services
Initial negotiations typically center around compensation, from salary and bonus structure to insurance, vacation and stock options. Bertelson and Sample both suggest senior leaders add outplacement to the list.
Outplacement services deliver immediate value when an executive leaves the organization. These experienced career consultants provide hands-on support, accountability and guidance during job transition. But, they’re often overlooked or misunderstood when senior leaders negotiate compensation or departure packages.
Outplacement services deliver immediate value when an executive leaves the organization
Many executives assume they can “go it alone” when seeking a new role.
“The right outplacement partner makes a significant impact for executives,” Sample noted. “At Navigate Forward, we focus on each individual’s strengths and goals, helping them land the right next step in their career journey.”
Choose Outplacement Services Tailored to Executives
Another common misconception is that all outplacement firms offer the same services. In reality, most agencies focus on a high-output model that works best with frontline staff and mid-level management. That means plenty of webinars, online resources and group discussions, but few opportunities for customized, one-on-one work with tenured career consultants.
Firms like Navigate Forward provide a team of experts to support each senior leader, working with the individual until they land a new role
Only select firms understand the specific environment that executives encounter in their job searches.
“A one-size-fits-all approach to career transition doesn’t work for executives,” Sample explained. “For example, it takes longer for senior leaders to land new roles; the positions are more specialized. Networking is crucial, since companies rarely advertise C-suite openings.”
Time is another important factor. Firms like Navigate Forward provide a team of experts to support each senior leader, working with the individual until they land a new role. Other outplacement firms place a fixed time limit on support, which often expires long before an executive moves into their next position.
Keep Negotiations Positive and Amicable
Negotiations around outplacement and departure benefits don’t need to be protracted or antagonistic. In many ways, it’s easier to discuss leaving an organization early on, when departure is not imminent.
Sample and Bertelson both recommend being specific in employment agreements about the type, duration and value of outplacement services. When possible, it’s smart to name a firm of choice.
Bertelson encourages her clients to advocate for boutique outplacement firms that truly understand the career needs of senior leaders.
Negotiations around outplacement and departure benefits don’t need to be protracted or antagonistic
“So many outplacement firms really don’t consider the unique aspects of being an executive; they’re just trying to get them a place,” Bertelson noted.
If you’re already established in your role, it’s not too late. While no one expects a layoff or sudden termination, in the event it happens, senior leaders can advocate for the outplacement services of your choice as part of the final severance package.
Curious about the Navigate Forward difference? Review these Seven Reasons to Choose Navigate Forward.