Learn the most effective HR strategy to reduce resignations by key talent during a business divestiture. Expert advice for the SHRM-SCP certification exam.
Table of Contents
Question
HR is committed to maintaining the strength of a business division that is being sold in order to preserve its sales value. Which strategy offers the best opportunity to reduce resignations by key talent once the divestiture is announced?
Answer
Offer generous severance protection. The best answer is to provide employees with insurance against possible severance after the sale. Such severance protection may include cash, benefits, and perquisites.
Explanation
When a business division is being sold, offering generous severance protection to key talent is the most effective strategy for reducing resignations after the divestiture is announced.
Severance protection provides employees with insurance and peace of mind regarding their financial well-being if they were to lose their jobs as a result of the business transition. A comprehensive severance package may include:
- Cash payments, such as a lump sum or salary continuation for a set period
- Extended health insurance benefits and COBRA subsidies
- Perquisites like outplacement services, career coaching, and retraining allowances
By proactively communicating and guaranteeing these severance protections upfront, the company demonstrates its commitment to the employees’ welfare despite the uncertainties surrounding the divestiture. This show of good faith and support helps maintain trust, morale and productivity among key talent.
Alternative strategies like promotions, pay raises or stay bonuses may be less effective because they don’t directly address employees’ primary concern of job loss. Severance protection offers tangible assurance to key personnel, making them more likely to stay engaged and see the divestiture process through.
As an HR professional, recommending generous severance protection aligns with best practices for managing human capital risks during major organizational changes. It balances the goals of retaining critical talent and preserving business value with the ethical duty to support employee wellbeing.
SHRM Senior Certified Professional (SHRM-SCP) certification exam practice question and answer (Q&A) dump with detail explanation and reference available free, helpful to pass the SHRM-SCP exam and earn SHRM-SCP certification.