Beneath the Headline | Edition 002
The human impact behind the business story.
The Headline
In May 2020, Airbnb announced it would eliminate approximately 1,900 positions, representing 25% of its workforce. Its separation package included 14 weeks of base pay for U.S. employees, an additional week for each year of service, 12 months of COBRA coverage, equity provisions, and assistance finding new employment.
The company outlined an approach that went beyond a traditional severance payment. Several elements deserve recognition.
But its announcement raises a question I think more executives should be asking.
When was the last time your organization examined the thinking behind its severance plan?
Not simply whether the package is competitive, legally compliant, or financially affordable. Whether the formula itself still makes sense for the workforce receiving it.
Beneath the Headline
Organizations regularly revisit their compensation structures, benefit offerings, talent strategies, and operating models. They adjust to changing workforce expectations, economic conditions, and business needs.
But how often does severance receive that same scrutiny?
Many severance plans use familiar formulas: a defined number of weeks of pay, sometimes increased by years of service or job level. Executive leaders may have separately negotiated agreements with different protections.
Those arrangements may have legitimate business justifications. But longevity doesn't automatically make a policy appropriate, and precedent isn't a substitute for examining whether the policy still serves its intended purpose.
Consider an employee who accepted a new position six months ago. Perhaps they left a stable employer, relocated, or made financial commitments based on their new opportunity.
Now their position is being eliminated.
A tenure-based formula might provide only a few weeks of severance. Meanwhile, an executive with a separately negotiated agreement could receive substantially greater protection regardless of their length of service.
There may be sound reasons for those differences. But executives should understand them.
Tenure tells us how long someone worked for an organization. It doesn't necessarily tell us how much support they'll need when that employment ends.
What if organizations established a more meaningful minimum level of transition support before applying tenure-based increases? What if job grade, compensation level, and executive arrangements were reviewed against a consistent set of principles?
I'm not suggesting a universal formula. I'm suggesting leaders should understand, and periodically challenge the one they're using.
There's also an important distinction employees should understand. Severance is generally a benefit, not an automatic legal entitlement when a job is eliminated. The U.S. Department of Labor explains that the federal Fair Labor Standards Act does not require severance pay. However, employment agreements, collective bargaining agreements, applicable laws, and employer-sponsored plans can create enforceable obligations.
The question for executives goes beyond what they're required to provide.
It's what they believe their severance program is intended to accomplish.
The Human Impact
We tend to describe severance in weeks. Employees experience it in the context of their lives.
Eight weeks of pay may sound reasonable in a budget presentation. But what does it mean to someone whose next comparable opportunity takes six months to secure?
According to the U.S. Bureau of Labor Statistics, the average duration of ongoing unemployment in September 2026 was 24.8 weeks—nearly six months. That figure includes unemployed workers generally, not exclusively those affected by layoffs, and doesn't represent the average time required to find a new job. Still, it illustrates the potential gap between the financial assistance an organization provides and the period of unemployment someone may experience.
And finding another job doesn't necessarily mean recovering financially. In a separate 2026 BLS study of displaced workers, approximately 49% of reemployed, long-tenured workers who had lost full-time wage and salary jobs and reported their previous earnings were earning as much or more than they had before.
Consider what that means for employees navigating mortgage payments, childcare, healthcare, and other financial obligations. Even after securing another opportunity, some may be rebuilding their financial stability for months or years.
Then there are the consequences a financial calculation cannot capture: the relationships, routines, sense of belonging, and sometimes professional identity that employees have built around their work.
Not everyone experiences job loss the same way. Some welcome a transition. Others face significant financial or emotional strain. Many experience both.
A severance package may help someone leave an organization. It cannot guarantee they'll recover from everything they lose in the process.
Before It Becomes Your Headline
I don't believe every organization needs to redesign its severance program. I do believe executives should periodically review whether the program reflects the realities of the workforce and the organization's stated values.
And that review should extend beyond the number of weeks offered.
A meaningful review should examine the entire separation experience, from how financial support is calculated to how employees navigate healthcare, career transitions, and the practical realities of leaving the organization. The following considerations offer executives a starting point for evaluating whether their current severance programs are designed for the workforce they serve today.
Six Areas Worth Reviewing in Your Severance Plan
- Financial Runway: Examine base pay, minimum weeks, tenure-based formulas, payment timing, and how much transition time the package realistically provides.
- Healthcare Continuity: Consider COBRA premiums, employer subsidies, alternative coverage options, and potential gaps in healthcare coverage.
- Employment Transition: Evaluate whether employees have access to outplacement services, résumé and interview support, career coaching, and hiring networks.
- Compensation Already Earned: Review how final wages, accrued leave, bonuses, commissions, and equity are handled, distinguishing existing obligations from additional severance benefits.
- Employee Choice: Consider whether reasonable flexibility exists around transition timing, retirement, or separation arrangements.
- Clarity and Dignity: Examine whether agreements are understandable, eligibility requirements are transparent, employees have adequate time to review their options, and communication is handled respectfully.
Airbnb's 2020 approach illustrates several of these considerations. Beyond severance pay, the company addressed healthcare, equity, and job placement. It even redirected recruiting resources toward helping departing employees find opportunities elsewhere.
That doesn't establish that every affected employee received everything they needed. It does demonstrate what can happen when leaders think beyond a severance calculation.
And this is where I would challenge executives reviewing their own programs.
When was the formula established? What was the original rationale? Does it still reflect the workforce you employ today? Are differences between employee levels intentional and defensible? Have you considered what the package provides employees with limited tenure?
The answers may affirm your current approach. Or they may reveal opportunities to reconsider it.
Either outcome is more valuable than continuing a practice simply because it's how the organization has always done things.
The Closing Thought
Severance is important. Financial assistance, healthcare support, and help finding another job can make a meaningful difference during an involuntary career transition.
But a severance plan shouldn't become so familiar that leaders stop questioning what it actually accomplishes.
Organizations invest considerable resources in attracting talent, creating positive onboarding experiences, strengthening engagement, and building employer brands that make people want to work for them. Yet the way employees leave an organization deserves just as much consideration as the way they're welcomed into it.
The employee experience doesn't end when employment does.
How someone is treated during an involuntary separation becomes part of the story they tell about the organization. It can influence whether they recommend the company to others, remain customers, or even consider returning when another opportunity becomes available.
Every interaction with an organization—before, during, and after employment—contributes to its reputation. Employees carry those experiences with them, and their stories become an extension of the employer's brand.
So, the next time HR presents a severance plan for approval or recommends changes to an existing one, I would encourage executives to ask a few questions:
- When was our severance plan last meaningfully reviewed, beyond legal compliance and cost?
- What was the original rationale behind our severance formula, and does that rationale still make sense?
- How do we justify the differences in separation benefits across tenure levels, job grades, and executive positions?
- What have we learned from previous workforce reductions, and how has that informed the support we provide employees today?
These aren't questions HR should have to answer alone. They're leadership questions that deserve executive consideration because they reflect how an organization chooses to treat people at one of the most consequential moments of their employment experience.
Organizations have changed how they recruit, compensate, develop, and manage their workforces. They've adapted their business models to new economic realities and changing expectations.
Has the philosophy behind their severance plans evolved with them?
Because an organization can follow its severance policy perfectly and still overlook the human experience of the employee receiving it.
And perhaps the most important question isn't whether your organization offers a generous severance package.
It's whether the package you're offering today was designed with today's workforce in mind.
Stay Human,
LaShawn Davis
About the Author
LaShawn Davis is the Founder and CEO of The HR Plug, an employee and labor relations advisory firm, and the creator of The UNPLUG Experience. Drawing on her experience advising organizations and leading employee and labor relations across complex workforces, she writes about the human impact of business decisions, workplace culture, and the leadership responsibility to humanize work.
Reader Correspondence
Beneath the Headline explores the human impact behind business stories, examining how organizational decisions shape the experiences of employees and what leaders can learn from them.
Have a perspective to share, a question about this edition, or a business story you think deserves a closer look? Contact the author at hello@lashawndavis.me.