Negotiating separation agreements.

• Author: Zweig, Stephen E.

It is Friday afternoon and an executive has just been told she is being terminated due to a "strategic reassessment" of her department's needs. Her manager and a human resources officer explain that she will be offered a separation package in exchange for a general release.

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The letter agreement will come shortly, they say. This is her last day. The meeting is over quickly, and the executive is asked whether she would like to immediately gather up her personal belongings or have them delivered to her home.

Once the letter agreement is received, the executive usually wants to know whether she can negotiate for more severance and better terms. To answer this, the executive must first identify the company's real objectives, as well as her own, the leverage each brings to the negotiations and how each can use that leverage.

The Real Objectives

A company's real objectives in negotiating a separation agreement are to: conclude the negotiations quietly with the executive releasing all claims; avoid bad publicity, government scrutiny or investigation and criminal or civil liability; maintain market share, customers and employees; and transition any ongoing projects to other employees without any loss of continuity or business opportunity.

In positioning to achieve these objectives, a company usually asks that the executive sign its standard form of separation agreement and agree to a proposed severance package, which is described by the company as uniform and consistent with those previously provided to other executives. But these are rarely nonnegotiable demands or unalterable terms.

The company may be willing to recognize individual differences in negotiating a total severance package. Also, companies are often willing to clarify terms and conditions that are susceptible to different meanings. This benefits both parties, as vague or ambiguous terms only serve to create disputes and litigation in the future.

The company's culture and its negotiator's character also influence the outcome of the negotiations. Most company negotiators want to be known as decent, fair and honorable in dealing with former executives, and are concerned about how a too-hard stance will be perceived by the executives who continue with the firm.

An executive's real objectives in negotiating a separation agreement are to maximize the total value of the severance package; leave in good standing with her reputation intact and with as few restrictions on...