Doesn't this make sense? Let's say you're about to retrench 100 people and the packages average out at half their average annual salaries of $40,000. That's $2,000,000! Now you're not going to be able to save everyone - the last to join would certainly be amongst those likely to move on. So how could you save the rest?
1. Start a new company entity, regardless of name, for the retrenched employees to sign on with if they so choose. This way, you negate the need to pay them retrenchment if the new venture fails. But it must be voluntary and you must spell out the chance that the venture might fail.
2. Find a product or service that can enhance your current operations, maybe one that an outside supplier is providing or an add-on that your current customers would appreciate, and that will require minimal start-up costs. Unless you're really in dire financial straits, you should still be able to provide most of the infrastructure, on account, to the new company.
3. Give it a try. If the $2,000,000 runs out, sell it or close it. At the very least, you've given those employees a chance to do something worthwhile and a hell of a lot more responsibility and experience. If you're a mid-level manager and you're given a chance to be a senior manager in a new venture, even with no increase (and maybe a decrease) in salary, you're likely to give it all you can to succeed.
In the end, it's a choice between paying out $2,000,000 or INVESTING $2,000,000. Which would you, and your shareholders, rather?