How to Survive a Layoff (according to me)

Posted on August 18, 2011. Filed under: Professional | Tags: , , |

Two and a half years after my fourth (official) layoff, I’m finally ready to write about my strategies for surviving and thriving after a layoff. First, a little history for context, then a list of guiding principles that have worked for me. Before I proceed, however, I feel compelled to point out everyone’s situation will be different. Therefore, consider these guidelines in that light… as a starting point for planning your own layoff survival in the event it happens to you.

John’s Principles of Survival

  • Count Your Cash. You should already know where your money is, but make sure you know how much is in each account. Create a list of savings and investments and determine which ones can be used (in priority order) if cash is needed. For me, I spend from my checking account first, then savings, then cash-in CDs or brokerage accounts (stocks, bonds.) If necessary, it is possible to withdraw from a Roth IRA without penalty — you’ve already paid taxes on it. Traditional IRAs can also be cashed in, but at a penalty — these are the last assets to use. Remember, spending your retirement has long-term implications, but if it is the difference between keeping your house long enough to land a job, you’ll have time later to worry about retirement. You may also be able to sell possessions, but these take time to convert into cash and if they are things you’ll need either during or after your period of unemployment, it will probably cost you more to replace than you will receive for their sale. Keep selling of hard assets as a last resort.
  • Cash Flow is King. Pay off debt, especially high interest-rate credit cards. Reduce or eliminate expenses that neither generate an income, promise to generate an income, carry a severe cancellation penalty or cannot be removed. For instance, you have to continue to make your mortgage payment, but often the bank will allow you to reduce your monthly payments to cover just the interest for a defined period of time. Do you need the expensive CATV package or the phone land-line when you have a mobile phone? When is your ISP contract up, can you negotiate a price break for renewal? Eat at home instead of at restaurants. Get creative, make all expenses as small as possible and then put them off as long as possible without incurring penalties or interest expenses. DO NOT put off these tasks, the sooner you adjust your cash flow, the longer your cash will last!
  • Preserve your Credit. Pay off debt balances early if you can. Stop using your credit cards as much as possible. Look for ways to exchange goods for goods or services for goods. Increase your limits while you still have a reported income. If you exhaust all your liquid assets (see Count Your Cash above,) you can use credit as a last resort. I say last resort because credit can be expensive. Take advantage of 0% interest for 6 months deals while you can… they may not be available later if your period of unemployment is prolonged. Avoid this phase as long as possible! Once you get into the circumstance where you must use credit, be ruthlessly thrifty, use low rate cards first, pay only the minimum balances each month but pay them on time to avoid penalties. Talk to the credit card companies to see if they can provide any relief for people in your situation.
  • Finding a Job is Your Job! Those who have never experienced long periods of unemployment often think of it as a vacation. But seriously, how relaxing can a vacation be when you don’t know when or how much will be the next paycheck? If your company provides a severance period, use it to its full extent. Don’t leave anything on the table. If they require you “wrap up” your old job, negotiate to minimize the amount of effort necessary to do so… don’t worry about putting a tidy bow on everything, it will get second guessed and redone as soon as you are no longer available anyway. Don’t burn any bridges, but remember it is more important you find your next source of income than for you to cross all of the t’s and dot all of the i’s.
  • Find Some Time to Relax and Reflect. I know I just said unemployment is not a vacation. But, it does offer some degree of flexibility. Take advantage. Have you thought about helping on a community project or volunteering at the local not-for-profit? Do it. They’ll work around your schedule and you might find either an interest or a lead that will send you down an unexpected path. Join your friends or take your family to the local free concert-in-the-park. It will allow you time away from your day-to-day stress, will not drain your pocket book and could be an important avenue for networking.
  • Some Expenses are Really Investments. Do you really need that fitness club membership? It depends, what kind of job do you seek? If you have a strong support network at the club, this may also be an important job network as well. Avoid isolation, scrutinize membership expenses but also consider whether they might lead to job leads or referrals. Hanging out at the popular coffee house might seem frivolous, but if there is a possibility you will meet your next employer there, it might still be worthwhile. Be sure to use your time productively while there and plan for lots of interruptions. Look for ways to eliminate expenses without eliminating the opportunities they present — can you reduce your membership cost? Can you drink coffee instead of a double latte with extra flavoring or stretch a single cup of coffee over an hour rather than having a couple over the same period?
  • The Clock is Ticking. It takes a lot of time to find a job that fits and pays well. There used to be a rule-of-thumb of 1 month for every $10K of annual compensation. I don’t know if that ratio still holds, but it is a reasonable starting place to estimate how long your savings need to last. Unless your savings are big, you probably won’t have the luxury of an extended employment gap. Consider negotiating your starting date once you land a job so you can have a week or two vacation prior to resuming work.
  • Plan Ahead. Obviously, it is not possible to plan ahead if you have already received a pink slip. If you have not, assume it could happen to you someday. I have made it a practice to estimate my monthly expenses periodically. I try to keep 3-6 months of savings on hand at all times. Here’s how it works, if the parachute account (this is what I call it) is in excess of 6 months, I’ll spend the money on anything reasonable. However, if it ever drops to 3 months or below, I will not touch it until the balance is once again up to 6 months. There is an undefined bonus effect that actually extends a 3-6 month parachute — if you calculate the savings goal based on current expense, whey unemployed you will minimize expenses and thereby stretch your cushion over a longer period of time.

Context: Why I am Qualified to Talk about This

I entered the professional workforce after completing an undergraduate degree in Business Administration from the University of Kansas. I was excited about the prospects of working for first employer because a KU professor’s tutelage had gotten me excited about Labor Relations and I would have the opportunity to practice in a company with a recognizable name. When my friends and I spoke about who had job offers, I didn’t have to explain who is Coca Cola.

Coca Cola Bottling Company

Our views of the world change as our perspectives expand. Mine is no different. Following the excitement of a union de-certification campaign, training management employees to work in the face of work stoppages and hiring strike replacements willing to cross a picket line, I began to develop a conscience. I learned that some companies deserve to have a union. Those unions can and do provide benefits that work to the advantage of both union and non-union employees alike. As my perspective expanded, I decided I would be better suited in sales and began applying for a transfer. Unfortunately, there was “bad blood” between the respective executives responsible to for Sales and Labor Relations and I became a pawn in a political game. I lost my job as a result.

PACE Membership Warehouse

It was 1983 and to my surprise, I landed on my feet in a role that fit my temperament much better and provided significantly better pay. I worked at this privately owned regional department store for more than five years. Advanced through a number of increasingly responsible positions and was ultimately recruited away when I topped out growth-wise in the moderately sized company.

PACE offered the promise of stock options, bonuses, travel, a considerable bump in pay and a prestigious job title. Unfortunately, the company did not know how to make a profit. Eventually, they were purchased (the goal of the founders of the company — built to flip) and I was out of a job.

Mutual of Omaha Insurance

Once again, I landed on my feet. I moved again, increased my salary, increased my responsibilities and got to do some really amazing projects. Professionally, I thrived in this environment; politically, I was a fish out of water. While heading the employee relations function of the global company I also received an MBA — paid for by the company! However, within months of finishing the degree, I became the football in another political game between corporate senior vice presidents. (I actually got the inside story when I ran into one of the VP’s at a cocktail party years later.) I had just finished my MBA and was ready to expand my responsibilities again. The situation allowed me to negotiate a superb severance package and move onto a dream job.

Alliant Health Systems

Yet another pay raise, bonuses, a generous boss and work outside of the human resource field, at last! I was still part of HR, but was working directly with front-line hospital workers and executives to re-create compensation and performance systems in brand new (at the time) and exciting ways. Despite the acclaim these programs brought to the hospital system and the increasing number of invitations to present at conferences, when my aforementioned generous boss moved to another position, I discovered I had not made the appropriate moves to replace him. Instead a peer manager had out-maneuvered me (again) and threatened to dismantle the systems I had assembled. Seeing the writing on the wall, I attempted to transfer within the system, but my skill-set was too specialized and no opportunities existed.

Hewlett-Packard Company

A number of factors led me to believe this would be my final career move. First, I could see organizational politics were not my long suit. I determined to shift my career trajectory from executive to professional. In other words, I intended to work in a role where expertise would serve me better than political skill. Second, I had longed wanted to live on the West Coast and HP offered an Oregon location. Third, my MBA had an international focus and I wanted to work with people in non-US countries. HP gave me instant global responsibility.

I was fortunate enough at HP to work on some very fun and unique projects. But mostly, I was able to turn a talent for organization into a job as a world class project manager. I developed a reputation for managing projects that were complex, dynamic and fraught with problems. I was constantly learning, was actively mentoring numerous colleagues and exercising a talent for problem solving at the same time. I thought I was set. Unfortunately, my success was also my vulnerability.

My frequent successes were met with bonuses, stock options and increasing salary. But I was working in a field (project management) that appeared generic and substitutable to company executives. Despite 13 years of success in management technical projects, my lack of a technical degree made me a candidate for layoff. I trained a replacement in India who earned 25% of my pay and was unceremoniously shown the door.

Oregon State University – An Encore Career

2008 was not a good year to be job searching. With the greatest economic crisis in nearly a century, high levels of unemployment and global financial malaise, few US (and international) corporations were hiring at my level of expertise. Plus, I was undergoing a personal crisis of identity. Faced with the prospects of having to relocate from a community where I had lived for a quarter of my life (longer than any other place) and leaving friends and community support, I decided to stay and change careers. Fortunately, a reasonably successful career had situated me such that I could pay off my home mortgage, eliminate all debts and survive on a significantly smaller income. I wanted to do something meaningful and teaching had been long on my mind as an option.

Due to some lucky networking breaks, I landed a position at OSU where I am now teaching strategic management to seniors and organizational behavior to juniors. My work experiences easily translate into the classroom and I’m finding the challenge of learning how to teach at the university level equal to any I found in corporate America and twice as fulfilling. It has been a struggle at times, but I am enjoying the dual reward of personal growth coupled with making a direct difference in other people’s lives.

Summary

Losing your job can be one of the most stressful events in your life. I ought to know, it has happened to me five times! But it doesn’t have to be the end of the world. Timing is everything. If you can build a big enough war chest, aggressively manage your cash flow and learn from your experiences, you too can survive a layoff.

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