My dad spent his working career as a salesman for several notable companies in the grocery industry. 25 years ago company management decided their sales force was costing them too much and over several years cut it in half. My dad survived several rounds of layoffs but eventually his boss came to him with two options. The company could sweeten his retirement package or he could be laid off. Accepting the package was better than the alternative so he took it. Many in similar situations are not so fortunate. There is nothing quite as gut-wrenching as being told your work is no longer appreciated or needed. You haven’t done anything wrong; you’re not being fired; it’s just a Reduction in Force and you were given the short straw.
The list of prominent American companies recently announcing layoffs keeps growing and employees are wondering if their job is being cut, or if their company will be the next to announce layoffs. Because the companies that have announce layoffs are household names, it creates the false impression that every company is laying off workers, and this leads to a foreboding fear. How do you confront this fear? There are two avenues worth exploring. How do I prepare for a layoff, and how do I respond if I’m laid off.
Layoffs are usually sudden and surprising. They catch you off guard. But there is one action you can take that will reduce the anxiety of any possible job loss; fund and maintain an emergency fund. Spending is usually more fun than saving and we need to discipline ourselves to spend less than we make. This surplus needs to be put away for whatever financial hiccup comes our way, including being laid off. Financial Planners routinely recommend having 3-6 months of living expenses in a liquid account to cover these financial emergencies. This money needs to be easy to get at, but not so easy that you are tempted to spend it.
A separate online savings account or money market account is often ideal. If you don’t have an emergency fund, start one; if yours is smaller than recommended keep adding to it every paycheck. You’ll get there eventually. And if a layoff is in your future you’ve got a several months cushion until you find your new job. A second idea is to keep your resume up to date. You’ll be one step ahead if you need to start looking for a new job. And who knows, another company may come looking for you, and you will have a resume ready.
Now that you’ve prepared for a possible layoff, how should you respond if you are laid off?
- First off, don’t lash out in anger at the company or the person who informed you of the layoff. It you have the right kind of manager, he/she probably feels almost as bad telling you as you feel hearing the news. Your contacts at your present company may be instrumental in landing your new job. Use co-workers and managers as your references.
- Don’t mope. Yes, you feel discouraged but a pity party gets you nowhere. Consider this your opportunity to make changes for a better future.
- Sign up for unemployment as soon as possible. This is a government program that you are entitled to and that your employer has been paying into on your behalf. Any income is better than no income at this point.
- Evaluate your severance package (if there is one). How long will you continue to receive a paycheck? Or is it a lump sum? How long will benefits last? What will it cost you to continue on the company health plan through COBRA? Do you have stock options that you need to act on now?
- Your new full time job is to find another job. Put in a 40 hour week or more. Who knows, you may find a new job before your severance package expires and you will end up ahead financially.
- Consider a side hustle. Don’t let your pride get in the way of bringing in income.
Being laid off is often a tragic loss. A job that is an integral part of your being has been taken away. But you can and will get through this. The advisors here at JGUA have helped many clients through life transitions. We can be a sympathetic ear and wise counselor through your job transition. Give us a call, we would be honored to help you.