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Severance packages: The big goodbye, with some added extras
December 2nd, 2008
General Motors and Citigroup are cleaning house in a big way. GM is cutting for survival, Citigroup is cutting to avoid the survival scenario.
Severance packages are created to give incentives to employees to leave, but they’re also designed to keep costs under control for employers.
Severance and redundancy packages are not the same things. The difference between severance and redundancy packages is that redundancy packages are usually far more generous. Severance packages, particularly under the current economic circumstances, can be expected to be cheap, purely functional, and non-negotiable. GM and Citigroup aren’t trying to find ways to spend money.
Don’t expect:
- Bonuses
- Money beyond strict entitlements
- Any more notice than absolutely necessary
- Benefits
- Information beyond the legal requirements to inform employees
There may in some cases be extras, but don’t count on it.
If there’s any good news for employees, it’s only that they’ve had a bit of warning, however vague.
There are few things you can do with the warning. Most of the considerations are time and money:
- Find out exactly how much you’re getting. You may find the employer a bit vague at first about figures. Compare notes with others, and expect the lower figure range to be the real one.
- Find out exactly when you’re supposed to leave. Very important for planning your next move.
- Check out your pension entitlements. You may want to roll over the pension fund, or consolidate it with a private scheme.
- Financial management. You’ll find you get a choice of options which is pretty confusing. You will need to consider both putting money away and making sure you have enough cash available. If you’re not sure, look at things like term deposits, where you’re not over committing yourself.
- Schedule yourself to be up and running from day one looking for work, or starting in another job. Set up interviews after that date, look at employers and ask if they’re intending to do any hiring at that time. This is actually pretty easy to do, and it does save you time when you leave.
- Cover all known bills, costs and outlays in your personal budget beforehand. (Make sure you include health insurance, etc. Sometimes paying these things upfront saves money over the period.)
- If you’ve got any other personal spending to do, figure out if you can really afford it. Real expenses first, you second.
- Get references from your current employer. This is reasonable, and most managers will be sympathetic and willing to help.
- Don’t pay top dollar for anything, if you can avoid it. Get into the habit of shopping around and looking for deals, because it does work and it does pay off, particularly over time.
Job hunting during this period between notification and actually leaving is absolutely essential. You can save yourself a lot of worry.
Most importantly, you can learn the job hunting methods, polish up the CV, and give yourself more time to find opportunities.
The time factor in job hunting is something you need to understand clearly.
Given a few months, you will definitely find something to apply for, probably several things, and do a few interviews. These can be considered practice interviews, at the very least, and that experience is crucial for job hunters.
The upshot of this experience is you become a lot more efficient in your job hunting, and therefore much more likely to find work, quickly.
Employment agents
You can also scout out employment agents, which is another time consuming and sometimes thankless task. Your co workers may have found someone who delivers, too, so it’s not a waste of time to swap notes and follow up leads.
Welfare
If necessary, check out everything you need to do in advance. It saves time asking the same questions later, and you can get some sort of orientation to the process.
Career maintenance
You may be able to fit in some extra training and qualifications with the spare time available, if you have any room in your life to do that. If you have six months to play with, use them. It looks good on your applications that you’ve done this extra work, too.
The important thing here is that you can do some career planning, and check things out thoroughly.
Suggestion: Treat this as a working career move, not a disaster. You can psych yourself out of doing the right things, if you get obsessed with the problems, not the solutions.
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