The following is a guest post by Steve, a 40-something year old reader and consulting client who is currently traveling the world with his family after a 20 year career in mass media. So many times we’re just too paralyzed to make a change because we just can’t see a path forward. It’s these stories that keep me so motivated!
As I write this, I’m sitting on a balcony sheltered by lush tropical leaves. I close my eyes to savor a gentle breeze that has just kicked up, caressing the trees and taking the sting out of another cloudless 95-degree day. I flick over to the Times to check out the latest on a monster winter storm that is shutting down the East Coast. Hmmm, maybe I should extend my time in Costa Rica to a third month.
Just a few months ago, I was one of those East Coast worker bees bracing for another winter of long commutes and office frustrations. But then something wonderful happened — I lost my job. Not in a careless or unfortunate way, but as the result of a deliberate, carefully considered strategy that took months to bear fruit in the shape of a six-figure redundancy package.
Two months on — as I spend my days here doing little more than reading, learning to surf, and exploring rock pools with my four-year-old daughter — I still have to pinch myself every time I see that another full paycheck has thumped into my bank account. And it horrifies me to think that I was on the verge of simply quitting.
My achievement owes a lot to Sam through his book How To Engineer Your Layoff and a subsequent phone session of one-on-one coaching. He suggested I write an account of how I did it – not to plug his services, but as a reminder to all you financially astute FS readers that you should NEVER, EVER quit a job and always try to negotiate a redundancy package, no matter how far-fetched it may seem to you.
It certainly seemed unlikely to me. Before I get into the nitty-gritty of how I did it, here’s a little background on my circumstances. I had been with my employer for close to 20 years, and overall it had been a very happy relationship. The job was high-profile, frequently stimulating and rewarding, and in a field of work that I loved and respected. It took me around the world, and the benefits were pretty good – by the end I had five weeks’ paid vacation a year, a salary north of $150,000, and was established as a senior employee whose work was highly valued.
But, increasingly, I couldn’t escape the reality that it just wasn’t capturing my imagination or making me as happy as it did in my 20s and 30s. In recent years I started to resent being tied to a desk in stuffy offices, ever more conscious that my time on this planet was finite and thus increasingly valuable — a feeling that was magnified by the birth of my daughter. Sam’s post on freedom vs. wealth sums up this tension that I and many others feel as we look to the second half of our lives.
I was harboring ambitions to take back control of my time and go freelance, even though I knew that – at least initially – I would probably only make about half my current salary and would lose valuable benefits like healthcare and 401k contributions. I seriously considered quitting but that seemed wasteful after putting in two decades of work, not to mention risky.
I knew that my employer – a big, multinational company – did periodically give out redundancy packages. Every 5-10 years there would be a big purge of employees when the company was going through a tough time or a restructuring. But in normal times, they were usually only offered to “underperformers” – a category that I was not in, despite my waning enthusiam for the work.
What I needed was the confidence to broach the subject with my managers and the know-how to make the most of any opportunity for a lay-off that emerged. Enter Sam. After devouring his book and having an hour-long follow-up with him, I finally had the confidence and a clear strategy.
– First, I reached out to a few former colleagues who I knew had got redundancy deals to get a feel for how the process had worked for them. This gave me some insights into what was possible. A conversation I had with a former manager who himself had overseen many redundancies was particularly valuable, as he gave me the tip that there was usually some money left over at the end of the year to pay for packages.
– I had an initial conversation with a manager – not my immediate boss but someone who I knew was a bridge between HR and upper management and with whom I was on friendly terms. I immediately played my main card — that I wanted to have time off to spend time with a close relative who was in failing health. I asked this in an open, curious way, seeking to draw out what my options could be from the company’s point of view. A months-long leave of absence or working remotely were the main options we discussed. But since the conversation was going well, I decided to bring up redundancy at the end as an outcome that I could be “open to.” I put forth one idea for how that could benefit the company, by allowing them to move my headcount to a higher-priority business area. We agreed to talk again after she had discussed it with the higher ups.
– When we reconvened a week or so later, she laid out the options: the company was open to giving me a leave of absence of up to three months or to allow me to work remotely, but redundancy was off the table as that was usually reserved for underperformers and they “didn’t want to lose me.” I hid my disappointment and said I’d consider the other options.
– A month later, I’d heard nothing more and was becoming resigned to the failure of my plot. How stupid of me to have thought anyone would hand me a small fortune to walk away! Then, out of the blue, my contact called me into a conference room. “Would you still be interested in that third option we discussed?” she asked. “Umm, yeah I think so,” I replied, struggling to hide my excitement.
– The rest was pretty easy. I talked through the package with the head of HR – it was a standard, but relatively generous deal that gave me nearly a year’s salary plus continued healthcare for the whole period. Before I knew it I was heading for my farewell drinks, feeling very bitter-sweet about leaving great colleagues and an employer that I still felt a lot of loyalty toward.
Based on my experience, here are some of the keys to swinging a redundancy package. Sam goes into these points – and many more – in much greater detail in his book.
Confidence. The first step is to really believe it’s possible. I really struggled to believe my company would do this for me and had long worried that it might adversely affect my standing with management if I tried and failed. But the truth is that in most cases you really have nothing to lose, and the chances of getting a deal are probably higher than you think once you start planting seeds of doubt in management’s mind about your commitment to the job.
It’s not personal. Again, this was a blockage for me. I’d been with my company for such a long time and generally been treated so well that it felt almost like an act of betrayal to angle for a “golden parachute” while I was still in my prime working years. Despite that emotional attachment, the cold truth is that my company – like all others – is overwhelmingly concerned with the bottom line and its reputation. It wouldn’t have hesitated to kick me to the curb in an instant if either of those were under threat. Also bear in mind that companies, especially larger ones, have a keen interest in making sure that employees leave on good terms and don’t start griping about its problems on social media or in the press. In the end, my departure was a win-win for my employer and me because it helped the company meet a budget and personnel goal without having to force redundancy on someone else.
Leverage the law, but don’t push it. By international standards, the U.S. is a very employer-friendly place when it comes to workers’ rights. But there are still some effective legal buttons that the canny redundancy seeker can push. In my negotiations, I steered clear of raising my right to family-related unpaid leave to avoid coming across as antagonistic. Just hinting that I knew my rights and being inquisitive about a leave of absence was enough. Few employers really like letting a worker take a prolonged leave as it tends to throw their plans into uncertainty.
Have a solid post-redundancy plan in place. Leaving a long-term job can be disorientating, even if it’s done on your own initiative. Taking a big vacation is, quite rightly, the first thing on many people’s mind. There are few things better – as I can now attest – than being paid to play on a gorgeous beach for weeks on end. But my experience is that after a while vacations can start to feel like work, especially when caring for a 4-year old is part of the package. And it isn’t long before some anxiety starts to creep in about the income cliff you are facing at the end of the redundancy period.
That’s why it’s important to have thought past your well-deserved break to your next move from a professional and financial perspective. In my case, I had amassed a solid amount of savings and established a passive income stream of over $35,000 a year (nearly half of my annual expenses), which gave me confidence that even in a worst-case scenario my family and I wouldn’t end up on the streets.
I’d also sounded out several contacts about freelance work, giving me confidence that I could at least get paid enough on a part-time basis to pay the bills. Between Costa Rica and Europe, I’m taking a three-month vacation — about a third of my total redundancy period — before returning home to seek new work prospects.
It’s early days and there are certainly some lingering fears I have about giving up a chunky salary and trying to reinvent myself. What if the stock market crashes and damages my nest egg? What if my family healthcare costs shoot up? What if my skills are not as marketable as I hope? But I firmly believe that our fears about financial failure tend to be overblown. Hell, if it comes to it I can always drive an Uber — or just move to Costa Rica!
We plan to work on trimming our expenses over the next year and investing more in real estate platforms to further narrow the income gap. If I can make just half my previous income and gain the flexibility to spend more time with family and friends by working remotely, I will consider the redundancy move a roaring success.
If you want to leave a job you no longer enjoy, I recommend you negotiate a severance instead of quit. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.
When you get laid off, you’re also eligible for up to roughly 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.
Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.
It’s the only book that teaches you how to negotiate a severance. In addition, it was recently updated and expanded thanks to tremendous reader feedback and successful case studies.