Good things don't happen to those who disbelieve. Be open to possibilities. This post will highly why negotiating a severance is possible, even if you are a great employee or a bad employee.
One of the push backs people have about my bestselling ebook, “How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye,” is doubt an employer will ever give them a severance. They think they're either too good of an employee or too bad of an employee to ever receive one.
What these skeptics don't understand is that a company's greatest fear is losing their reputation. Thanks to social media, it is very easy to destroy someone or some company's organization more than ever before.
Let me use a fascinating example to explain why negotiating a severance is possible. Hopefully through this example, if fewer people will start believing that employees do have more power than they realize.
Why Negotiating A Severance Is Possible: A Company's Reputation Is Everything
No doubt HR personnel and managers everywhere have read this post on Medium entitled, How I Got Scammed By A Silicon Valley Startup. You should read it too if you are in a position of power or care to one day negotiate a severance.
In a nutshell, a woman by the name of Penny was promised a $10,000 relocation bonus to help her move from Texas to the Bay Area to join a startup. Although joining a startup will probably make you poorer, it's what so many young people do nowadays to try and get rich quickly.
She would receive a $135,000 salary, equity, and a 3-month severance package if she were to leave without cause. Penny signed on and made the leap. After months of missing payroll, however, and receiving what she claims was a fake payment invoice, Penny filed a wage claim and says she was fired in retaliation.
When you “hire fast, fire fast” as the WrkRiot CTO told Penny during her initial interview, you might fail to realize the repercussions of your fast actions. Instead of working something out peacefully with her employer, Penny turned to the internet to blow them up!
Destroying A Company Quickly
Penny's article has since been picked up by The New York Times and many of the biggest media publications on the web. Everybody in the startup industry knows her story and many more will too in the weeks to come.
As a result of Penny's article, her previous employer no longer exists. Their Twitter and Facebook profiles are gone. Previous employees and investors have disavowed the company and the CEO is now a ghost.
Negotiating a severance package is possible because companies can be ruined overnight be disgruntled employees. Golden parachutes are offered after takeovers because they don't want those in the know to sabotage their old employer after they're gone.
Instead of just reporting the news, let me share with you some severance negotiation lessons for both employers and employees to follow.
Severance Package Lessons For Employers
In this day of social media and the internet, employers need to be more careful hiring and laying off employees than ever. Employees may be more emboldened to sue their employers and destroy their employers reputations online.
Therefore, is good for employers to be open to negotiating and offering its employees a severance package. Here are some key lessons employers should follow.
Lesson #1: Don't screw with your employees.
They may go on the internet and light a torch to your barn. Your HR personnel and lawyers won't be able to save your company once a disgruntled employee goes on a rampage. “Heav'n has no rage, like love to hatred turn'd, nor Hell a fury like a woman scorn'd,” William Congreve ( The Mourning Bride, 1697).
Employers need to be respectful of all its employees and consider offering a severance package to those they want to lay off. Break up on good terms, not bad terms.
Lesson #2: Understand the risks if your disgruntled employee tells all.
In Penny's case, she had almost nothing left to lose at WrkRiot. She wasn't getting paid her salary nor did she receive a severance, which she claims to be $50,000. That sounds abnormally high for only several months of work on a $135,000 base salary. However, it's a relatively small amount to pay if it could have prevented what followed.
Lesson #3: If you are not absolutely certain about a potential new hire, make him or her interview more people.
What's another two hours of interviews to make sure you're not missing anything? Once you've hired the wrong person, it's extremely unpleasant to lay the person off.
You'll probably want to wait at least three months to build a record of underperformance for documentation purposes. Then you'll need to have the talk and start looking for a replacement. What a productivity killer. Spend more time in your vetting process instead.
Lesson #4: Be open to negotiations.
Something can always be worked out. It's less likely Penny would have filed a wage claim if her employer was honest and told her the company was in a severe cash crunch instead of sending a fake pay invoice.
Did you know around 50 of Pandora's first employees didn't get paid for two years? The CEO didn't know it was illegal to not pay his employees at the time. However, he made up for their sacrifice and then some once the company went public.
More “woke” employers is why negotiating a severance is possible today. My wife was able to negotiate a severance package that paid her for full-time work while she worked only 60% of the hours.
Severance Negotiation Lessons For Unhappy Employees
On the flip side, here are lessons for unhappy employees who want to leave. It is vital to negotiate a severance instead of quit. Because if you quit, you end up with nothing!
Lesson #1: You have more power than you think.
Today, you have your tell-all editorial published in The New York Times like Greg Smith did when he wrote, Why I'm Leaving Goldman Sachs.
Or, you can publish on your own blog how you were constantly sexually harassed at Uber and HR and management did nothing. You can turn to platforms like Medium to potentially get your story told more easily using social media like Penny.
You'll be surprised at how much more respect people will give you once they know you have an established online platform.
Related: How To Start Your Own Blog
Lesson #2: Know what's at stake.
The people who tell-all, even if they have a great reason to tell-all, will likely have a much more difficult time getting employed in the future. Rational employers won't want to risk hiring someone with a history of blowing up their previous employer if there's another candidate with equal skills and no such tendencies.
No employer wants to always feel on edge wondering whether their company culture may offend you. If you plan to detonate your company, make sure you already have a signed contract to work for another employer.
Or, make sure that if you win a lawsuit, you'll win so much that you'll never have to work again. There are much more undetectable ways to get back at your employer.
Lesson #3: It's always better to negotiate than to quit your job.
More than 90 percent of pending lawsuits end in a pre-trial settlement. In other words, both sides realize there's too much to lose by going all the way to court.
When you come to an agreement, a fair exchange takes place where both sides walk away happy. You won't be seen as an “at risk” employee by future employers. Meanwhile, you'll have a nice severance to hold you over until your next move.
Here's a story of how one man negotiated a mass severance for 2,000 employees!
Build Stronger Relationships For A Better Severance Package
Reputation and a strong brand go hand in hand. A brand really takes a lifetime to build and a minute to destroy. As a result, a company will be more open to negotiations. If a company is unwilling, it risks putting its brand at risk
Once you publicly trash your employer it will make recruiting and retaining qualified individuals much more difficult at the margin. If the company is publicly traded, perhaps its stock might take a hit. Investors sell first and ask questions later.
You don't have to threaten a company with a tell-all post if you don't get the severance you want. Companies already know they are susceptible to assault. Instead, you need to build stronger relationships with your managers so that you can have an open dialogue to negotiate.
Only the lazy or fearful quit a job with no backup plan because they can't stand confrontation. You must protect your own brand as well if you are not financially independent.
My Severance Negotiation Situation
When I raised my hand to get laid off in January 2012, I told my manager I was willing to sacrifice myself. This way he didn't have to make a difficult decision to lay someone else off who wasn't as amenable.
Employees who've never managed people underestimate how difficult it is to tell someone their services are no longer needed. If you can help make your manager's job easier, they'll be more willing to help you get what you want.
In return for receiving a severance and all my deferred compensation, I offered to stay for as long as it took to train my subordinate to do my job. I reassured my manager I'd introduce him to all my clients. I'd sing my boss's praise, and stay until he felt comfortable my departure wouldn't severely hurt the business.
Perhaps more importantly, I assured my boss I wasn't going to a competitor.
In the end, I got the severance that I thought was extremely fair. I stayed on for a couple of months once I made my intentions known to help with the transition.
The severance package alone has paid for 100% of my lifestyle for the past four and a half years. My last tranche of my severance was finally paid out in 1Q2017. It was amazing to earn severance payouts for five years in a row after I left my job in 2012.
Related: Workplace Bullies, Comebacks, & Fighting Back
Never Burning Bridges If You Want A Severance
I'll never speak ill of my employer because they took a chance on me when I was 24 years old. Of course there were times when I thought I should have been paid more or promoted earlier. But that's what every employee thinks when they are trying to ascend the corporate ladder in a highly competitive environment.
Everything worked out in the end. I built as strong of a network as possible until I no longer cared. More than 10 years later, I now realize the best reason to retire early is greater happiness. To not have to spend time with people you don't like is a huge blessing!
Just look at what Susan Fowler did to Uber after publishing her post outing Uber's bad culture. Uber's board fired their CEO, and there are no-longer any more C-level executives at the firm! You have more power than you think dear employees. Utilize your power. Negotiating a severance is absolutely possible.
Recommendation If You Want To Quit
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.
Since you got laid off, you're also eligible for up to 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, on how to negotiate a severance.
It is the best severance negotiation book on the market. Literally thousands of readers have negotiated tens of millions in severance packages since the book first came out. The book is update for a post pandemic severance work life.
Use the code “saveten” to save $10 at checkout!
Even in 2025, there are still non-believers that buyouts and severance packages are available to employees, even federal government employees. But it’s happening under the Trump administration and its employees must decide. I would take the servants package of eight months if it was offered to me.
That’s a great point you made about when a company’s policy looks like “hire fast, fire fast”. They often don’t realize the repercussions that such an approach can have. And, if you end up in the crosshairs of such, a lawsuit could just be around the corner.
I was probably the first person to negotiate my severance package (I asked my supervisor if they had someone do this before and the answer was no). In this case, I decided to engage with a lawyer to do the negotiating for me. The lawyer was a complete jerk to them, but he said that it’s just a way of negotiating especially to complete jerks (the business owner).
Ended with improved severance pay, but the main item that I really did need was the signed letter of reference from my previous employer since I was getting a lot of calls from hiring managers and recruiters during the negotiations. I’ve read that there was no legal obligation for an employer to provide one. However, I had a large employment gap before I started with them, so if they refused to provide a reference or provided a negative reference then it would have negatively affected my job prospect.
So I got my severance pay, some items, and a signed reference letter. If I found out that they deviated from the signed letter it would have been seen as a breach of contract. There are other legal avenues to pursue if you found out about reputation damage (ie defamation) but have read that it’s harder to prove this. For breach of contract, probably not so much.
I came out of that experience knowing how to choose and engage with lawyers for legal matters should something happen to me again.
In the end, after everything was signed, I was informed that the employer was responsible for shooting the ‘first bullet’ and that before making moves to lay me off they should have worked with a lawyer to do things legally. Lawyers from both sides agreed, well I was informed by my lawyer that his lawyer also agreed. Not sure if BS or not.
It was worth paying the lawyer for peace of mind over this issue.
Depending on what company you’re at, it’s easy to get sucked into the “There’s a set way of doing things” or the “You can’t do that” mentality. Especially when you’re fresh out of school and all bright-eyed and bushy-tailed about the world; meaning you really know nothing. But you’re right: both sides often realize it’s easier to negotiate than to actually go through the legal motions. There’s a great line in Breaking Bad where Walter White says, “Name one thing in this world that’s not negotiable.” Skewed view of the world because he was becoming a major drug king-pin? Almost definitely. Still pretty damn good advice? Without question. Awesome post, definitely feel more empowered now!
For many people, their jobs are the identities. So getting laid off, even intentionally, could be a huge hit to their self-confidence. Even though it makes more financial sense to get laid off, someone people might just quit because it feels like they’re walking out with their head held high instead of being kicked out. So there might be a psychological component that needs to be overcome when it comes to getting severance.
Maybe it comes down to personality. Some people have really thick skin and can carry out the advice you’ve outlined in the book. But others who care too much what other people think might have a harder time. So in the cases where they try to follow your advice and still don’t get laid off, it might just be because they don’t have the stomach for it.
Hi Sam, what is your recommendation for a 22 year old college students, who is just entering into the workforce.
Severance package? Negotiate salary? Or that comes after you have enough experience before you are even worth a severance package or a higher salary
Thanks!
I’ve been surrounded by layoffs lately in the oil and construction industry and I’ve heard a lot of chatter about people contacting lawyers to write their counter offers. I remember reading that here in Canada the severance is supposed to be based on the markets, so with a ton of layoffs lately everyone is pushing for more based on what the highest severance payouts are. I’m not sure if there’s any truth to it, hopefully when I’m no longer working it’s on my own terms!
I’m one of the skeptics you mentioned at the beginning of the post. I’m planning on quitting my job at the end of the year, and I am pretty certain I will not be able to get any sort of severance.
Here’s Why:
-I work for a huge company who is used to getting badmouthed online, so they have very little fear of me ruining their already weak reputation.
-They are desperate to find *qualified* new employees, so they certainly aren’t going to pay one to leave.
-Employee retention is terrible. Our division has about 250 employees and last year ~60 quit. None of them received a severance.
-There is no official policy for layoffs and severance pay, therefore the lemmings in HR are incapable of doing anything.
I suspect in the middle of the recession I might have had a chance to negotiate a layoff, but right now it seems incredibly unlikely.
Sam, I would love any advice you can offer aside from getting your book, because right now I’m not inclined to pay for the book when a layoff it seems hopeless.
Skepticism is great. Always have some before spending any money and do your due diligence. It’s hard for me to give you specific advice w/out knowing your specific situation e.g. years worked, current comp package, existing relationships, performance over the past 6-12 months, company, etc.
Of course the 60 who quit didn’t receive a severance. They quit. They took the easy way out without bothering to have a conversation. That’s what most people do because they don’t understand their own power as an employee.
I’ve learned it’s not enough to tell. People will do what they will. Folks have to EXPERIENCE what quitting (in this case) is like before deciding whether there could have been a better move. Since most people changes jobs ~7 times in their career, there will be more opportunities. Each transition is a learning experience. If you quit, just make sure you have something lined up or your have enough income/wealth to hold you over until you find something new.
If your organization is large, there is inevitable someone who did get laid off with a severance. I’d seek them out and ask what they got so you know what you are playing for or leaving behind.
Only you can convince yourself!
@Fiscally Free, the difference for me in Unemployment Insurance, alone, was into low five-figures.
Cash is not the only value you can negotiate.
The perception the world has of someone who ‘just quit’ and someone ‘laid off’ is undeniable. This is particularly true if you were to ever attempt to get another job.
@Fiscally Free
Quitting generally guarantees you with no severance and it may affect for when you need to collect unemployment. You are better off getting laid off due to lack of work. Lack of work can also be lack of work with your position also.
In 2011 I volunteered for a layoff. The next day I interviewed and got a raise and a better job. Didn’t even have to negotiate with either of them! Sometimes just striking while the iron is hot is enough.
So many people don’t understand your power when negotiating with your employer. Whether that’s during the hiring phase (do a great job in the interview and they’ll be hooked) or negotiating a severance. You should always ask for more money (worst thing is they turn you down). But most importantly you have to work hard enough and be a good enough employee that you deserve what you ask for.
I don’t expect to ever be in a similar situation, but I almost want to be just to test my skills after reading all these posts. Great read as always.
Getting laid will always be better than quitting. Wise words.
Getting laid is better than a lot of things! :p
Great post Sam,
Good advice for both employers, employees, and entrepreneurs.
I really wish I had found your website before I left my employer. I’ve been on my own now for about 11 months, but could’ve been in a better position had I come across your book.
It’s not that I’m in terrible financial shape or that I left on bad terms, it’s that it never crossed my mind that I could be in a better position by negotiating a severance. For the record, I did leave on good enough terms to get references.
And to what you said about never saying an ill word about an ex-employer, I’m the same way. Even though my blog is about escaping the day job, I’ll never mention the company by name or put them down.
The company was a great stepping stone in my life that provided a ton of experience, a stock sharing plan and helped get me to the point I’m at today.
Thanks for the post!
Good attitude Graham! Sometimes things just don’t work out. Be mature about it, be professional, and move on. You just never know what new opportunities may arise in the future.
Are you focused on being a solopreneur 100% right now? Or are you looking to get back into full time work?
Great article that all entrepreneurs/business owners should read. Treat your employees well and you will get loyalty and dedication in return. I know this from first hand experience, on both sides of the isle.
I have a friend who owns a business where he even makes employees shareholders of the business if they have been with him for a certain amount of time. You would be amazed at how hard employees will work for you when they know that they have a stake in the business and will get to share a small portion of the profits. This does not work for every business model though, but for some it works well.
I totally believe it. Make employees owners, no matter how small the ownership, and they will CARE more. Instead of letting trash lie on the floor, they’ll pick it up and throw it away. Instead of just focusing on the immediate transaction, they’ll think about recurring, long-term business.
I have been in the position to hire my replacement before. I was shocked at the horrible things about former employers that almost every candidate had to say. None of them rang true, and none of those people were hired. If you can’t finesse the way you speak about a bad experience, you are not subtle enough to work for me and interact with my clients. At the very least, they could have said nothing. I would have trusted their judgment more.
Interviewing a candidate who bashes their former employer is a serious RED FLAG. It shows there were problems in the past with them getting along with people and it shows a lack of maturity and discretion.
Whatever you do in the interview is a reflection of what you will do if you get hired. It’s so logically. Practicing how to interact is crucial.
Related:
The Art Of The Interview
How To Develop A High EQ For An Easier Life
Buy the book. As a bigshot who runs own company, you would do well to see the other side’s perspective. Click on my link to read my story; the book was a great investment for me, and it will be a business expense for you. Don’t be pennywise, Geppy!;-)
Read most of it. Congrats on getting what you were seeking! But your situation seems like one that I described… a company going through tough times which is the catalyst for layoffs. What would you have done had your company not been laying people off and doing just fine?
The answer you seek is in the rest of my post that you almost finished, and the book. Buy it. Or don’t.
You seem to have posted in order to humblebrag that you run your own company. Mission accomplished!
I didn’t finish the post because it was clear your company was on tough times and you had the option to volunteer your head. That does nothing to answer my original question for those that want to leave their current position WITH a severance when their company isn’t in a rough patch and doing lays offs.
I posted hoping for a reply from Sam, not one of his less-than-personable fan boys. If my goal was to humblebrag, I surely wouldn’t use my anonymous Internet alias.
My company is small, not something I deem worthy of trying to impress anonymous Internet users with. I have far better things to do, and I’d hope you do too but it seems you’re still trying to find something to fill that post-retirement void. Unfortunately you’ve landed on questioning others’ motives on an Internet blog’s comment thread.
Saddest retirement ever.
Tone must be lost in translation here. JayCeezy has been a long time contributor and I appreciate his views.
Anyway, I don’t think he means any ill regard. Let’s move on.
I’m more curious to know how you’d handle an employee’s request to get laid off with a severance package.
The thing not clear to me, and doesn’t actually have to be since I run my own company, is what conditions need to be in place to leave with a severance.
It seems a company needs to be laying people off (in your case, Sam), or treating you poorly. In the former, you volunteered to be one of the rolling heads. In the latter, like our friend Penny, it seems like you’d be threatening the company… give me this or I do this.
So it seems the company needs to be in trouble or going through tough times. What about the folks out there that no longer enjoy their current job and want to leave with a severance.
Perhaps you cover that in your book, but that would seem like most situations. Or maybe i’ve not been an employee for far too long to be able to see something.
Geppy,
As an employer, you don’t want someone working for you who doesn’t want to be there. And the fact of the matter is, most employees would rather be elsewhere than doing the job they are doing now be it because they are bored, feel underpaid, feel under-appreciated, have other interests, etc. Your employees might say they love to be your employee, but chances are high they are just being respectful.
And because you plan to be in business long after an employee leaves, you just consider negotiating an exit strategy for an employee who doesn’t want to be there so you will have a smooth transition, minimize backlash, and improve your company’s reputation as a great place to work.
I’d love to hear your viewpoint on how you would handle a situation where you’ve had an employee for the past 5+ years who discusses with you about moving on, but wanting a severance to do so. What would you do?
Do you have any mediocre performing employees whom you may wish to upgrade/layoff but can’t figure out how?
Thanks,
Sam
Sam, I had to give this some thought as my initial reaction was “Why would I give an employee a severance when they don’t want to be here?!”
I realized that there’s potentially a good answer to that question, so I slept on it.
It’s a bit hard for me to fully grasp seeing as we are a very small company (just four people). I’ve had to let go of two people in the past, but both times were performance issues.
The first I did give a small severance without her asking. She was a hard worker, but clearly not cut out for the position. She was wish us for 8 months, but shouldn’t have made it past a month or two (my fault). I gave her a small severance because she did make an honest effort to meet expectations but just didn’t get there. The separation was amicable in the end.
The second person I had to let go was not given severance. He knew the first employee did receive some and he asked for the same. I denied it. He was very young (just eighteen years old) and 100% had the skills to be a good employee, but his priorities were elsewhere (namely chasing girls and showing up to the office past noon). I gave him far too many chances to shape up, but his actions literally got worse after every meeting/attempt to correct him.
In that case, I don’t believe one deserves severance. So I got to thinking when I might give someone severance.
Being four people, everyone is pretty essential. But one employee in particular… if she were to leave, I’d panic a bit. I know it’s common for employees to check out, start using sick days for interviews, job hunting online during business hours, and simply do the minimum to get by each day. Then they up and leave and the employer has no heads up and had no time to find a replacement.
When that happens to a low level, non-performing employee it is what it is (likely an overall positive). But if that happens with a key, high-performing employee… that would really suck.
So if this employee came to me and said “Geppy, I’ve loved working here but I’m ready to move on. I don’t want to do you or the company a disservice by gradually checking out and potentially tarnishing my reputation here as an employee. I want to move on, but I want to make this an easy transition for you and the company…” Now that makes sense to me from a business perspective.
How much do I lose in productivity if that employee decides to go the route of checking out and job hunting during business hours? How much do I lose in transition when she leaves and I’m literally stuck scrambling to replace her after a measly two-weeks notice?
I don’t know what the dollar amount is there, but I imagine that’s where it makes sense to offer a severance in agreement that the individual stays on long enough to pass the baton.
So, in short, I get it. But it has to be a high-performing, valuable employee that’s able to ask for a severance in a time where a company is not going through turbulent times. At least that’s my perspective from an employer point of view.
Hi Geppy,
Great job thinking about the various scenarios and sharing it with the community! From your POV, I get it. I wouldn’t give a severance to a short term employee who was expendable either.
The irony is that the high-performing employee who wants to leave will always wondering, “Why the hell would my employer want to give me a severance since s/he wouldn’t want to let me go?”
Your comment has helped address this exact befuddlement of the good-to-high performing employee. Now imagine if you liked the employee as a person, and the employee showed loyalty and sincere desire to leave your company better off after they leave? Of course you would be much more likely to take care of such a vital employee.
So for those employees who’ve been at a job for less than 1 year, don’t bother to build relationships with your managers, and simply don’t give a damn about your job and the company, forget about trying to negotiate a severance. You don’t deserve one! You may get mandatory WARN ACT pay of 1-3 months, depending on which state you live in if you work for a large corporation. But if you are a job hopping ADHD maniac w/ no loyalty, then forget about it. Just leave.
But some people might really have some VENGEFUL FIRE if they feel wronged and try and publicly trash a company online. You just never know. In the past, it was more common for people to use the word, “Going postal” to describe the disgruntled employee who comes back and shoots all his colleagues. Now it’s the internet footprint that can be very damaging as well. There is a reason when people are let go, they are immediately asked to leave like a shell-shocked rabbit w/ all access keys taken away.
My book is 150-pages long and discusses various scenarios from the employer and employee’s perspective. This article is just ONE perspective regarding why severance negotiations are possible.
My secret goal is to have all employers read this book and my articles so they also realize the upsides and downsides. Instead of making this whole breaking up phase awkward, it becomes common place. Everybody wins.
Hope this response helps!
Sam
Makes sense, Sam and seems like we’re on the same page. Thinking about it from the employee’s perspective it must seem like a big risk to say, “I want to move on”… what stops them from getting fired on the spot, right?
But again, I think this is where having solid relationships comes into play (like you mentioned).
Good discussion though, thanks!
From an employee’s perspective, it is scary to say “I want to move on,” therefore, it has to be couched in a way that is softer and more strategic, hence my book.
Getting fired for saying “I’m thinking of doing something different” is a scary proposition for the employer. You’ve got to fire people for cause, and document such causes if you don’t want potential legal backlash. Most employees “take it and like it” b/c they don’t know their rights or are too afraid.
You can lay someone off due to no fault of their own or because things just aren’t working out, but a layoff entails a responsible transition.
Although there’s no “severance” in my industry I was able to seize an opportunity by resigning in addition to finding a better employer.
Back in 2012-2013 “Big City” was going through a budget crisis like so many of its peers. Big City leadership decided to buy itself some time by using police overtime pay like a credit card system. Each officer was provided an “Overtime bank” that maxed out at 800 hours (although they kept an unofficial maximum of 600). Officers were not to be paid cash for their overtime hours but would be “compensated” by the return of their time in time off at 1.5x the rate is was earned. For example, four hours of overtime = 6 hours in the bank.
With all the magic of a credit card, the city was paying less to employees! Many officers also became less incentivized to work long hours or be active near the end of their patrol because “it wasn’t money.” Unfortunately this was also a drain to the city’s manpower access. Those that did not like the system did not work. The workhorses (like myself) capped out their bank and ere compelled to take vacations. The lazy sneered at those with maxed out banks. “It’s not money.”
BUT! They overlooked the caveats. This money would be paid out in the event of your termination, resignation, or retirement. I continued to work my blue rear off and arrest all the bad guys (and gals) I could find (OT is cool, but I also LOVE my job). The older war horses shook their heads at my gusto.
About two years later I left Big City for another City. Checkmate. Higher pay, better work environment, and dramatically reduced commuting costs were mine! Additionally, all that “it’s not money time” became money. I’ll admit a little maniacal laughter when I funneled that check straight into an investment account.
Leaving isn’t THE END, it’s a tactic and an opportunity. Thanks for continuing to point this out to us, Sam!
(Just like hiring someone who negatively blog bombed a former employer. If the writing was well written and popular, the employee could be an asset if they would be singing your praises!)
Fascinating insight Jack! I like the idea of piling up credits to be used or collected at a later day. One of the errors I made before engineering my layoff was using valuable vacation days to go to Hawaii for a week. What I should have done was just use some sick leave. I got 12 a year, and I might have taken only 1 or 2 a year on average for 11 years. So out of the 132 sick days I got that I could have taken and would have still been paid, I left 110 on the table, or 1/3rd my annual paycheck!
See: Mistakes I Made When I Quit My Job
Our company requires 6 months of underperformance, THEN 6 months of no improvement on a performance plan. So you can suck at your job for at least a year before getting let go. That reason alone makes me think they would be willing to do a severance instead of a long drawn out battle of an employee not caring.
Online platforms like Glassdoor allow previous employees to post about their experiences, it doesn’t take a lot for HR to start worrying about the reviews. If to many stack up it can deter top talent – especially when pay is at the center of the complaints.
Great datapoint. I imagine your company to be relatively large or has had a wrongful employee termination settlement or suit in the past? 6 months of underperformance for RECORD KEEPING and then another 6 months of “let’s see what happens” provides a very SOLID case for laying an employee off without fear of losing a wrongful termination suit.
Employees need to be aware that if they are going through poor reviews it could be a precursor for getting laid off 6 – 12 months down the road. HR people and poor reviews are there to protect the firm to prove they did their due diligence and gave employees a chance long before letting them go.
Self awareness is key. Unless there is a surprise reorg or a department shutting down, an employee who gets laid off who tells me s/he is unaware is not being very mindful.
Good point on Glassdoor, although I take Glassdoor to be a repository where mostly disgruntled employees go to air their grievances. Normal folks don’t go there to say anything. And if you have a great experience, you won’t bother either b/c we’re lazy that way.
As a manager in a growing company, I can vouch for how difficult it is to let someone go. Even if they’re not a good fit for your company, they’re still a person and you (usually) want to wish them the best regardless.
On the other side of the stack, I’ve been with my company for 17 years and have been very loyal. I’m also in a unique position where we don’t have someone in the lineup to takeover for me when I leave. I’ll be using some of the ideas in your book to use that as leverage to hopefully get some additional funds to get someone trained before I go.
— Jim
Jim – You are the PERFECT candidate to engineer your layoff. 17 years is very admirable and you do have a lot of leverage.
Does your company have a pension or any deferred comp?
No pension or deferred comp, but the good news is the owner is the only guy above me in the company and he’s nearing retirement in the next few years.
My understanding is there’s a possibility that he may shift this to be an employee-owned company as he slowly back out. That might be something I can work to my advantage, but I haven’t figured out a solid plan yet.
— Jim
If this is the case, then negotiating a severance is a must after so many years of service!
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Right on bro!!!
Good stuff.
I’d also follow the old saying, “It never hurts to ask.” What do you have to lose?
And if you ask in the right manner, with the right tone, and with the correct reasoning, you have a much better chance of getting what you want.
Sam, “How To Engineer Your Layoff” has always entrigued me and I plan to give it a read before potentially leaving my current employer.
In regards to a company blowing up due to a disgruntled employee, the same can happen to someone’s rental from a disgruntled tenant if they file a lawsuit for a “slip and fall”. Have you by chance ever wrote a post on protecting your rental properties with an LLC or umbrella insurance?
Thanks!
Hi Jordan – Not sure if this situation is similar. Unless there is some type of negligence on the building / construction, slip and fall seems more the fault of the individual. If there was some hole that caused the fall, the hole would have been fixed and the person injured would have worked something out if they wanted to.
Did something like this happen to you where you sued your landlord? If so, this would put fear in all your future landlord’s hearts. You’ve given me purpose to amend my lease for future tenants or ask in the application process whether a prospective tenant has ever sued! Thanks for the suggestion.
https://www.financialsamurai.com/how-does-an-umbrella-policy-work-and-how-much-does-it-cost/
Sam
No, I’m looking to rent out my condo in the near future and was looking for some insight on umbrella policies vs. an LLC.
Thanks for the link to the umbrella policy article!
Things are a lot different in a school environment in terms of getting laid off and severance packages, etc. but this line is incredibly important ‘ “I’ll never speak ill of my employer because they took a chance on me”. I interviewed people all week last week and have a full slate of interviews tomorrow. People don’t realize what former employers will tell sometimes. And I’d rather start a year with a substitute to find the right teacher – that vetting process is INCREDIBLY important. Sounds a lot like finding a good tenant. A little more upfront work will save you time, energy & frustration down the road!
Yes indeed. Let’s all spend a little more time or a lot more time on the vetting process. Often we are too impatient and sometimes too blind due to our impatience. I’ve made this mistake many times before and I’m trying to just slooooooooooow down.
BTW, it’s hard becoming a substitute teacher here in SF. Gotta get a TB test and pass and teaching credentials. Great for those who do pass, but tougher for those who want to just help out in the community occasionally like me.
This is good advice. You may not realize it, but you have a lot of leverage as you are leaving an employer. They don’t want you to bad mouth them. As someone who has been laid off, it’s much better than quitting – no question about it!
At my Fortune 50 company my ability to negotiate was limited, but at smaller firms, there’s no harm in trying!
Hey Sam, I completely agree with your way of thinking. Ultimately people and businesses get along better when they work together. There’s more respect there and everyone is much more likely to get the result they want.
I wouldn’t hire Penny because I’d worry she would be difficult if she didn’t get what she wanted. Even though she didn’t do anything wrong, she could have handled her part better. I haven’t had a severance package yet, but maybe one day.
Tristan