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Should You Accept A Redundancy Offer?


I met Robert (not his real name) for the first time three years ago when he enquired about the services provided but specifically about CV and Interviewing.  We met and he explained that his company was going through a restructure and he would soon have to re-apply for his position.  A cruel prospect for anyone.

We went through the CV and interview work and to cut a long story short, he retained his job and even got a salary increase.  Robert was happy.

Last week I got another e-mail from a not so happy Robert.  He said the company he worked with was taken over recently and big changes are on the way.  “We need to talk, urgently” he said.

Robert was a really nice guy, in his late thirties, a bachelor and living a nice comfortable lifestyle.  He is not what you would call wealthy, but as a single guy he was doing nicely.  I suspect he has been doing nicely for too long, as I detected an easy going attitude to work.  Do what you have to do, do it properly; keep your head down and go home, would probably be his motif, I think.  Robert is a traditional company representative working on behalf of a global giant and dealing in brand leader good which makes selling a bit easier.  He has an area of a city to service which he does.  Robert if comfortable with life, but he has a problem heading his way, and very soon.

His company, although a giant was bought by an even bigger giant and as in all these situations everything goes very quiet after the buy-out, for about six months.  Then the new plans are rolled out and part of this particular plan will hit the sales people directly. We see this happening again and again as with technology, central distribution, automated stock/ordering etc the ‘Company Rep’s’ as we know them are becoming an endangered species.  While they do great work, maintain a good image and the reputation for their company while keeping the retailers happy they are to a large extent an expense that some companies, particular brand leaders can work with, but at a greatly reduced level.

Robert was advised that a specific number of people were required to leave, and a voluntary severance package is being put in place.

“Should I take the offer and then try to get another job was his question?”

That’s a very hard question to answer, everyone’s needs are quite different and what works for him probably won’t work for another.

My gut view in these situations is to hold on to your job for as long as you possibly can.  Once that monthly salary cheque stops, it’s amazing to see how quickly your savings can disappear.

There are a few other considerations as well.  From our discussion, I suspect that on the basis of last in, first out, he is safe.  But for how long is safe?  History shows again and again that traditionally companies like this never ever do it properly on the first round of redundancies.  They nearly always come back for a second bite.  Usually that is because they are fearful that cutting too deep will leave the company exposed or unable to operate efficiently.  In reality, this rarely happens as remaining staff usually rise to the need and keep things going.

A second round later on is never as generous as the first.  So holding out on the hope of more cash further down the line rarely happens.

Robert bought a house to let during the boom times, but now it’s on an interest only arrangement. I did point out to him that if he accepts the offer on the table and gets €40/50 thousand in a redundancy payment his bank will quickly learn of this. The interest only agreement that had been put in place was due to a certain set of circumstances at that time. A payment of this size now creates greatly changed circumstances. More likely than not, the Bank will insist on some if not all of it to be paid against arrears. In the long term the property will most likely regain its value and again become a valuable and saleable asset.

I took the view with Robert that he was too long working at the safe level; he feels safe in his comfort zone and whether he stays or moves on, he need to start challenging himself.  Nothing stays the same.  It gets better or worse and in his case it will get worse if he doesn’t start taking measures to improve his lot sooner rather than later.  He did agree with this.

My summation was that on the basis that he is going to move up within his current employer or move out to a new company, it would be best for him to take his time, prepare well and make his move in his own time.  He should do it not because of the pressure of a pending redundancy, but in his own time when he is good and ready. He must plan, prepare and work to retain his current position at all costs.  If and when that is secured, then quietly start planning for the future.  A good move, up or sideways should yield about 10k per year.  Three or four years and that redundancy offer will be well covered.

Like everyone in this situation it’s very hard to look 40,000 or 50,000 in the eye and say no thanks, but think about it, the realistic option is to say no.

For example, let’s say he took take three months to get redeployed, and that’s going very fast. His 50k will melt very quickly.

On receipt of a redundancy payment he will have to deduct three months salary. That is assuming he is redeployed in three months.  Then add on, outstanding loans, buy out his car from the company, top up his pension for the three months, take the inevitable holiday, buy those few things he wanted and then pay his motor and health insurance.

All the above are realistic and will all add up to about 30,000.  That makes a fair hole in a 40K redundancy package.

I am not a financial advisor nor do I ever try to be one and a sharp accountant would probably show my views to be flawed, financially. Looking at Robert’s situation and strictly from a Career Development point of view which is my area of expertise, I would strongly suggest he holds on to his job at all costs and make a well prepared and carefully planned job change/job search in his own time.  Do this when it suits and not when it suits someone else.

Being employed, you can wait a little longer, not rush it and can even afford to be a little choosy.

There is one last essential thing for Robert to keep in mind. Assuming he did not take redundancy, when the dust has settled and he is back to work as before, he must not put job searching on the long finger just because the immediate pressure is gone. It’s essential he maps out a plan, spread over a few months, and no more than that and slowly, carefully begin making contact with everyone that can be of assistance in a Career Change.

The very best of luck

Further information about the author, Colm Cavey can be seen below and also at: www.jobdoctor.ie

Top Tips are provided by PCC, who provides professionally delivered, supportive and most importantly, successful career change and redeployment assistance to private clients from all sectors of Industry. While based in Ireland our on-line service extends to those overseas throughout the world. Inquiries are welcome and treated in the strictest confidence.    Tel: +353-86-3017207 & +353-1-2819056.

 

 

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