Making Cents: How prepared are you for redundancy?

FIRST it was Twitter, then it was Stripe, and now it’s Meta. There have been thousands of high-profile layoffs in the tech sector in recent months.

Hundreds of people in Ireland will have been given notice that they are losing their jobs. It’s devastating news for those affected and unfortunately it could be a sign of things to come.

Other companies like Microsoft, Zendesk and Amazon have been taking steps to reduce staff numbers and there are many others just like them.

While the consensus is that a global recession is likely sometime in 2023, it's impossible to predict how severe it will be, or how long it will last. And typically with a recession unemployment rates go up as economic growth slows but it’s too early to know if that will happen in very big numbers. What’s almost certain to happen though is that there will be fewer job openings because companies are flagging now well in advance that they are putting a freeze on any new hiring.

Whatever happens, we should prepare for the worst and hope for the best.

And there are many reasons someone could lose their job i.e. their employer runs out of capital, or they want to reduce costs, or because the demand for what they provide or makes diminishes, or the company over hired, but sometimes the reason doesn’t matter much to the person being made redundant.

What matters to them is that they’re losing their job and losing their source of income, and their immediate concerns are (a) how long will it be before they run out of money, (b) how quickly they’ll be able to find a job and (c) how much will it pay them.

So, this and next week I’m going to focus on what you should be doing if you’ve been told by your employer that your time with them is coming to an end. And I also want to talk about what you should be doing if you still have a job, but you’re worried it’s under threat sometime in the future.

Before I do, let me first tell you what severe weather events and losing your job have in common.

In the United States, they’ve looked at why so many people are killed each year from weather events like tornados, cyclones, wildfires etc. Their national weather agency is really good at predicting such extreme events and despite people receiving advanced warnings from them, saying that something very serious is heading their way, and to take cover and go to designated shelters, why do so many people choose to ignore the advice and stay in their homes?

They do so, because home is where they think they’re safe, and the tornado or whatever it is, will never go through their house.

And I think, the same type of thinking happens with people and their jobs.

They don’t want to think about losing their job. It’s not pleasant and why stress themselves. And why should they do anything anyway, like moving to a different industry, or up-skilling? There are plenty of jobs available and despite any rumours in their organisation, they are very busy with their job, and everything appears on the surface to be going just fine.

And their employer could either be a big private or multi-national company, with deep pockets so nothing much to worry about, they’ll always take care of them.

So, they choose to stay at home and do nothing.

And then bang.

They are given notice that their job is gone.

The tornado has just ripped through them and the company they worked for.

And they never took cover.

Did they see it coming? Were there warning signs? Maybe, maybe not, but if there were, did some people simply choose to ignore them?

I encountered one such person recently who told me he was worried about losing his job, but he’s been saying that to me every time I’ve met him over the past two years. He’s just waiting to be told his time is up and he’s a nervous wreck.

I keep asking him what has he been doing to make himself redundancy proof?

How many courses has he attended? Has he updated his LinkedIn profile? How many people has he reached out and connected with? How many other employers has he spoken to about opportunities that might suit his skillset? Has he reviewed his finances?

Why is he waiting to be told his job is no more before he does anything about it?

His excuse is that he doesn’t have the time, but not investing the time in himself and being busy doing work for an employer he’s fairly sure is going to make him redundant, doesn’t make sense.

We’re frequently asked by companies who are downsizing to come in as part of an outplacement support programme, to give financial advice to people exiting their companies, whether that is part of a voluntary or compulsory redundancy programme.

And when that happens, I carry out presentations, and workshops and one to one sessions. And it’s during one of them I can easily identify who is redundancy ready and who isn’t, just by observing and listening to what people say and how they are reacting.

Those who have prepared themselves and have a plan in place are much less stressed, and some see the loss of their jobs as an opportunity and not as a threat. You see they’ve been proactive over the past number of years, and have been looking after their finances, in tandem with up-skilling, re-training etc.

And then there are those who are in a state of disbelief, a state of shock, a state of fear, because it dawns on them, from a financial perspective, that this is the absolute worst thing that could have happened to them.

And that’s because they have very little savings, have big debt that is being serviced by their present income, but with that being cut off and the likelihood that they may not earn the same amount again, how will they be able to keep up with repayments? Their reaction to the news is one of devastation and they think it could spell disaster for them.

So, let me ask you a question?

Are you, redundancy ready?

Do you have a plan in place if you were told in the morning that your job is gone?

Getting job ready and financially insulating yourself go hand in hand, so the better prepared you are, the easier it will be until you land that new job. And there are things you could have in place from a financial perspective like maintaining a budget and knowing how much you spend each month, having an emergency fund in place, not taking on new debt or reducing what existing debt you have, so if worst does happen, the easier it will be to ride out the storm until you land another job.

If you don’t know how to go about doing this yourself or you’re unsure what your starting point should be, reach out and get help from someone who does, someone who can map out that I’ve just lost my job plan for you.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey, Co Limerick. He can be contacted at liam@harmonics.ie or www.harmonics.ie