What to do if you are made redundant: Our finance expert explains

LAST WEEK, 820 people working between Molex and Novartis, were given notice that they were losing their jobs. It’s evastating news for those affected and unfortunately it could be a sign of things to come.

The group McKinsey estimate that 800m people will be made redundant by technology in the next 10 years. It’s an incredible number and whether we like it or not, change is coming.

There are many reasons we could lose our job, and technology is just one of them. People are going to lose their jobs because of Brexit, because their employer runs out of capital, because the demand for what their employer provides or makes diminishes.

There could be any number of reasons, 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, how long before they run out of money, how quickly they’ll be able to find a job and how much will it pay them.

So, over the next couple of weeks, I’m going to concentrate 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 if you still have a job, but you’re worried it’s under threat sometime in the future, I want to talk about what should you be doing now, to protect yourself if that was to happen.

Before I do, let me first tell you why I think severe weather events and losing your job, share certain similarities.

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 them giving advanced warnings to people that something very serious is heading their way, and to take cover, why do so many people choose to ignore them?
And they discovered, the problem isn’t entirely their fault.

It isn’t that they’re not detecting these storms early enough, or it isn’t because of poor communication. The problem was something they never thought of, and a little bit beyond their control, and it was human behaviour.

When people were told to take cover, and go to designated shelters, what did they end up doing?

They stayed at home, 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? Despite the rumours, they are very busy with their job, and everything appears on the surface to be going just fine.

And their employer could be a big multi-national with deep pockets so nothing much to worry about, they’ll always take care of them. They choose to stay at home and remain with their current employer.

And then bang.

What their employer is making comes off patent, or they’re moving production to a different, cheaper part of the world, and staff are given notice the site is closing, and their job is gone.

The tornado has just ripped through the plant.

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 because of Brexit.

But he’s being saying that to me every time I’ve met him over the past three years. He’s just waiting to be told he’s lost his job and is a nervous wreck.

And, of course I understand how he feels, but this absolute dependency on someone else is really not healthy. I asked him what he has been doing since we last met to make himself redundancy proof?

How many courses has he attended? Has he up-dated his Linkedin profile?

How many people has he reached out and connected with? How many other employers has he spoken to about opportunities they may have that might suit his skillset?

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

He shifted in his seat, and looked at me a bit awkwardly and said, not very much because he was so busy at work.

So, you’re busy doing work for an employer you’re fairly sure is going to make you redundant at some stage, but you don’t have the time to invest in yourself right now, to prepare yourself for when that happens?

Did you just hear what I said? I asked him.

And I don’t believe he didn’t have the time, I think he was just choosing not to create the time.

Your employer doesn’t think as much about you as you might think they do. Yes, some care about your welfare and provide great benefits but you work for them.

And if they have to choose between themselves and you, there’s only going to be one winner, and it’s not going to be you.

I’ve seen this happen so many times in the past decade, because we’re frequently asked by companies from every sector you could think of i.e. pharma, banking, healthcare, information technology, public sector, telecommunications to come in as part of their outplacement support programme, and give financial advice to people exiting their companies, whether that is part of a voluntary or compulsory redundancy programme.

And when that happens and I carry out presentations, workshops and one to one sessions, I can quickly identify those who are redundancy ready and those who aren’t, just by observing and listening to what people say and how they are reacting.

Those who have thought about the what if, have prepared and have a plan in place in the event they got that tap on the shoulder, 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, keeping in touch with their network adding to it all the time, and have kept themselves up-dated on trends that are happening in and out of their sector.

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, because they have very little in savings, have debt that was 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?

Of course, there are the unknowns if this were to happen i.e. what your severance package would amount to, how quickly you’d have to leave etc. and it can be hard to prepare without knowing them, because they can only be used and applied when they happen, in real time. But that’s not an excuse to ignore the question I’ve just asked either.

Getting new 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 for you.

And it doesn’t matter how secure you think your current employment is, things happen very quickly, and you need to be able to react as fast, and having that, what if, plan in place is something I would recommend you consider and act on.

Next week, I’m going to look at what you should be doing, if you’ve been told your losing your job, and I’ve complied a checklist under 10 headings you can use to lessen the impact of unemployment whilst protecting the financial security of you and your family.

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