Financial Freedom

How Stay Safe From Layoffs

So I work for a software company and currently the industry that we make software for is in a bit of an “economic downturn.” This has lead the company to feeling like they need to reduce expenses. The company has found that the most effective way to reduce expenses is to reduce employees since we are quite expensive to keep around. You have to pay us each 5 to 6 figures a year, cover our medical insurance, give us money for 401k, and supply us with computers, coffee, pens, notebooks, telephones, and other supplies to keep us productive. Throw in a few team building lunches and us employees are some of the most expensive equipment the company has.

I’ve been in the corporate world for a whopping 9 months and over the course of 2-4 weeks I’ve see almost 50 people get laid off. For a company of about 500 employees this is a drastic percentage of the company, to date we have lost about 80 people since January this year. I have heard about layoffs, watched Office Space, and I’ve been around my parents and grandparents when their companies were doing “reductions.” Despite that, I grossly underestimated how much of a morale killer the process is. It didn’t matter how closely I worked with someone every time I heard about another employee being dismissed from service I questioned how long I would be around and if this is an environment that I wanted to continue to work in. I wasn’t alone in my thinking, the sentiment was shared by others around the office.

At first it was a guy a few cubes over that got laid off and I justified it with “yeah, he wasn’t really contributing much here anyway.” Then it was someone I worked with but was in another office so I didn’t know them that well. They got let go because the company did not think they were ready to fulfill the position they were hired to do, seems reasonable in my mind.[1] Then someone who I had just started working closely with and had been with the company 14 years was downsized because he was stagnant in his career growth. I guess we are just ignoring the fact that he had no desire to be a manager and was a kick ass programmer from what I had seen, sorry he didn’t want to fall for the Peter Principle[2]. Then the Bomb Shell hit, my mentor who had taught me and the other new guys on the team everything we knew was cannedThis guy worked nights and weekends, constantly! He contributed more to the team on his own than all the rest of us… combined. He was also stagnant in his career growth and the people making the decision totally skimmed over the fact that he is working on a project that is already taking a few thousand hours more than it was supposed to.

That Bomb Shell hit on Thursday, Friday was a massacre. I watched people who started with me get let go, I saw more managers of 14+ years get fired, I watched people who were above the managers and in direct decisions about how the company functions get let go and they didn’t even see it coming. We even had an entire team that was integral to the process that we deploy software get laid off. As soon as we thought someone was safe they would get the fateful message from an executive to come to their office and bring their laptop. Since this wasn’t a quick process I had spent some time thinking about my situation and I had figured out why I was safe from these massive layoffs.

How did I know I was safe? I don’t work nights or weekends, a long day for me is 2 or 3 hours extra and even then I leave 2 or 3 hours early the next day. I don’t have copious amounts of knowledge on how my company’s software works or how to write optimal code, I’m figuring this out as quick as I can but I still learn something new every day. I wasn’t immune because I was a cheap new hire, I had seen many new hires just like me get cut. I was on a high profile project but that didn’t seem to keep the 2 other people on my team safe, or the other employees around the company who were also on high profile projects and still got laid off. I knew I was safe because I had multiple exit strategies.

When I learned to ride a motorcycle they taught us to think about exits maneuvers in traffic. If something went wrong we should have a plan in our head of how to react before it happens. For example, the guy in front of me stops short, I can’t just slam on my brakes too because I will either go over my handle bars, get rear ended myself, or I will lock up my breaks and wipeout. When I get cut off, or someone merges on top of me because they didn’t see me, I can’t stand my ground like I could in an SUV.  If theres a blown out tire in the road or a 2×4 fell off of a truck, motorbikes don’t have the luxury of keeping their balance after hitting obstacles in the road like 4 wheeled cars do.

A biker has to assume the worst will happen, this guy’s on his phone so he’s not paying attention to me. This guy seems young so he probably isn’t experienced enough to know to look for motorcycles. This semi is big and has a lot of blind spots and I’m small enough to be trapped in one if I’m not careful. Once a list of all the worst case scenarios has been compiled solutions to each can be planned. This guy on the phone stops short, that’s fine the lane to my right lane is empty I’ll swerve into that. This teenager merges into my lane and doesn’t see me, that’s fine there is no one behind me so I can slow down. This semi has large blind spots, I should get through them as fast as it is safe to. These are all exit strategies and quick decisions that need to be prepared for so that if/when disaster strikes I can QUICKLY act on it and be safe.[3]

I did the same thing for work. While most of the other employees were reacting to all the layoffs around them and assuring themselves they were safe or assuming that they were definitely going to get laid off for any number of reasons, despite the fact that almost no one was able to actually pick up on a pattern. Instead of following their hysteria I focused on what I could control. It was apparent that the decisions were being made at the highest level, the middle managers and even upper management were as surprised as us entry level guys when they found out which people were let go. Executives and HR were the only people who knew these decisions were coming. To me this meant that whatever decision was made about keeping me or not was made long ago by people who didn’t see my effort on a day to day basis but rather only saw the biannual performance report. So while others were ramping up their effort to look like they were doing harder work than they usually did I knew whatever metric they were using was already set and what I did in the present wasn’t going to have a huge effect on the decision.

Since the decision was already made I couldn’t control the outcomes. But what were the possible outcomes? Either I am fired or I’m not. If I’m not fired great, I keep my job, I keep my paycheck, I keep the long hours I work, and as a bonus I’ll probably get to pick up the extra work from those who were laid off /s.

Scenario two: I’m not safe and I lose my job, What’s my exit strategy? This was the process of my brainstorm: Can I retire yet? No, the severance package is generous but not that generous. How long could I make it without a job though? About 2 years, neat this means I won’t be homeless immediately, I could easily find some sort of work in 2 years. What kind of work could I get? Well there are plenty of positions for software engineers out there so if I want I could go back to that. Additionally, I’ve been learning about real estate a lot lately and there are plenty of opportunities for hardworking entrepreneurs there. I have another friend whom just started taking part of a pyramid scheme and is claiming that he can make money there so I could work hard at that and work with him. Blogging can make money so I could take my extra free time and ramp up my efforts on this site or another. I could go back to school I’m sure my alma mater would be happy to accept me for a masters program and I could probably find a way to get sponsored in order to get paid to go back, if I worked hard enough at it. Less desired, but still reasonable, options, are get a part time job somewhere, flip stuff on craigslist, sell things I have but don’t need, or live on even less to make my savings last longer. Absolute worst case scenario, the break glass incase of financial ruin kind, I could move back in with my parents. I wouldn’t be happy about it but they would understand and support me as long as I made an effort to get back up and out there and wasn’t just loafing around.

So there is a long, probably not even complete, list of possible exit strategies for me. If I lost my job would I immediately be homeless? Looks like no. Am I safe from being laid off? Well that’s a bit of an ambiguous question. No, it’s not guaranteed that I am going to be immune from this wave of layoffs, or the next. However, regardless of my current employment situation my current life style, which I am happy with, is safe for a few years if my current stream of income gets cut off.

It’s important to note that most of these exit strategies were put into place long before I was slapped in the face by the concept of mass layoffs. I didn’t start saving money as soon as people got laid off, I didn’t start writing this blog or learning about real estate because I needed a job to cover expenses. If I had waited until last month to start doing these things then I would not be as safe as I am now. This is really the first, of hopefully many, experience where money I’ve saved has bought me something more valuable than a new toy or a memorable experience. Money I’ve saved has bought me peace of mind that my life style will be maintained for a few years regardless of my current employment status. This peace of mind has let me continue to focus on developing quality software instead of being distracted and worried about losing my job. This peace of mind and focus on my work rather than office politics/gossip has probably made me a better employee and less likely to get laid off in the future. Is that irony?

Unfortunately I don’t have a fool proof plan to help you if your office is currently being downsized. Instead my process for being safe from layoffs is a long term plan instead of a quick fix. If you’re interested in having peace of mind from hardship caused by unemployment then spend some time thinking about your exit strategies. If you don’t have any back up plans then start making a plan to create some. I suggest saving more, and learning new marketable skills unrelated to your current position. The plan doesn’t have to be perfectly mapped out, and I think the more flexible it is the more powerful it is. As long as you’re thinking about it now that will be enough to have an idea on where to start when you have to execute it. After you do your own brainstorming leave a comment about the exit strategies you have in your mind, I’d love to hear about what my loyal readers have thought of since I’m confident that my ideas are not the only good ones out there.


[1] After further review of that decision I realized that the company actually removed her from the picture and then gave her responsibilities to another person who was only slightly more qualified from what I can tell. Not to mention now that guy is doing his work AND hers, since there is no one to take up his original work.

[2] Peter Principle: “The selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and ‘managers rise to the level of their incompetence.'” Thanks Wikipedia!

[3] I apply this to when I drive a car too, but motorcycles are more prone to catastrophic disaster if something goes wrong, so I used that example.

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