Financial Preparedness: Preparing For a Layoff

You or someone you know has probably been laid off at some point. No matter how stable and secure your job appears to be, the dreaded "pink slip" can happen to anyone, sometimes through no fault of their own. Rising competition, a slowing economy, or a natural disaster can all result in job loss.

With the current economic climate comes downsizing. Every day, new job cuts are announced by companies. It is now time to prepare for a job loss. Here are some pointers to help you prepare for a layoff.

Do not conduct your job search during working hours or on company property. Employers in the United States have the right to monitor anything you do with company assets (computer network, computer activity, e-mail, etc.) This is a surefire way to get fired.

• Keep yourself busy and assure yourself that things will get better. The first thing to remember if your company announces layoffs is not to panic. While losing your job can be upsetting, this is the time to focus on networking and improving your skills.
• Understand your legal rights. If you receive a layoff notice, read your employment contract as well as the documents you signed when you were hired. These documents will specify any benefits to which you may be entitled if you leave. Check to see if you are being compensated for unused vacation days, sick leave, or money owed.
• Reduce your spending. When you are laid off, your financial situation will deteriorate for an unknown period of time. While you may be receiving unemployment benefits, you must reduce your expenses as soon as possible. Create an emergency fund and a post-layoff budget. Stop all unnecessary spending and start living on a shoestring budget right away.
• Make contact with your creditors. If you are unable to pay off all of your debts, you should contact your creditors as soon as you receive a layoff letter. Even if you are able to make your payments each month, informing your bank that you are being laid off will give you some flexibility in how and when you make your payments.
• Expand and improve your network. Network actively with professional organizations and colleagues from other companies. Make an effort to raise your visibility both within and outside of your organization. Articles should be published and/or presentations should be given at professional organizations.
• Always maintain a professional demeanor. Don't sever any ties with your current employer. Speak with company mentors and list them as references. You never know when someone you worked with or for might be able to hire you at another company or in a different position within your own.
• Improve your skills and learn new ones. Consider how your skills might be applicable to other jobs or fields.
• Maintain and update your resume.
• Do housekeeping quietly at your current job. People are frequently given very little time after a layoff to clean out their offices and remove personal belongings. Remove all personal files from your computer, take/send home copies of work product you want to keep, remove important possessions, and locate copies of your performance appraisals and other personnel records.
• Create an exit strategy. Investigate severance packages and what you might be able to negotiate on your way out. Create a discussion agenda with your boss or the human resources department. It's a list of everything they could do for you if you were fired. Prepare it in your desk because you never know when you'll be notified of your layoff. People who are laid off are frequently given "outplacement" services, which include career counseling, resume assistance, and so on. A few weeks or months of vacation or continued pay will be beneficial. 
• Do not go overboard with any severance package you may receive. It could take you up to six months or more to find a new job.
• Always be on the lookout for new job opportunities. Even if your current job feels secure and comfortable, you never know when your dream job will become available. Maintain your resume and ensure that the appropriate recruiters have your phone number. You should always be conducting a passive job search. That way, you'll always have a steady flow of job leads and a head start on finding your next job if you get laid off. This may seem like common sense, but few people take it seriously until it's too late. Don't let yourself be fooled into thinking you're safe. When layoff rumors begin to circulate, increase your passive job search and become more active in your exploration.
• Examine your health insurance policy. Make sure you understand what your health insurance covers and how much it would cost to extend your employer's group insurance coverage through the federal program Cobra. Be aware that you would be required to pay both the employer and employee portions of the premiums, which can be costly, but you would retain the same coverage. If necessary, look into independent insurance plans.
• Make a list of references. Make a list of people you can call for references "just in case." If someone has seen you at work and thinks you're great, ask if they'll be a reference for you. Inquire with your supervisors, managers, colleagues, coworkers, and even subordinates. Then, request their personal contact information so you can stay in touch after you or they leave your current job. Obtain approval from as many people as possible, as there will be attrition over time. Don't use someone as a reference if they don't agree or appear hesitant. If a potential employer contacts them, they may jeopardize your next job search.
• Be wary of using company assets for personal gain. Stop sending personal emails to family and friends outside of the company using the company e-mail. Keep track of what is charged to the company credit card, for example. If a layoff is imminent, someone perceived as "abusing company assets" for personal gain may be at greater risk than other employees.