By Lisa Scherzer
Published: March 6, 2008
EMPLOYERS CUT SOME 17,000 jobs in January, spurring the first negative turn in job growth since 2003. And, as businesses continue to strain under a slow-moving economy, that trend will likely continue.
The one relative bright spot in this slowing job market is that many companies are opting to offer employees buyouts rather than laying them off. In the past year, Electronic Data Systems, Yahoo and Southwest Airlines have all offered early-retirement or buyout packages to thousands of their employees. The U.S. auto industry, chronically troubled by sluggish sales and red ink, is an old pro at using buyout offers as a way to cut costs. Just last month Ford announced a plan to offer voluntary buyouts to its 54,000 hourly employees, with package options including tuition reimbursement and cash payments ranging from $35,000 to $140,000.
For these corporations, buyout offers are a way to trim payrolls without firing workers outright or confronting unions. For employees, though, an offer can be fraught with dueling considerations and concerns. Accepting the offer can present new opportunities, be it another job or an earlier-than-expected retirement. But it also has the potential to be disastrous, particularly if you’re not financially prepared to live without a steady paycheck.
No matter what the situation, employees can take some solace in the fact that buyout offers aren’t always set in stone. Before blindly accepting the first offer that comes your way, consider these factors first.
You can negotiate. Don’t assume your employer’s proposal is the final offer. While many companies have little to no wiggle room when it comes to details in the packages — particularly in mass buyouts like Southwest’s or GM’s — it’s almost always in the employee’s best interest to try and get a better deal.
“No package is a take-it-or-leave-it situation,” says Kirk Nemer, CEO of Career Protection, which works on behalf of employees facing buyouts or termination to arrange the best exit package possible. “That’s how companies present it. But they can be negotiated; they can be re-worked to fit the employees’ personal situation. It’s so important they don’t leave dollars and other perks on the table.”
Nemer says his firm recently negotiated better terms on a buyout package for an employee who was close to retirement but didn’t want to stop working just yet. The original offer, he says, included six months of income once the worker left the company. Nemer claims the company agreed to another 18 months of income and says the employee was essentially kept on as an “inactive employee” for that time, with the same health benefits and 401(k) contributions he was getting before the buyout.