Minimizing the Impact of Job Loss

Short Term Tactics and Long Term Career Pillars

Lehman Brothers by Bert van Dijk on Flickr!Over the last week, several people have written to me in a panic, asking what they should do if they think they’re about to be downsized at work. Given the current economic conditions, I don’t blame them a bit for worrying – I’ve never seen such an obvious trend towards a recession.

There are a few really good tactics for preparing yourself for a possible job loss – in fact, it’s good to do all of these things even if you don’t expect the axe to fall any time soon. You never know what the future might hold.

Five Useful Tactics for Protecting Yourself Against Downsizing

1. Learn how to live frugally

Spend some time finding out where you can cut corners – and practice it. Cut out as many unnecessary expenses as you can and only add them back in if you find a strong, compelling reason for them.

2. Start building a solid cash emergency fund

Drop some cash in there as soon as possible, then set up an automatic savings plan to scrape $20 or $50 each week from your checking into your savings. This might provide a needed cushion in the event of a sudden job loss.

3. Develop a clear spending plan

Put a cap on your spending on non-essentials like food, entertainment, clothing, and so on. Put those credit cards up for a while until things are well under control.

4. Hack away at your debts

Develop a debt repayment plan and hit it hard. Make it a part of your spending plan. Clear away some debt now so it doesn’t make your life nightmarish later if you were to lose your job.

5. Always keep your resume polished

Always. Here’s how I do it.

Those are indeed good tactics to apply when you’re worried about losing your job, but they don’t help you very much in terms of planning what you’re going to do next in your career. A well-managed career can roll right through a sudden job loss with barely a blink.

Planning Ahead for That Next Step

No matter where you’re at in life, you should always be planning ahead for the next step in life. Build a strong foundation and just about any step you might realistically want to make becomes quite easy – and even if a piece or two of the foundation fails, you’re still in good shape.

In my experience – and in most of the better career books I’ve read, such as Never Eat Alone and Love Is the Killer App – a good career foundation is made up of five pillars.

Pillar 1: Knowledge

Never stop learning about what you do. You should spend at least an hour each day purely on building your knowledge, either in terms of the things you directly work on or the things you want to be working on in the future. Read challenging stuff – and go through it at a slow speed, so you know it. Try new things. Push yourself, always.

Pillar 2: Communication Skills

Take every chance you can to present to others and to talk in meetings. Polish your ability to communicate with others. Join a group like Toastmasters and work on your public speaking ability. Work on your conversation skills every time you have a chance to talk to someone, until the ability to converse well with a complete stranger is very solid.

Pillar 3: Tangible Accomplishments

Don’t worry about the day-to-day minutiae. Instead, focus on doing the best job you can with your big tasks. Don’t expend your mental effort cataloguing the stuff in the supply closet. Instead, throw your effort into big projects that really show off what you can do. Your bosses, coworkers, and peers won’t talk about how great you were at managing the coffee pot – they’ll talk about that two year project you knocked out of the park.

Pillar 4: Relationships With Others

Take every opportunity you can to build relationships with others both in your workplace and outside your workplace but in the same industry, and also with people up and down the board in terms of seniority. When you hear a cry for help and can help easily, do it. The more positive relationships you’re able to build with people, the stronger your reputation grows and the more valuable you become to others.

Pillar 5: Ethical Behavior

Always behave ethically. Never backstab people. Never talk down to people. If you can’t think of something good to say, don’t say it. If you’re called upon to criticize, never criticize without the person you’re criticizing hearing what you have to say – if you won’t say it to their face, don’t say it. Whenever you have an ethical choice, take the high road – it’ll never trip you up.

The Pillars Work Together

What’s interesting is that if you put significant effort into building all of these pillars, you’ll find that they constantly work together to propel you even further. Your knowledge is often a great way to help out others, building relationships with them. Your ethical behavior helps others begin to trust you, as do your tangible accomplishments. Your communication skills almost always help with building relationships with others, and it also helps with building up knowledge.

If you invest your time, talent, and heart into these five pillars, you will become a valuable person within your workplace and perhaps even within your industry. If you’re in that position, if your company fails (or if you just want a new challenge), you’re still in great shape because you have a clear, established value that other competitors will want and you’ll have tons of connections to get your foot in the door.

Don’t just do the basic things to protect yourself against a devastating job loss. Work to make your career more independent of the pain of losing a specific job.

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  1. My biggest piece of advice is certainly to stay on good terms with current and past managers and co-workers. You never know which one of them may end up in a position to hire you or refer you to a colleague for employment in the future.
    I’ve managed to triple my salary over the past 4 years and the last (and biggest) jump was the result of a referral of an old colleague who happens to be a fishing buddy of the Vice President of Finance at my current employer.

  2. Isn’t it amazing how frugality comes in handy in so many different life situations? No matter where you are in life, it’s always good to spend carefully and live within your means.

    My husband is in a pretty safe job(he does IT for a health care company), but we’re working on building a decent emergency fund for our peace of mind, and because it’s always possible that he could lose his job.

    Fortunately, he has a lot of those pillars you mentioned in place, so I think he could find a new job relatively easily if he got laid off.

  3. MARK says:

    Never underestimate the power of the cash emergency fund. Most people never see emergencies (car trouble, illness, job loss, broken pipes, or car insurance deductibles etc…) coming. The cash emergency fund has saved my ass. Image needing a car repair. The collision insurance will cover everything except the $1000 deductible. Do you have the $1000 or $500 the mechanic will require to start the repairs? Charge it to the Credit card and pay 24% interest? The mechanic may charge 10% interest. Sometimes with cash up front I have talked businesses into giving me a 5% discount. Credit card companies charge a 5% to 10% merchant fee to businesses to use credit cards. Credit card usage is not free to business or users. I advise people to drop $10 to $20 a week into a fund. If you like to when it gets to $500 put it into a federal Govt CD to cover inflation. But always put in money to save. Accidents happen to everyone. Everyone will eventually be unemployed. Everyone will have a fender bender. Everyone will get sick. Do you have the money for these small disasters? Sorry for the long comment!

  4. cv says:

    I try not to nitpick given the volume of posts you turn out, but capping spending on “nonessentials like food”? I think your proofreading skipped a beat there.

    I know, I know, there are a ton of ways to eat more cheaply than most of us do, so much of our food spending is discretionary (meals out, fancy cheeses, prime cuts of meat, prepared foods, etc.). This still struck me as funny.

  5. Your Friendly Neighborhood Computer Guy says:

    Great post! I like how you didn’t just end it with being prepared for the lay-off, but also things you need in place to be able to bounce back and move on to another job.

  6. Lurker Carl says:

    These tips are good for everyday living, not just preparing for a layoff. It’s difficult to adapt these measures and expect significant results two weeks before the pink slip arrives. Personal calamity does not wait for an economic downturn, stuff happens during the best of times as well.

    Chance favors those who are prepared.

  7. bethh says:

    I’ve been laid off twice, and was able to live just fine on unemployment checks until I found new work. In over 20 years, my company has never laid anyone off, but I just checked to see what I’d receive in unemployment benefits.. just in case. I’m happy to see that because of my frugal living and debt reduction, I’d be able to get by on unemployment. It’s a good feeling for sure.

  8. Excellent post here. Its always been so frustrating to see friends and colleagues go through tough times because they didn’t recognize that their performance at work was crucial to keeping their job security. I especially believe in the power of pillar #4 and #5.

  9. Trent Trent says:

    “much of our food spending is discretionary (meals out, fancy cheeses, prime cuts of meat, prepared foods, etc.).”

    That’s exactly what I was getting at. Most people have a TON of nonessential spending in their food budget if they’d look at things with a critical eye.

  10. I agree, your five tips are also sound advice for any point in life. With spending under control and an emergency fund in place, you’re well-prepared for any situation, not just job loss!

  11. My mantra is “Spend Less, Save More” which basically encompasses your first two points.

    By spending less on those things we don’t want anyway puts you in a better position from the get-go.

    By saving more (into an Emergency Fund, a Freedom Fund, your retirement fund or just about anything brings you out much better off.

    They’re the keystones and what you do after that is just detail (but important detail).

  12. Plus, keep your side gig honed and ready in case you might need it for more than ‘fun money’?

    Here in the UK unemployment levels are rising. As recession deepens, are we maybe going to see jumps in the levels of entrepreneurship and self-employment – and if so, will it be altogether a good thing?

    I’m ‘between jobs’ and I know my little microbusiness has paid for more bills lately than I ever expected it to have to. That’s great, and I may have to ramp it up to do more than that. OTOH I have a pal in the same position who has leapt into full-time self-employment – and is finding the swimming-pool is, if not dry, at least only half-full re: getting business in these times. Ouch!

    Will some people experience the double whammy: first unemployment, then own-business failure?

  13. IRG says:

    Good overall post, which I personally agree with.

    But the bit about ethical behavior…staying “above it all” doesn’t really work if you work with people who DO NOT exhibit ethical behavior.

    The world of work is populated by many who view work as solely about competition and getting “ahead”–at any price, usually at someone else’s expense–job, reputation, raise, promotion, etc..

    Although one should not resort to unethical behavior even in those circumstances, one does have to think and sometimes act differently, to protect one’s self professionally. Many really nice, professional and ethical people get royally screwed while others gossip, backstab and worse to them. Sometimes turning the other cheek isn’t the answer. These people get away with stuff precisely because they know that professionals either won’t “get” or won’t protest what is happening to them.

    Alas, given the current climate, we’ll see a lot more fear-based negative behavior at work as people worry about losing their jobs. And, sadly, less cooperation (Most companies really don’t seek cooperation. They want internal competition because they think it spurs better work. NOT.)

    The “new rules” of work today mean you not only have to work more on your own stuff, but you may have to pay a lot more attention to office politics and what you’re co-workers are doing.

    For those of us for whom it’s about the work, this is an extra stressor.

    If ever the work world needed more professionals and more “leaders”, it’s certainly now. But then, there aren’t many examples of good managers and real leadership anywhere these days.

  14. MH says:

    Great advice. We’re a single income family, and my husband has been at the top of his region in sales for quite some time, so despite the economy, we’ve felt relatively safe. However, being at the top doesn’t help when the entire department is “down-sized”. . .nationally! He was laid off last week, and we are SO thankful that we have followed these steps up until now. We can live for a number of months on the emergency fund we’ve built over the past couple of years, so while we still need to get one of us employed soon (health insurance is too expensive!), we’re not in a panic. You never know what the future holds, so we are so thankful we took time to plan for something unforeseen.

  15. The Job Vault says:

    There is obviously a lot to know about this. I think you made some good points here. Thanks!

  16. Brigitte says:

    This article is great, lots of good advice, but the title doesn’t match! Other than cutting costs and educating yourself about your field, it doesn’t really discuss how to minimize the impact of actually losing a job–just how to avoid doing so. Which means you don’t really lose the job or have impact from losing it to minimize…

  17. Lee says:

    It’s amazing how little you can spend on food if you put your mind to it. My monthly budget for food is just £40 ($65 USD)! Some folks can spend that with ease in one DAY.

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