Negotiating Your Severance
Get What’s Coming To You:
Negotiate the Best Possible
by Kate Wendleton
The Five O’Clock Club product is much better,
far more useful, than the outplacement package my employer suggested.
-a Five O’Clock Club Member
The Club meetings kept the juices flowing. You meet with people weekly, you’re told what to do, what not to do. Job hunting can be very lonely. There were fresh ideas. I went through an outplacement service that, frankly, did not help. If they had done as much as the Five O’Clock Club did, I would have landed sooner.
-another Five O’Clock Clubber
This website tells you everything you need to know about negotiating severance and getting the right outplacement package. Start with this article and then read our entire section on negotiating severance and getting outplacement help (click the link here).
Case Study: Beth
Short-Timer Gets Outplacement
Beth had worked at Intelliger for less than two years, including working only two days a week for the past month. The company wanted her to leave, but stay on for another month to train a new person. Beth wanted two months’ severance, the $60,000 bonus money that was due her, and outplacement help. Following the advice in this article, she ended up with a significant portion of the bonus money, four weeks’ severance and outplacement with The Five O’Clock Club.
Even short-timers have negotiated severance.
Case Study: Daniel
Help Starting His Own Consulting Business
Daniel’s case is more typical. Like most people who receive a termination notice, Daniel was stunned when he received the news–and rightly so. Daniel had been given every assurance that his career was on the rise and his job with the company secure. A year earlier, when he received an offer from a competitor, his supervisors begged him to stay on. These professional assurances went beyond words, though. Daniel’s compensation was made up of a base salary plus bonuses tied to performance. With his future looking so rosy, Daniel felt comfortable purchasing an expensive home.
A traditional outplacement firm cannot help you negotiate severance with your employer (it is a conflict of interest since your employer is their client), but The Five O’Clock Club can help you (because you are our client).
The ink was scarcely dry on the new deed when Daniel was struck with the news that he had been replaced. The company offered him a severance package consisting of nine months of base pay (which represented a small part of his prior year’s compensation) and only three months of traditional executive outplacement. (Companies typically offer outplacement packages that end just when you need them the most – at the three-month mark when you are about to get offers.)
When he called me at the Five O’Clock Club, Daniel was still in a state of shock. He knew that his severance package was inadequate, but he did not feel he would be able to negotiate anything better. Should he just take what they offered and move on?
His only strength was to prod company officials until they gave in.
He knew they wanted to get him out of their hair.
Absolutely not! Many departing employees have more leverage than they think–sometimes simply by asking for fairness–or even sympathy. In Daniel’s case, his age (51) raised the specter of age discrimination. We worked together to develop a strategy and he went back to his company armed with his plan. The result? He walked away with $125,000 more and a commitment for off-site office facilities as well as a full year of career coaching to help him launch his own business.
Daniel’s case is not an unusual one. Here at The Five O’Clock Club, we coach many professionals, managers and executives dissatisfied with their severance packages, but hesitant, for a variety of reasons, to say so.
Daniel wanted to leave with his dignity and pride intact,
and with the ongoing help he would need to move ahead.
The first thing I advised Daniel to do was to return to his company and tell his supervisor that he would have trouble accepting what was offered because he would have financial difficulties. “I want to remain whole,” was the phrase that Daniel used to express his feelings to anyone he spoke with. The phrase helped Daniel to focus on his goal while sending a message to company officials that he was not just after money. He wanted to leave with his dignity and pride intact, and with the ongoing help he would need to move ahead. After his twelve years of service, the company owed him that.
Why would a company agree to any of Daniel’s demands? Because he wasn’t going to stop pestering them until he was satisfied. He would prod the company officials until they gave in. They wanted to get him out of their lives. To do that, they soon realized, meant they had to pay his price.
It doesn’t mean that Daniel was obnoxious. My advice to him was to be “pleasantly persistent.” Of course, Daniel had to make a commitment to go back to these people again and again. He didn’t have any trouble holding to that resolve. “Here’s what I want,” he would say. Concentrating on his purpose spurred him on.
Based on my coaching sessions with Daniel and others, I can offer further guidance on how to negotiate the severance package you deserve. Here are some things to consider:
Deal with each compensation issue separately. A severance package is made up of many items. These may include an actual cash settlement, career coaching help, benefits, office space, and other items, depending on the industry and company. Like Daniel, who neglected to scrutinize the outplacement help he was being offered, you need to look at each component individually. A large cash settlement, for example, may quickly be eaten up if you end up paying for outplacement help and benefits.
Decide what you want. List what you think is fair and also what you think you are likely to get. It helps if you have some idea of what others have received. “Company policy” may have nothing to do with what people actually get.
Push to continue your benefits.It costs a company very little to carry employees on its medical plan. But if you try to duplicate that coverage on your own, it would cost a lot.
Develop a mantra. Daniel’s was, “I want to remain whole.” Find one that succinctly describes your feelings, such as “I just want to be treated fairly.” The phrase will keep you focused and give your overall campaign consistency. Then, no matter what they say, you can repeat your mantra.
In addition, it is not out of line to talk about the stress you and your family are suffering.
Ask for career coaching services for one year. You should never underestimate the amount of time it will take you—or the help you will need—to find another comparable position. Depending on the complexity of your situation and your own psychological makeup, your search may last a long time—some tough searches have taken more than a year.
You’ll need a year because your search may take that long. You may even decide in the middle of your search to start your own consulting business, then realize that consulting is not for you after all, and resume looking for an on-payroll job instead.
If your company grants you only one to six months’ outplacement assistance, you could find yourself cut off in the middle of your job search. Therefore, ask for The Five O’Clock Club service. If your company has a contract with a traditional outplacement firm, ask your company to supplement less-than-full corporate outplacement help with attendance at The Five O’Clock Club.
If you find you do not like your new job—or lose it—you can return to The Five O’Clock Club during that year and continue your search. (Traditional outplacement firms do not allow you to return once you have been “placed.”)
Don’t take money over outplacement. A cash settlement of $25,000—or even $5,000—sounds like a lot, but on your own you are unlikely to spend what you need for career coaching services. Instead, you are likely to skimp and end up unemployed or taking a lesser job than what you would have landed if you had received all the help you need. Get whatever cash you can and ask for the outplacement help as an added benefit. (Click on the outplacement link above to find out more about our services.)
Select the career coaching service yourself. Although your firm may have a relationship with an outplacement firm, many companies allow you to select the outplacement service of your choice.
Remember that, with traditional outplacement firms, the “client” is your former employer. With The Five O’Clock Club, the client is you ! You will probably be impressed with the plush space and other amenities offered by the outplacement firms. But space does not help you get a job: career coaching does .
Many people in traditional outplacement come to The Five O’Clock Club for the career coaching help – so they can get a job! Some negotiate with their prior employers to pay for The Five O’Clock Club’s services in additional to traditional outplacement (which they want for the space), and some pay for The Five O’Clock Club on their own so they can get a good job .
It’s better to ask for Five O’Clock Club help and get space elsewhere. We can give you some ideas.
In addition, most packages at traditional outplacement firms end at the three-month or six-month mark. Most outplacement packages at The Five O’Clock Club are for a full year. This extra time gives you more “breathing room” to find the situation that is best for you.
Use outplacement help to launch your own consulting business. Daniel’s dream was to have his own business. He was tempted to take a cash settlement, believing that the money was the most important ingredient he needed to form his new company from scratch. I convinced him otherwise. A highly qualified Five O’Clock Club career consultant can help you write a business plan, develop your target list, brochure and verbal “pitch,” and serve as a valued advisor until you are on your feet.
Peter, an unemployed actor in his mid-forties, came to The Five O’Clock Club because he was having trouble starting his own consulting business. He wanted to coach senior executives in presentation techniques. After working with The Five O’Clock Club, he landed his first three clients who were senior executives at major corporations. Then we advised him to increase his rates and showed him how to get more business on an ongoing basis. Peter was so successful that his wife quit her job, he ended up buying a 30-acre estate, while keeping an apartment in the city .
You can start Five O’Clock Club coaching even though you have not completely come to terms with your employer—we can help with that!
You can be looking for another job at the same time you are pushing your company for a better settlement. A traditional outplacement firm cannot help you negotiate with your employer (it is a conflict of interest since your employer is their client), but The Five O’Clock Club can help you (because you are our client).
If your company only offers three months’ traditional outplacement and refuses to budge, you could take it—and ask if you could come back and ask for a monthly extension if you are conducting a full and active search and have not landed by that time. Then, right before the three months are up, go in and push for an extra month at a time.
However, if you negotiate for The Five O’Clock Club’s services, it is unlikely that you will have to ask for more. At The Five O’Clock Club, you can receive a full year of outplacement help—and negotiate a space allowance as well—for what your company would pay for three months at a traditional outplacement firm.
Find out what other employees have walked away with. Use this information to further your own case.
Daniel discovered that what he was offered was not what he had to settle for. He almost made a mistake—one that would have been very expensive in the short term, as he struggled to make ends meet, and in the long term, because he never would have been able to afford to start his own business in such style.
Make sure you don’t settle for less, either. Every situation is unique. Get help negotiating your severance package. The amount you spend on a little bit of coaching can reap enormous benefits. You will end up with what you deserve and need. It may cost your company more, but as the saying goes, you’re worth it.