Mergers and acquisitions can have a negative impact on employees. Taking these simple steps now can position you for success later.
In times like these, you have to think of how you are positioned to absorb difficult situations. You need to examine your position in relationship to three important aspects of your financial picture. If you are impacted by the current economic and employment conditions, then you should read with interest these suggestions. Recently, a large Carlsbad, CA company announced that it was being purchased by a competitor located in Waltham, MA. Why is that significant to you? If you live in Maryland it is significant because the Carlsbad, CA. company is Life Technologies Corp. Life Tech (as it is known) employs many in Frederick and from the surrounding area. If you work for Life Technologies or if your business is associated with Life technologies, chances are you will be impacted by the pending transition.
On a more global note, if your company is bought out by another company, you could be facing some of the same realities that the employees of Life Technologies are facing right now. With mergers and acquisitions there is always the potential for layoffs. Companies who compete in the same industry will often have overlap in their operations. This results in structured reductions in human resources and in some cases, the selling off of parts of the original business. I experienced this when C&P Telephone merged with NYNEX and became Bell Atlantic and when Bell Atlantic merged with GTE to become Verizon. Each subsequent merger brought a reduction in head count and selling off of parts of the businesses.
This, however, is not about these companies specifically. I wanted to explore the impact of this type of situation in relationship to the employee’s experience. Specifically, I want to address that employee’s broader financial concerns. If you find yourself in the aforementioned position, you need to be considering how to make adjustments in the event of the worst case scenario. If you have positioned yourself well, you will be salivating at the sheer possibility of a severance package. If you have operated in the realm of “it will never happen to me”, then you need to begin to think in terms of how to position yourself to absorb a potential layoff.
Let’s first look at your position in relationship to the company. Being totally dependent on a company leaves you vulnerable to crisis living. To determine your dependency on your employer, ask yourself this question. How long could I survive if I were to be laid off today? If you have a three to six month emergency fund your answer is quite simply “about three to six months.” However, if you have just a few thousand dollars in the bank, your confidence to survive will be quickly eroded. Three to six months of expenses is nice, but three to six months of gross salary is better. Therefore, it would be a smart move to cut back on your budget and begin to put away as much additional cash as possible (more on this in a minute).
With the current employment environment, it is difficult to make a career transition across disciplines. That simply means that moving from, let’s say, the telecommunication industry to the bio-technology industry will be a hard sell. Unless your intangible assets can easily transition to a different industry, you will be hard pressed to cross industries. Therefore, one of the best plans you can have to create possibilities is to be a lifelong learner.
Take the time to learn disciplines that are outside of your current discipline of expertise. By doing this you can demonstrate your ability to learn a variety of skills and show that you take an interest in broadening your knowledge. If you find yourself in the position of being out of work through layoffs, you can market your advance skills and knowledge as part of your intangibles. This might mean focusing on completing your degree or picking up a certification in an unrelated field of study.
The second consideration you need to make is your position in relationship to the economy. The larger the buffer you create between you and life, the better you are positioned to handle the challenges of life. To determine if you have a sufficient buffer between you and life, ask yourself this question. How much space do I have in my current budget between assets and liabilities? The greater your debt to earnings ratio is, the greater your ability to absorb a negative life event such as a layoff.
This ratio measures the percentage of your income that is committed to paying off debt. The measurement is total debt (not including your mortgage) divided by your monthly budgeted income. If this ratio is 15 percent or less, you are maintaining a sufficient buffer. If this ratio is between 15.01 and 20 percent you are at risk for major impact if you were to suffer a negative life event. Anything over 20 percent means you do not have a buffer between you and life.
The ideal position is to have no debt including the mortgage. When you are debt free, you have created the greatest buffer between you and life. In this situation, if you were to receive a layoff notice, you would simply ask, “What is the severance package?” because you have a significant buffer between you and life. If you have two incomes try to live off of one and bank the other. This will increase your buffer between yourself and life.
The last consideration to have is your position in relationship to your goals. If you desire to be able to choose your retirement date and not depend upon the government to choose it for you, then you need to create complex pathways of achievement. It sounds daunting but a complex pathway is nothing more than a number of complimentary pathways of achievement that have dependencies. Complimentary pathways of achievement are nothing more than simple goals that work in tandem towards your success.
Simply stated, your goals should always be moving you towards your ultimate target of creating space between you and life. When you have honed your goals to your ultimate target, you do away with the frivolous targets. Although taking a vacation is nice and in some cases recommended, it should not be a target. Ahh, shocking! Vacations are not life sustaining goals. Vacations themselves are not bad, but they should not have priority over more life impacting goals such as retirement. Taking a vacation does not put space between you and life, and remember that is what we are talking about here.
Generally speaking, getting laid off will impact your entire existence. However, if you continue to gain knowledge in other employment disciplines, reduce or eliminate your debt, and set goals targeted towards life sustaining targets, you will create the space required to manage a bad situation. You need to do these activities in consideration of your position in relationship to your current employment, the economy, and your goals. You also need to do these disciplines while you are employed. Trying to put these disciplines in place after you have received your layoff notice will create crisis living.
If you feel stuck and are having a hard time getting a sense of direction, consider adding the services of a life coach to your plan. If you have too many irons in the fire and do not know which ones are important and which ones can be removed, consider the services of a life coach. A life coach serves as a strategist, an accountability partner, and provides the support necessary to achieve success. You can learn more by visiting http://kenrupert.com.