With the economy sinking into recession, companies around the U.S. are slashing workforces.
As boomers begin their involuntary retirement, indications are that the weak economy is squeezing exit packages. David Broman, CEO at compensation adviser Syzygy Consulting Group, says his firm's annual survey shows "a significant pullback in what [companies] are willing to pay outgoing employees during downsizing."
Some 62% of employees polled by research firm Weber Shandwick predict their company would have trouble meeting its goals in the next year while 54% say they haven't heard anything from senior managers about what the financial crisis means for their company.
Yet, AARP tells us that 28 percent of Americans devoted more time to reality TV in the last month than to retirement planning in the last decade. Perhaps, you should be considering how you will get by when your boss tells you that you have lost your job...
In most cases, the law doesn't require employers to pay a cent to laid-off workers.
While top executives often negotiate lucrative departure packages, few employees have such contracts. The trend these days is toward differentiated plans: one for CEOs, another for senior executives and another for the rest of the staff. Where do you fall in these three employee categories?
According to a 2007 survey by WorldatWork, a nonprofit human resources organization, most policies offer one or two weeks' pay for each year an employee has worked, often to a maximum of 26 or 52 weeks. But employee handbooks that set forth severance policies typically state that the companies are free to modify them. Says Steven Gross, who advises businesses for HR consultant Mercer: "Companies have gotten very stingy in their stated policies so they can come back and be more generous if they want to be."
Many managers feel that treating ousted workers well sends an important message to those who remain behind. "Everybody who survives looks at how well the other people were treated because someday they may be in that situation," says Mercer's Gross. But the primary reason employers offer severance is that they extract something in return: The departing worker must waive all rights to sue the company.
Mass layoffs in particular put companies at risk for age discrimination suits, because cutbacks often target higher-paid boomers, who tend to be older. Demanding a waiver is "really a mechanism that employers are using in a very effective way to eliminate the numbers of claims that come out of a reduction in force," says New York employee attorney Pearl Zuchlewski.
You are advised to begin planning your exit strategy today...way before you are escorted out the door.
Source: BusinessWeek, November 3, 2008
For what boomers are thinking today, visit the Blogging Boomer Carnival #91 at Contemporary Retirement.