We Have Some Lovely Parting Gifts
First of a two-part article about managing the latter years of one’s career. Part One focuses on corporate strategies and the practice of offering Voluntary Exit programs. Part Two contains insights on how the individual employee is impacted by re-organization initiatives, with advice on how to get to the finish line successfully.
My Auntie Kay owned an Asian gift shop in Boston’s Chinatown for about 30 years, and when I was a kid I would visit the store with my family and try not to break anything expensive. Among the things she sold for kids my age were numerous toys (Made in China, of course) such as the catch-ball-in-cup, the disappearing coin box, and the ubiquitous Chinese finger trap. Hours of fun, amaze your friends, amuse your kids.
As art imitates life, it seems the finger trap is a perfect metaphor for today’s airtight job market: one on end there are Gen Z college graduates who are stuck trying to get employed, on the other end there are Baby Boomers who are getting ushered into early retirement with limited choices to stay employed. If you’re in the middle, there’s some flexibility.
In a previous article (But Who’s Counting, March 2021) I wrote about the Gen Z dilemma, and the opportunity for Higher Ed institutions and corporations to adopt a stronger practice to help young professionals plan their careers — not just their next job. This article is focused on the other end of the career continuum, specifically middle and senior managers age 55+; this group is targeted for layoffs and early retirement packages since their compensation is relatively high and their experience and institutional knowledge is not sufficiently valued in economically challenging times.
To put this decision into context, it can be helpful to understand the situation from the corporate perspective. Early retirement packages (charitably re-branded as Voluntary Exit programs) have been in broad use by corporations since the recession of the early 1990s, when merger & acquisition activities in a declining economy created a lot of duplicative management talent. The first recipients of these programs were from the Silent Generation, many of whom were challenged to make the conversion from analog to digital and were somewhat relieved to have both an ejector seat and a parachute. Baby Boomers started to see more early retirement programs between 9-11 and the 2008 economic downturn when two or three bad quarters of financial performance could quickly lead to a mandated 10% reduction in operating expenses or head count. The COVID pandemic has led even historically stalwart companies to offer Voluntary Exit programs in the last few months, including Coca-Cola, Harvard University, and Fidelity.
While organizational re-structuring is a side benefit of downsizing (charitably re-branded as right-sizing), the primary consideration is always financial; if companies can’t sell or market their way to meet growth targets, paring costs is the most immediate way to improve the bottom line. If a sufficient number of employees accept a Voluntary Exit package, the program is deemed to be successful.
The fiscal aspect of a right-sizing strategy is so dominant, one can easily miss the human side of the situation. Deb Leonard Kosits, an organizational design consultant and HR leader for several Fortune 200 companies says, “the calculus is always about balancing the goals of supporting the continuing business, maintaining employer brand reputation, and demonstrating respect for the individual.” Kosits notes that companies can overlook the impact of a Voluntary Exit program on the rest of the organization. “Ultimately the business needs to succeed with the people who remain, so preparing and transitioning them is arguably more important than managing the process for those who are exiting.”
Despite the best intentions, there are unintended consequences in the process that many companies encounter, most having to do with communication. Senior leadership will rarely provide a detailed explanation of the reasons behind the offering of a Voluntary Exit program, since it impacts only a small fraction of the company’s workers and the underlying desire is to treat each discussion with a candidate as a private matter. Ironically, the clandestine nature of such a program becomes a significant distraction for the non-impacted part of the company, since the process discourages asking questions such as, “is this a financial issue or is it really a performance issue?”, or “if this person’s job is being eliminated, will his/her responsibilities just be pushed down to those of us who are left?”, or the most paralyzing question, “if not enough people take the package, is there going to be a layoff?” At a moment when clear, reassuring communication is most important, companies often retreat into the cone of silence.
In this nervous and emotion-filled environment, long-time team members are being asked to make a decision that will impact the rest of their working lives, and even their post-working lives. Coming next week: Part Two of this article, which will convey stories of how people made decisions to accept or pass on their Voluntary Exit program offers, and advice on how to be more in control of the final phase of one’s career.
Tim Guen is President of CareerMap and blogs frequently about the challenges of career building during the pandemic.