Should you take a severance package or risk a layoff?

Q: Your company isn't doing well. A downsizing is planned. In an effort to reduce the number of people who will have to be laid off involuntarily, they are offering a generous severance package to employees who are willing to leave voluntarily now. Should you take the package and run, or should you stick it out in the hopes that enough others will take it so your job will be saved?

Nick's reply: This scenario is becoming more common. Companies deserve credit for trying to reduce involuntary layoffs by offering a severance deal to people who will leave willingly. The problem this creates, however, is that once a voluntary package is offered, a pall is cast across the company. Everyone starts to worry. When will the actual layoff happen? How bad will it be? Can I save my job? In a sense, everyone feels they're in a lottery. The quality of their work suffers as they endure powerful psychological stress.

The decision to take an early package is personal. A lot depends on a person's financial state. It becomes all the more difficult to make a career choice under such stress. However, there are a few realities that are worth keeping in mind.

-- Companies don't make the decision to downsize lightly. It immediately puts them at risk with investors, creditors, customers and vendors -- to say nothing of their employees. It is a powerful signal that management believes the company may suffer through a protracted downturn.

-- While companies usually don't reveal what the involuntary severance deal will be, the voluntary deal is often better. A voluntary package might give you more of a cushion -- and potentially more choices -- than you'd have in a layoff.

-- If you wait to leave when a lot of people are laid off, you might face more competition as you search for a new job. This is especially true if your company is big and the layoff swamps the local employment market.

-- Leaving voluntarily gives you a sense of control. You make a choice, and you have time to plan your next steps. This can make all the difference to your self-confidence as you pursue your next job (or start your own business).

-- The involuntary phase of a downsizing sometimes comes in stages. A company often can't predict whether a single layoff will be adequate. This leaves survivors uncertain of their future, and that produces continuing stress and the fear that they might be next.

There might be good reasons to stick around in such a situation, but this usually involves having solid insider information that others don't. In most cases, employees have little to go on. If your company is generally healthy and if indications for the future seem good, remember that a layoff can be an inoculation against more serious trouble down the road.

It's interesting that some companies lay people off out one door while they continue to hire through another because there's still important work that needs to be done. Look at all the big corporations that have laid off thousands. They aren't going out of business; they're restructuring. This can be an opportunity, depending on the kind of job and skills you have. In the midst of the turmoil, devote some energy to getting some of that insider information as you assess your options. If the ensuing restructuring is done right, it might even be an opportunity for advancement for those who remain.

A layoff announcement is a profound statement about a company's situation -- and about your own security. It's worth considering some of the issues we've discussed before you're faced with the choice of a voluntary or involuntary severance.

Copyright 2009. Distributed by Universal Press Syndicate

Nick Corcodilos is author of "Ask The Headhunter: Reinventing the Interview to Win the Job" and the host of www.asktheheadhunter.com. He can be reached by e-mail at seattle@asktheheadhunter.com or at North Bridge Group, P.O. Box 600, Lebanon, NJ 08833. Sorry, no personal replies.