WHAT TO DO IF YOU GET FIRED DON'T JUST TAKE THE PACKAGE AND RUN. HERE'S HOW TO NEGOTIATE THE BEST DEAL FROM YOUR COMPANY.
(FORTUNE Magazine) – THE DUMBEST six words in the language are "You can't fire me--I quit!" That's what you may be tempted to blurt out in rage when told you're being dumped. In subsequent powwows over your plain brown severance package, management will be only too happy to say, "But you quit." So much for your negotiating clout. If you're ever fired--as 415,000 employees were last year--remember these three rules for negotiating your exit:
Never quit. Make the company fire you.
He who acts first, loses.
Your pride is the company's best weapon. Don't get proud, get even.
So what's the best way of getting even? Start by keeping your cool during that most stressful moment when the boss calls you in and wields his terrible swift sword. You should say almost nothing--you don't want to start negotiating now. Instead, write down what your boss says. This may move him or her to be more conciliatory. It also sends a signal that you're not about to surrender, and so the company had better prepare to deal with you.
Reject management's first offer. If you cave, the company will say thanks a lot and figure you're a wimp. On the other hand, if you bargain hard, the company almost certainly will not retaliate. Similarly, don't immediately sign a release promising "I won't sue" or "I won't compete against you." Management wants your signature; hold on to it as one of your strong cards to play in future negotiations.
The company also wants to get rid of you fast--you're an embarrassing reminder to all others of what may happen to them someday. But you should stall for time, saying, "This is a great shock. I need time to think about it. I'll call you next week." You want to be able to consider your choices, to find out what the company has given to others it fired, and to consult a lawyer.
Do hire a lawyer. He can coach you, let you know what payouts are standard in your field, and help draft your severance agreement. You need an expert in employment law, not a friendly generalist. The hourly fee--$200 to $400--is a worthy investment. You can get listings of specialists from the National Employment Lawyers Association (415-227-4655). Tell the company you've hired a lawyer. Its negotiators may be more willing to give, knowing that you have an expert adviser.
YOU HAVE EVERYTHING to win if you negotiate forcefully but quietly. Robert Swain of the Swain & Swain outplacement firm in Manhattan advises, "Don't make some terrible threat that causes the company to dig in its heels and say, 'If you want to sue, go ahead.' The truth is, the company has more lawyers and deeper pockets than any individual." Successful suits are rare, particularly outside litigious New York and California. Suits are difficult to win even if you're in a group protected by antidiscrimination law--women, minorities, people over 40--and almost impossible to win if you're white, male, and under 40. Even if you prevail, you may badly hurt your chances of getting a new job. Not many companies want to hire someone who has sued his previous employer.
Before you turn to the courts, ask your lawyer to negotiate directly with the company's general counsel. If you have a good case, those two professionals often can work out an agreement. Another strategy is to request an outside mediator to hear both sides and make a recommendation. Says Joseph Garrison, an employment lawyer in New Haven: "Mediation is voluntary and nonbinding. But each side gets its story out, each side feels some catharsis from that." Most cases are settled quickly at a fraction of the cost of a suit. Washington, D.C., attorney Robert Fitzpatrick recalls a mediation where at the end of the day the fired executive got a check for $750,000--and both sides went out to dinner together.
Your position is strongest when you alone have been singled out for firing. It's weakest when your entire department has been let go. That's clearly a job elimination, and you then have to appeal to the company's sense of fairness and decency to pay attention to your special case.
If you have a contract, view it only as a floor, and negotiate for richer terms. Don't take seriously company threats to break your contract; short of outright fraud on your part, that can't be done. Some companies may even sweeten your package. Says a former human-resources chief at a major company: "Even though there are places like American Express that claim they never deviate from a formal severance policy, I have not found a single corporation where that's the case. There is always someone who has a sob story and can get a friendly high officer to say, 'I'll give you another six months' pay and benefits or nine months' medical coverage.' "
Whether or not you have a contract, most bosses call you in and spend the shortest possible time firing you. Then you're put into the hands of some functionary--an HR person or a company lawyer. You can be as pushy with that bureaucrat as you wish. Says the former HR chief: "If you don't get what you want, go back to the person who fired you--or his boss--and tell him what you're seeking. By then the guilt has sunk in, and your ex-boss wants to get this over with. That's when exceptions are made."
Many companies want you to feel you've "won" something from them. So they are prepared to give you at least some of the extras they have quietly granted others in your situation. That way, you're less likely to badmouth your ex-employer to customers or to press a lawsuit, which can cost the company time and money even if it prevails in court.
Know what you want out of the negotiation before you begin. In general, the higher your rank, the more you can get. As social commentator Calvin Trillin writes, "In the world of huge corporations there's nothing more lucrative than being fired well."
John Challenger of the Challenger Gray & Christmas outplacement firm in Chicago says big companies tend to be more giving than small ones. Family-owned outfits are also openhanded, and locally owned companies are more liberal than those whose owners are remote. The least generous are heavy-manufacturing companies and investment banking firms, where Darwinian rules apply--"unless they figure," says Swain, "that by being nice, you won't rape and pillage on the way out." Here are some specific things you should ask for:
More money. Request four weeks' severance pay for each year of service, but be happy with three and settle for two. Most companies initially offer one to two weeks. Middle managers usually get at least three to four months' salary, and top executives receive a minimum of nine months or a year. Try to delay the date when your package begins paying off. In other words, negotiate to stay on the payroll, where you receive your regular salary and benefits, for as long as possible. You'll end up with more money, and the company can claim that your package was no more generous than anyone else's--meaning no precedents were set.
Pension bridging. This is hard to win because federal law says a company cannot change its pension rules just for you. What it can do is keep you on the payroll, sending you a small monthly check, for up to five years. That enables you to preserve your full pension even if you're only 50; the earliest age that a pension kicks in is usually 55.
Stock options. Unvested options generally vanish when you're fired. But you may be able to make a deal: Agree to take less severance pay if the company will vest your options and stretch out the deadline for exercising them. The company saves money--and you'll make some if the stock rises.
Bonuses. Companies have no legal obligation to pay your annual bonus if you're dismissed, and many insist that you be on the payroll on December 31 in order to collect one. Indeed, Steven Mitchell Sack, a plaintiffs labor lawyer and author of The Employee Rights Handbook (Facts on File, 800-255-2665), says most firings occur late in the year so that companies can avoid paying bonuses. "I've never been busier," he said in a recent interview. Still, companies with class will pay bonuses to dismissed executives who have regularly received them. Ask for your full bonus and settle for half.
A well-worded announcement. This is much less important today than five years ago, because firing carries almost no stigma. But it costs the company nothing and should be an easy "give." Ask to approve the wording of the announcement, which should credit your major accomplishments and explain that you are leaving "because of differences over strategy."
Office space. You should be able to negotiate an office on another floor or in another building, with secretarial help and your usual phone extension, for at least three months. Don't accept a phony title that is both transparent and worthless; it may cause you to delay your job search.
Job-hunting expenses. This is an easy give because it doesn't cost much, and even the ogre who fired you probably wants to see you happily re-employed. The company should pay for everything, from taking your networking sources to lunch to plane trips for interviews.
Perks. Covering your club dues and letting you keep a company car until you bag another job are inexpensive ways for a company to preserve good will. And only the chintziest try to retrieve your home PC.
Outplacement. Most companies pay for it. Ask to choose the outplacement firm yourself. Look for one that stays with you until you find a job, even if it takes a year. You also want a firm that assigns a counselor to speak with you face-to-face at least once a week and gives you an office, a phone, and secretarial support when you need it. The outplacement firm should monitor want ads in newspapers across the country and get your resume out to headhunters.
You can buttress your negotiating position if you have a paper trail to support your case. That's wise to remember even if your job seems secure. So ask right now to see your personnel record. Photocopy and file all favorable reports, and keep congratulatory memos that come your way from bosses or customers. You can never tell when they might come in handy. So many talented managers have lost their jobs that, as headhunter Stephen Unger of Spencer Stuart & Associates says, "being fired today is almost a seal of approval." Almost, but not quite.
Reporter Associate Joe McGowan