Five years ago, I read How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye written by Financial Samurai, and it changed my life for the better, forever. It was a very profitable use of my time, and has returned at least 1,500 times more than the cost. The book is now in its 3rd edition, newly released in 2019, and has a lot of great new content and resources. If you’re considering buying the book, I highly recommend it! Below you’ll find details and a review of my own experience negotiating a severance after reading Sam’s book.
When it was time for me to get promoted in early 2014 at a job I’d been working at for about nine years, I was passed over for two male colleagues. One guy was a slacker 80-90% of the time and the other guy always talked about how unsatisfied he was at the firm. Both of them were slightly older than me, but I had the same amount of experience. I had been at the firm for nine years and was finally pissed off enough to do something about my situation.
After getting rejected for that promotion, I wasn’t willing to stay late and deal with PITA clients any more. Reading How To Engineer Your Layoff gave me the motivation and confidence to take matters into my own hands.
How To Engineer Your Layoff Severance Plan
Here are the key steps from How To Engineer Your Layoff that helped me negotiate a great severance.
Step #1: The book taught me what my true worth was at my job. I calculated how much money my employer believed I was worth. Then I calculated roughly how much productivity and revenue my employer would lose if I left.
Step #2: After reading the book and knowing my worth, I had a meeting with my manager to express my shock and disappointment and getting turned down for the promotion. I laid out the reasons why I believed I should have been chosen and implied that if the firm did not promote me mid-year, I was ready to walk. My boss was surprised at how upset I was, which was a bad thing because I hadn’t properly managed his expectations. But, it felt good to get my feelings out in the open.
I played chicken with the firm, knowing they would likely swerve in the final seconds because I was the point person for several major clients. Nobody else had the relationships I had built, or my level of expertise and skillsets for a lot of the firm’s proprietary systems. If I left and pulled the rug out from under them, they would be screwed by more than 10X my salary in lost revenue.
Six months later, they agreed to promote me and gave me a 20% raise. Better late than never. Management realized their mistake in passing me over earlier and were quite apologetic.
Step #3: I felt relieved and proud finally getting the promotion I deserved. No matter what happened from then on, I finally had that new title on my resume. After the excitement wore off, I realized I had no desire to strive to the next level higher in management. I saw the stress and unhappiness my boss went through every day. I didn’t want to hustle towards that or more responsibilities. With this realization, I realized I had nothing to lose in trying to negotiate a severance and start a new chapter.
Step #4: Work continued to stay stressful, a lot of people kept quitting, and the same old $h1t really started to weigh on me. I was happy to have my new title, but it wasn’t enough to keep me going anymore. After hitting a wall after a really bad slog of days, I decided it was time to make my move. Five months after my promotion (11 months after I was first passed over), I sat down with my managers and asked for a severance equal to what some recent employees had received when their department shut down. They balked, as expected, given I had recently gotten promoted and was an excellent performer. But I’d finally had enough.
About a couple weeks went by before they realized I was dead serious about leaving. My heart was no longer into the job and they recognized something had to be done. They knew they had messed up by not promoting me earlier in the year. At the same time, they needed to keep me. Millions of dollars in revenue and months of lost productivity were at stake if they lost me. It would take months for them just to find and train my replacement.
Step # 5: We had another meeting about what they could do to make me happy in attempts to convince me to stay. They implied I would get another 20% raise in the new year. I didn’t take the bait. Even a 50% raise wasn’t going to keep me motivated because I no longer enjoyed the work. Plus, I didn’t fully trust management anymore. I reiterated I wanted to work out a severance agreement, mentioned I had some flexibility with the timing, and they told me they’d get back to me in a week.
My Initial Severance Offer
A week or two passed, and we had another meeting. All this while, I continued to come in on time, but left right when the clock struck 5pm. I was always courteous to my colleagues, but I no longer put in more effort than expected. After years of going above and beyond, just doing the norm felt strange, but also wonderful. Good behavior during any severance negotiation process is crucial, so I remained professional, courteous, and patient.
Fortunately, the senior management team decided it was best to pay me a severance and arrange some type of long-term transition so that everybody would win.
Here’s what they initially came back with:
* Three months base salary (the actual severance lump sum payment)
* All my unused vacation days paid (required by law in California).
* Six months of health insurance.
* Continue working for six more months full-time
After reading How To Engineer Your Layoff, I knew their initial offer was weak since I’d been at the firm for 9.5 years. I should have gotten at least two weeks of pay per year worked, or at least 19 weeks.
I tried my best to negotiate a higher severance lump sum, but it wasn’t looking good. The company was private and earnings had been on the decline for awhile. My managers refused and claimed they were handcuffed by headquarters based in Europe.
Step #6: The only logical next step was for me to get creative. This step is where many severance negotiators fail, but where readers of How To Engineer Your Layoff tend to succeed.
Given my firm wouldn’t budge on the lump sum severance payment, I proposed a compromise for the remaining six months of full-time work requested.
Instead of coming in five days a week, I went back to them and said I’d be willing to come in two days a week and work from home one day a week. Further, I asked to removed from all client interactions and communications, which was the main stressor of my job. During my remaining time, I also proposed to train whomever necessary to fully hand off all aspects of my job, all while getting paid my FULL salary.
After another week or two of deliberation, they said yes! Management was afraid I’d quit and leave them high and dry if they didn’t meet my terms. They needed me to oversee my large clients until they found capable replacements.
By working 40% fewer hours and getting paid the same, I got a 67% raise for six months. In other words, the value of my severance package increased by over $85,000. Not only was I getting another six months of full company 401k matching (worth $9,000), I got to accumulate 15 more days of paid vacation (worth $7,800), and continued to receive health care insurance.
What’s even better is that I LOVED my last six months at the firm! Without the stress of communicating with clients, every day I went to work felt like a casual hangout. The responsibility of interacting with clients was delegated over to my managers and trainees. And I came home with a big smile every day for six months.
When I finally left, I felt like I had won the lottery. Not only had I gotten a raise and promotion, I had been able to get a severance and also feel vindicated. They threw me a small good-bye party at the end, I left on happy terms, and I still remain in touch with my bosses.
Total value of my severance package: ~$140,000, up from the initial $40,000. Cost of the book, $87 after the $10 discount code. Reading How To Engineer Your Layoff was seriously the best investment I have ever made.
Life After A Severance Package
After leaving my job, I traveled to 20 new countries with my husband for two years. Then I became a mom in 2017, which was the best gift of all. I cannot believe my good fortune. There is literally no other book like it in the world.
I thank my lucky stars every day I get to be a stay at home mom. Not having to commute to and from a job I dislike makes me so incredibly happy. And to spend every day with my son and experience every single milestone with him is priceless. It would have broken my heart if I had to part with him after just three months of maternity leave.
If you are miserable at your job and are ready to leave, there is no downside in trying to negotiate a severance package. I highly recommend you buy: How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. It changed my life!
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