Can you cope with a job loss?

One of the negative fallout of the opening up of the Indian economy has been the possibility of a job loss in the private sector. Fortunately, the government and public sector jobs are relatively insulated from this right now but, in the years to come, they may well be affected by it to some extent too. As the job growth is almost entirely in the private sector, coping with job losses becomes an important consideration for many people.

Job losses can be there for many reasons. The first and the most probable reason is that the company decides to stop doing what it is doing or scale down operations significantly in India. The second can be the company decides to move it’s operations within India and some Employees may not want to relocate. The third can be due to reasons of misconduct, financial or otherwise. Finally, there can be an issue of individual performance or the job role in question can simply become redundant.

It is important to understand two aspects very clearly when we are talking of a job loss. Firstly, apart from a few higher end jobs and some MNC’s, there is virtually no safety net available when it comes to job loss. All that you may get paid is about 2-3 months of your salary and you have to deal with the rest of it yourself. Secondly, most people do not understand that a job loss is very much a possibility even if they are individually doing well in their respective jobs. A vast majority of job losses are because of economic and structural reasons, not because of misconduct and performance issues.

As they say, prevention is better than cure and there are a few preventive measures that you can take to minimize the possibility of a job loss. To begin with understand the overall business of your company and how is it doing. That will make you aware of the potential risks of a possible cut down in expenses, which normally lead to job losses. Next focus on your own performance and understand the importance of your job role’s relevance and importance to your company. Corporate organizations are largely selfish entities, if you are useful to them they are unlikely to let you go. Thirdly try to add value to yourself by learning new things, both formally and informally. This will not only help in getting better in your current job but also assist greatly in getting a new one when you need it.

No one can be truly prepared for a job loss as it will always come as a shock, no matter how and when it happens. However, if you have a reasonable value in the job market you will be able to find an appropriate job sooner or later. In terms of financial safety net, there are a few things that you need to be conscious about at all times.

  • Minimize your loans and ideal situation is with no loans. If you are having to pay a high EMI then the anxiety you face will be high and you will be more likely to make wrong decisions.
  • Have a Contingency fund of 6-8 months expenses that you can tap into easily. This needs to be separate from your general investment plans, so that you do not get a feeling you are depleting your future resources.
  • Focus on necessary expenditure and avoid buying assets. You may get a fairly big sum of money as settlement but do not be tempted to spend it on an asset purchase or a vacation.
  • You need to ensure that your family understands the situation but at the same time, take care that they are not overwhelmed by it.
  • Continue your insurance payments and if you did not have a Health insurance of your own, then get one quickly.
  • Continue your regular investments in MF etc if you can but stop it if it is proving to be a burden.

The ideal situation will be for you to find a job in the 2-3 month period that you have in your current job. However, if you are in an industry where jobs are relatively less or if you are on the wrong side of 40, this may be easier said than done. In such a situation you have to dig in for the medium haul if not the long one. I will try to cover the financial strategies to deal with such a situation in the next post.

Whether it is for the Employee or the Employer, a job loss is an undesirable situation. However, if you are able to cope with it well without reacting negatively or in panic you will come through it with flying colors. As a CEO, I have unfortunately had situations where I had to let people go. While some of the people had tough times, most of them emerged from the experience in a better manner and have had fairly successful careers.

Remember a job loss is only a road block that can only delay you from where you want to reach. Unless you let it affect you badly, it will not be able to stop you from reaching your destination.

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4 thoughts on “Can you cope with a job loss?

  1. This is a reality that not many Indians realise. I was in this boat, will not happen with me in India – “I am a top performer…”. But it happened last year

    It took me 4.5 months to get a new job – pretty senior profile (VP level) and being on the wrong side of the 40s did not help.

    A few things that helped me:
    – Investment in keeping myself up to date with the latest in my field
    – A year’s expenses available in an emergency fund
    – Financially conservative, no overwhelming debt/EMI load
    – Understanding family – I got my wife and college going kids to understand what happened, shared our financial plan and a plan to get us out of this situation. They completely understood and were supportive.
    – Having great references from all my previous employers.
    – Connections in the industry and a network of professional connections.

    Some challenges:
    – The mothers & in laws were a different story- older generation could not understand.
    – The larger social circle was a real problem – the rumor mongering and gossip in the building society and other social circles was a real problem for my family
    – The psychological effect of not having a job and keeping yourself busy.

    Hope this was helpful.

    Liked by 1 person

  2. Personally, I have been through 2 job losses viz., one each in 2009 and 2013. In 2009, the startup which was a dream for a lot of mad guys like me couldn’t hold on and unfortunately, the same had to shut down. I was not an entrepreneur, but employee no. 3 and was gutted. There was a lot of emotional capital invested in that organization and too much water had flown under the bridge. The timing was the most inopportune time one could imagine and being a techie, it was a nightmare to find a job. 43 applications, 2 interviews later, I had a job. No compensation, loans to pay, it was a literal nightmare. Some learning out of this experience:
    1. Love your job, give 200%, but never ever get emotionally attached to the organization. It can hurt you big time and unless you experience it, one has no idea what it means.

    2. Keep building skills, develop your network. Your next job will be solely based on these 2 factors.

    3. Become strong emotionally. I agree with the previous comment about the older generation unable to grasp the gravity of the situation, but in my view, it’s better not to explain beyond a point.

    4. Have back-up funds (more below). My MF investments were handy and my wife was working. So financially, it was a cushioning aspect, but my own choice of lifestyle ensured that I didn’t have too many commitments to be worried out.

    5. NEVER EVER compromise family time for office work. There are crazy guys like me who compromise everything in the pursuit of professional experience in startups, but at the end of it and some years and little white hairs later, the wisdom dawns. ” It is not worth it”.

    With this experience, I hopped onto my next job which was pretty exciting as long as it started, but business conditions meant that 4 years down the line, I was staring at my next job loss. With experience number being in double digits, the job search was very exhausting, but overall the aforementioned principles stood the test of time. Referrals are the most important part of job search and one needs to dedicate time and effort to build the network and maintain the relationships.

    1. Financially, this was a far better deal as the employer, one of the market leaders from Europe, compensated us handsomely. This coupled with the fact that the employer put onus on retiral benefits like Super annuation, Gratuity etc meant that all of us coming out had some decent money in hands.

    2. The employer took a great step in organizing placement camps for the 200 odd people losing their jobs and I am happy to state that a large majority had a job, before we came out.

    What did I do with the money? Since I had a job, I did the first most important thing:
    – Became LOAN free .. decided not to have any loans before Jan 1 2014 dawned and by compromising and cutting corners, I achieved it

    – In between, I did upgrade my car (previous one was 10 years old) and cleared the loan of that also

    – Became very aggressive about my investing (basically had a 2x jump from my previous planning).

    I think the experts have shared their wisdom, but I do have a few points which I want people to consider.

    1. Budget – Most people whom I have encountered and advised don’t have a budget. Unless you know how much is going out, you don’t know how much you need. You need to write down every gory detail and then take a holistic view on the emergency fund number.

    2. How much is enough? Rajashekar sir has suggested 6 – 8 months. I would be a little aggressive and would recommend atleast 12 months of backup at bare minimum.

    Some statistics from the very recent history (< 6 months):
    – The average hiring time for a 15 year experienced technical guy is atleast 3 months
    – One of my friends took 7 months to find a job – We admired him as a technical guru, a software architecture whose fundamentals are amongst the very best I have encountered. HIs experience level was 19 years.

    Moral of the story: Live within your means, Limit your wants and Be prepared.

    Like

  3. I don’t have any loans, free from EMI’s. But still staying in rented apartment. If I continue in my job I will be able to buy decent apartment on loan, but still afraid. My mind set not allowing to buy anything on loan..

    Like

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