Friday, November 28, 2008

A Guide to Surviving the Recession For Twenty-Somethings

Like many, I'm reading headlines that aren't too optimistic about the future of the economy. I just read an article that put the potential unemployment rate around 10%, up from roughly 6.5% now.

Unless you are self-employed, you don't have a lot to say concerning your employment status. However, there are a few things you can do to gauge your likelihood of being let go in a layoff. Ask yourself these questions:

1. Are there multiple people with the same job title as you? For example, if you're part of a 15 person engineering department, it's possible that the engineering manager could be expected to give 3 names by the end of the day. If there are 5 mechanical design engineers, 3 drafters and 4 electrical engineers and 2 programmers, the 3 names given will include at least 1 mechanical engineer and 1 electrical. The programmer is the least likely to go.

2. Could your company still function without you?
This is one of the scariest realizations, that your job isn't a lynch pin the the corporate machine. If you realize that you're not critical, it's possible you may be among the first to go. Be honest with yourself and try to gain more responsibility so you leaving will cause maximum corporate pain.

3. Do you get along well with your boss? Here's a dirty little secret. Sometimes major layoffs are used by managers to get rid of merely average employees that they can't exactly fire for any really good reason. Sometimes a department might not be asked to lay anyone off, but a crafty manager might say, "Could I please give you one name?" or even negotiate a deal with another manager, "Hey, I can get rid of Average Adam in my department so you'll only need to let go of 2 people instead of 3 in yours. I'll be calling back my favor later." Don't assume this sort of thing doesn't happen.

4. Does your boss think you are critical to his or her team? Regardless of your opinion on your contributions, if your boss thinks that you're a critical element to the team, you're less likely to be let go. This is why it is critical to always be on good terms with your boss, or at the least not be on the bottom of their list. All managers have favorites (though the professional ones will not exhibit favoritism). If you're a favorite, you're more likely to hold your job.

While the point of the above questions isn't to strike fear into your soul, it should be a wake up call for everyone in Generation Y: We're not invincible. While its possible our baby boomer parents had some sleepless nights after their 401k was rocked by the dot com boom, our lifetime hasn't be scared by any sort of major recession. What we're looking at for the next couple of years is a big deal.

So what do you do? How do you prepare?

1. Make sure you have an emergency fund of liquid assets on which you can live for 6 months. I already hear the cries of twenty somethings saying that there is no way that they can save that sort of money. To which I'll say: baloney. There's no way you can't afford to have an emergency fund. 6 months of expenses should include costs like rent or mortgage, utilities, food, car insurance, health insurance and life insurance. Yes, this is a lot of money - start saving now. Having a 6 month emergency fund is more important than your 401k, paying down high interest loans or just about anything else. I'll be writing an entry on in the future about how to save more money. (But there are only ways: cut expenses or increase income.)

2. Role Play a Worst Case Scenario With a Complete Re-Employment Plan. Assume that you've been given two weeks notice without severance. Who would you contact about finding new job offers? Write down your list so if you're in shock from this unfortunate news, you've got a plan of action. Update your resume. Make contact with old co-workers and managers to find out what they've been up to. Websites like LinkedIn make this easier, but a personal phone call or email can't be beat.

3. Work smarter (not harder) to move yourself up a notch on your boss's favorites list. Revisit questions 3 and 4 above. Try to make yourself a critical part of your managers team. Find out where your manager's pain is and help him fix it. Have lunch with your manager and develop a personal relationship. Find out how your manager is compensated and help them get a hefty bonus. Be the hardest employee your manager has. Remember: now is not the time to slack off.

This is definitely a painfully practical post, but I hope that the readers can think through some of the thoughts. Comment away!

Thursday, November 13, 2008

Employee Compensation & Negotiating Raises

One of the interesting parts about being a twenty-something is dealing with your salary. Depending on the company you work for, the process may vary widely. Depending on the company, there may be no process at all.

If your employer doesn't have have a review process, you need to create one. Every year you need to have a discussion about your objectives and how you can measure your success in your role. The annual review may or may not discuss your salary, but it is paramount that you can discuss your performance as an employee. This will be a key tool to negotiate an appropriate pay increase.

You should expect, at the very least, to get a cost of living raise each and every year. I'll pin that number, for the sake of discussion, at 2%. If you don't get a 2% raise each and every year, your employer is giving you a pay cut -> they are taking money out of your pocket. If you honestly believe that you are over paid and can not find similar compensation somewhere else, then you don't have much room for complaint. However, if you think you're being underpaid, then you have every right and reason to negotiate.

I think it's critically important to realize that your employer needs to have a valid reason to pay you more than you are earning now. Your life circumstances can not come into play. For example, the following are not reasons why your employer should give you a raise:
  • You want to buy a house and need more money to get the size house you want.
  • You are getting married and need to cover the cost
  • The interest rates on your student loans are increasing.
  • You are expecting a child and you need to provide for them.
  • Your spouse is changing or leaving his or her job and you need to make up some of the difference in compensation.
These are all personal reasons. Your employer doesn't care about how you spend your pay check. They care about how you are making them money or saving them money. Your employer's #1 objective is to get the most (work) for the least (money). Your objective as the worker is the opposite.

There are, however, valid reasons why you should expect additional compensation.
  • Exceeding company goals, especially related to creating income or reducing costs.
  • Performing extra responsibilities that potentially reduce the amount of other employees needed to accomplish the tasks.
  • Others performing your job function at other companies are getting paid more than you.
  • Coworkers or those with less experience at your same company are getting paid more than you.
Another thing to mention is that employees seldom realize how much negotiating power they have.

The cost of replacing a good employee is incredible. First, the company needs to find a new employee. While they search, the position is unfilled and additional strain is put on coworkers who now have more work to do. It is unlikely the company will find someone with exactly the right skill sets, so after the replacement is hired, there is time where they are paying the replacement for less than 100% output (training). If it is a mid to upper level replacement, they might need to use an outside recruiter, who will get paid up to 30% of the position's annual salary. Bottom line: Replacing good employees costs big bucks!

Keep this in mind when looking to negotiate your next raise. A few percent isn't much when leaving will lower the moral of the office, costs the company valuable training time and the possible cost of an upfront fee of 30% of your salary. Every person in human resources knows this, and its quite possible that your supervisor does as well. If you bring up a raise, they're going to have to discuss it past HR, who will surely clue your supervisor in.

One element is not good for salary negotiation: Another job offer.

It may seem like the golden ticket, "Hey boss man, you better give me this raise or I'm going to go and work for ABC company! Look at this incredible offer they made me!"

Here are the simple facts: If you have the brief conversation above with your boss, your current employer will likely cough up and offer you whatever salary request you made, so they do not lose you. However, make no mistake, this is only temporarily. Once you mention that you are going to leave or have considered leaving, you are no longer loyal to the company. They want to keep you around only for strategic value and to possibly train your replacement. No ifs, ands or buts: your days are numbered.

Alternate jobs offers are not a card to be played, they're an opportunity you accept or do not accept.

Whew, a lot of random information on the subject here. Hope you enjoyed it. Comment away!

Saturday, November 8, 2008

Terminated - Fortunately Not Arnold Schwarzenegger Style

As many people may or may not know, I'm making a job change. This is a really exciting time for me. After working at at my first employer out of college for over 3 years, I was offered and accepted an exciting job at a competitor.

It's a very interesting situation to respond to as an employer: If your employee is leaving for a competitor and gives notice (2 weeks, for instance, as I did), how do you respond? Some people might not understand my question.

As an employer, you have a few options:
  • Let the employee leave in 2 weeks.
  • Terminate the employee within a few days of the notice.
  • Terminate the employee immediately.
I personally believe that the second option is best, assuming you have an ethical and productive employee committed working hard after they announce their intent to move on. A few days forces urgency of a brain dump from the leaving employee to coworkers without giving time for the employee to mentally 'check out' before quitting. It also allows time to methodically transfer files to coworkers, prepare projects for hand off and answer any outstanding questions directly.

However, my employer, (as do almost all employers when an employee announces they're leaving for a competitor) terminated me by the end of the day.

The concern, of course, is that your employee is no longer loyal, especially if they are disgruntled. They could potentially steal trade secrets, inventions, patents, customer lists and other sensitive information with hopes of having an advantage at their new employer.

This concern, however, I personally believe is somewhat misleading. First and foremost, company secrets are protected by law. Often when working for technology companies, you give away all rights to inventions, patents and copyrights relating to your job function (sometimes unrelated to your job function!) to your employer. I specifically have an invention (and frankly a really cool one at that) which my previous employer is probably not going to act on. However, I can't mention anything about it to my new employer because I signed away the rights to it upon taking my previous employer's offer. In addition, my new employer asked for and I agreed that I wouldn't give confidential information from my previous employer as a part of my new contract.

Bottom Line

Simply: Professional companies that deal with technology make you sign away anything valuable to them, want to make sure inventions and secrets from previous work stay with the original companies. Good companies don't want lawsuits from stolen ideas - they want original innovation.

Less Than Simply: There are gray areas. Customer lists, for example, could be considered trade secrets. However, its very difficult to legally prove a customer list is stolen.

Regardless of Simplicity: Employees who are leaving know before the employer does. They'll secure whatever information that they want before they give their notice. What they secure isn't a function of time employed after their notice, it's function of the employee's ethics and savvy.

Sunday, November 2, 2008

Adolescence - A Failed Social Experiement

Newt Gingrich, love him or hate him, has an interesting take on adolescence, calling it a failed social experiment of the 19th century.

I never gave much thought to this idea, but it has some merit. I had some interesting discussions this weekend with some peers about it. Many of them were steadfast advocates of a broad exposure of education.

Mr. Gingrich argues a the broad education system has had too high a cost:
The costs of this social experiment have been horrendous. For the poor who most need to make money, learn seriously, and accumulate resources, adolescence has helped crush their future. By trapping poor people in bad schools, with no work opportunities and no culture of responsibility, we have left them in poverty, in gangs, in drugs, and in irresponsible sexual activity. As a result, we have ruined several generations of poor people who might have made it if we had provided a different model of being young.
I'm not really sure that I exactly have an opinion, but I found the article very interesting. I'd be curious to see others thoughts.