5 Components of a Good Layoff Contingency Plan

I’m pretty sure than no one actually wants to get laid off (unless you’re planning world domination or something). So naturally, few people actually think about what they would do after a layoff.

Fortunately, doing a bit of contingency planning can have good benefits:

• Reduced stress now because you’ll feel better prepared.
• Less stress later because you’ve planned ahead.
• A clear roadmap to follow in an already tough and emotional time.

When my wife was laid off last July, we had the beginnings of this plan in place, and it helped us navigate through a stressful time and emerge on the “other side.”

Here are five components every good layoff plan should consider:

1. A checklist for your old job

Some layoffs are a like a respectful breakup, while others involve escorts by armed guards. Whatever the case, you should be ready to wrap up loose ends at your old job and do it quickly. Sticking around or coming in to do paperwork will be awkward.

Some things to consider are on my original layoff checklist, and include:

• Collecting personal files from your work computer and physical belongings from your desk.
• Grabbing any files (with permission) that you’ll need to create a résumé or professional portfolio.
• Arranging to transfer any insurance or retirement benefits to your name, including health, life, and your 401(k) plan.

2. An income replacement plan

The biggest problem with unemployment is the obvious lack of income. How do you plan to replace the income on a temporary basis?

Ideas you could consider for your plan include:

• Filing for unemployment insurance with your state.
• Using a portion of your savings/emergency money to fund your expenses.
• Selling off assets like clutter from your home or big-ticket things such as cars and boats.
• Other ways to raise money fast, including raiding your retirement savings (not recommended) or chasing down outstanding family loans.

3. A solid emergency budget

The other side of the financial equation is money going out. It’s a good idea to prepare an emergency budget that will roughly match your temporary income level. (Or better yet, match your temporary income level to the minimum amount you’ll need from your budget).

Here are a few things you could do to create a budget:

• Review all discretionary expenses, like eating out, entertainment, service subscriptions (Cable TV, music, etc.) and trim or eliminate where possible.
• Look at the “big things”—rent or mortgage payments, car payments, major insurance, and see where you can pull back.
• Temporarily suspend some savings efforts like retirement or emergency stashes.

4. Plans for a new job search

Job hunting in a recession is not an easy task, but having a plan specific to your industry can help. Will you need to create a portfolio, for example, or submit your name to specific agencies?

Here are a few other tips to consider for this part of the plan:

• What are the best networks to start your search in?
• Will building an online identity help your case? How will you start?
• Would you consider self-employment, and what would you need to begin?
• What are other industries or markets you could start looking in?
• How will you fund the financial needs of your search (e.g. travel, printing, etc.)?

5. A good long-term plan

The unfortunate reality of today’s job market is that you may be unemployed for the long haul. Part of your layoff plan should address some ideas for a long-term approach.

For example, you could think about:

• Would you consider self-employment or try to start a business? What are some possible areas/industries you’d look at?
• Could you go back to school and how would you pay for tuition and your regular living expenses?
• If your spouse works, could you become a stay-at-home parent and/or home school your kids?

The goal isn’t attracting a layoff

Readers of “The Secret” are going to start telling me that I’m trying to manifest getting laid off. That’s not the idea here.

The point is to spend a couple of hours of your time now and decide what you’re going to do if a layoff hits. It’s much better than complete paralysis later on and inaction while the world passes you by.

Your plan won’t be a step-by-step checklist of how to work through a layoff. It’s meant to be a rough guide of how you plan to get back on your feet and general ideas to follow. You’ll still have to make up most of the journey as you go along. 🙂

Go write yours!

Photo by aflcio