Corporate retrenchment

Recent news of corporate giants like Amazon and Nestle cutting thousands of jobs is part of a global trend where organisations are restructuring due to a challenging external environment. Each retrenchment directly affects the employee, their immediate family members and the people they support. Retrenchment is a very painful experience that can happen to anyone in the corporate world. It is not something to wish for, but it is better to plan and prepare ahead of time should the unfortunate event occur, with particular focus on three key areas: financial planning, communication and new employment.

The first thing a retrenched employee should review is their personal finances. It is also important to understand the local labour law for retrenchment and the market practice for compensation.

A rainy-day fund is essential, set aside to help manage the period of unemployment. The size of the fund will vary based on career stage, but setting aside one year of expenses will offer a reasonable cushion in terms of cash flow until a new job comes through. Employees early in their careers should build the habit of monthly savings as a contribution to this fund.

Many people struggle with how to communicate their retrenchment. In the past, it was a social taboo, but not anymore because it has become so common. People understand that retrenchment happens and that it is rarely the fault of the employee, but rather a sign of a corporate culture where employees are treated as expendable. Some affected employees announce their retrenchment as resignation, but this lacks credibility because bad news travels fast. It is better to state that the role was impacted as part of organisational restructuring.

There should also be a plan for communicating with family members, including spouse, children and parents, as each may need a different message. Children can be vulnerable and may need reassurance from the affected parent that they will be alright. Jamie Dimon, chief executive and chairman of JP Morgan, mentioned in his autobiography how he sat with his daughters and assured them that their college fund was intact and that they had nothing to worry about after he lost his job at Citigroup.

Although the experience can be demoralising, retrenchment can also be viewed through a positive lens as a rare opportunity to start fresh. The transition period may offer an appreciation of many small things in life that a busy executive may overlook. It is also the moment to begin the search for new employment with careful planning and disciplined execution.

A list of people in a professional network who may help to secure the next role is essential. At the same time, one should be prepared for disappointment and ghosting from some contacts and former colleagues. Often, the most helpful people are those who have experienced retrenchment themselves. Connections of connections on LinkedIn may also become surprising sources of support in the search for the next job.

Retrenchment should never be seen as the end of life. It is a transition that closes one chapter before the beginning of another. Mental and physical health must be protected during this stressful period. Professional counselling, family, friends and faith can provide much-needed reassurance and calm. The mantra is to stay positive and not give up. As the saying goes, I may fall down, but I know how to get up.

The writer is former regional head of supply chain finance at Citibank, NA, and former head of product and platform solutions at TASConnect, a Standard Chartered Ventures portfolio company