How to Negotiate a Severance Package

Getting laid off is never fun. In difficult economic times layoffs are all too common. Companies have a need to improve their bottom line for any number of reasons but remember, it is at your expense that the plan is being implemented. The best way to mitigate your personal pain is to negotiate the severance package by customizing it to your personal needs.

To negotiate a severance package that best fits your needs identify how a layoff is going to impact you personally.

Sure, you will be out of work. But what does that really mean? The company will typically be offering a universally equitable package to all affected employees.

You need to consider the layoff a personal situation and put aside company loyalty and resist the argument that they are doing what is best for the company. That may be true for the company but as of the layoff notice you are no longer a valued member of the company. You will soon be on your own. You will want to negotiate a severance package customized to your personal needs.

Before accepting the severance package as offered consider enhancing it by taking these two essential steps.

1. Assess your situation:

Evaluate your potential for finding another job, how long it might take, if you need additional training or schooling, if there is a likelihood of having to take a cut in salary or benefits. Getting back to work has cost in time and loss of income and even job search expenses. Knowing what you are likely facing in terms of expense will help you assess the reasonableness of the severance offer from your perspective.

Evaluate your personal needs for things like medical coverage, help finding another job through professional outplacement support, continuing use of a company car or computer for a period of time, the right to continue to use an office while you search for a new job, or other support that will specifically help you between jobs or to find a job.
When you negotiate a severance package consider asking how the company might help you find your next job.

Often the Human Resource Department will have contacts and resources that they use to find people which can also be used to find job openings. Just having the contact information will help you; getting a paid outplacement service is even better.

If you or a family member has an immediate medical situation or need you may want to see if you can get that resolved before you are removed from the company health insurance plan.

2. Prepare your counter-proposal:

Consider whether you have the leverage to ask the company to increase your package or if you need to work within the parameters of the offer extended. Many companies are limited in their capacity or flexibility when it comes to large layoffs. When considering how to negotiate a severance package you will need to be sensitive to what the company is able to do.

If the company is limited in capacity or is facing bankruptcy, your proposal may need to trade off some of the offered package in exchange for specific continuing benefits that would make your transition easier for you. Often the cost to the company for continuing a lease on a car is far less than the cost to you of leasing or buying a comparable car. The company should not care how they compensate you as long as the total cost to the company remains static.

If the company has the ability to deal individually when negotiating severance packages in order to do what it can for their departing employees, you can counter by adding continuing benefits that make your unique situation easier to absorb personally.

In either event your objective and the argument you are making to the company is to clearly explain why certain continuing benefits are critical to making the best of a difficult situation essentially caused by the company. They are laying you off so the company can improve its bottom line. That means they are thinking about the company's welfare; not yours.

You are entitled to ask the company to be a little more expansive in how they take care of you as they implement their corporate improvement plan. Make your case civilly, professionally and backed up with specific reasons for the trade-offs or additions you feel appropriate in your case.

Remember, the offer of a severance package is only the first round in a negotiation that is very important to you.