Wednesday, June 20, 2007

Elastic Severance

Following up on my blog from earlier today, my guess is that your imbedded overhead is pretty much fixed, as is your severance package. So the real challenge is making sure your severance can last long enough to allow you to find a new job.

Realistically, how long is that? Well, you can go to the Bureau of labor Statistics and research unemployment duration at They have monthly "UD" data going back to 1946. The good news is that this data will give you the average and median unemployment duration. The bad news is that it isn't specific to age, sex, ethnicity, geography, industry, job description, tenure, salary range, etc.. But at least it can you give you some sense of what to expect. Once you've got an idea of where unemployment duration is, do the simple arithmetic. How long will your severance support you? If that is less than the average unemployment duration, you've got a problem. The reality is that your severance won't support you long enough to allow you to find a new job.

Then what to do? Is there a way to make severance last longer? Think financial engineering. Think creatively. Think legally. Think ethically. The answer is "yes", and if you bear with me a few more weeks, I'll introduce you to a company that has developed a patented underwriting template for the insurance industry to underwrite a transfer-of-risk alternative to funding the costs associated with severance. The cool thing is that there is now a way to take that system and turn it to your advantage. The same company has developed that, as well. Stay tuned. There just may be light at the end of the tunnel.


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