"Bouncers" Author Interview

Back in December I posted a review of the fine book Learn to Bounce by Anita Caputo and Lee Wallace. The book gives valuable advice on how to overcome a job loss and again find fulfilling work.

Anita agreed to answer a few questions I had after reading the book. Here are the answers. There are some especially valuable comments about how to deal with finances before and during an unexpected job loss.

1) Why did you and Lee write this book? What was lacking out there that you felt it worthwhile to put all that effort into a book?

We wrote the book to provide hope and inspiration to people who are in job search mode. We decided to write the book when tens of thousands of people had been laid off when the bottom dropped out of the global high-tech industry. The unemployed had no productive outlet in a market that offered few, if any, jobs that suited their skills and experience. We wanted to restore people’s confidence and encourage them at a time when there was little good economic news. We wanted to highlight that some individuals did find work – not just any job, but work that fit them well. We wanted people to know that “If they can do it, you can do it!” even during the worst of economic times.

FYI, as the USA moves into recession and thousands of jobs are being lost, particularly in the financial sector due to the credit crunch, the stories and solid advice apply equally to anyone experiencing unemployment.

2) What surprised you the most, or differed the most from your preconceptions about the realities of being laid off?

First of all, I never imagined that it could happen to me. Isn’t that typical? And I still believe that if we had not had such a huge economic downturn, I would still be working in high-tech wondering what I would really want to do.

When I saw others being laid off, I always thought how lucky they were to be collecting a severance package and having time off, particularly if they were laid off during prime vacation times. Here is what I learned.
a) Being laid off is not a vacation. Finding another job is a full time job!
b) Severance/redundancy payments are not winning the lottery. If you are out of work for an extended period of time, and/or if you have large financial obligations, you will need every penny of what you were paid and maybe even more.
c) I find myself being more empathetic and I will “go out of my way” to help someone who is laid off. There is nothing like “walking a mile in another man’s shoes” to know what it is really like. Providing someone who is looking for work with connections to other people who can help them, or to potential jobs is very important to me.
d) I will treat someone who is laid off from a job the same way I would treat someone who has resigned from a job. When someone is laid off, I recommend you have a celebration, take them out for lunch or follow whatever ritual you would normally follow. Often when someone loses their job, they feel like they have done something wrong (even if/when they haven’t). Treating them equally helps to reduce the stigma a laid off person feels. It helps to bring proper closure to what was an important part of their life. There are two things people did for me are very memorable. One, a colleague that I worked very closely with sent me flowers saying “This is the first day of the rest of your life”. Secondly, when I went out for lunch with someone who was employed, I was very grateful when they volunteered to picked up the tab.

3)What was the greatest challenge in writing the book?

Getting it done! As we have often said, Lee Wallace and I had real jobs. We did not get paid to write. We had to make the money to pay for the book.

Staying motivated was also a challenge. Working as co-authors had many benefits. One significant benefit was “picking up the slack” or helping to motivate the other person as/when required.


4) What are the main financial bits of wisdom coming out of the experiences of the layoff-ees?

Save while times are good. Definitely save and cut back on expenses, particularly “if the writing is on the wall” and you think you may be laid off.
Pay off any debt that is not tax deductible, i.e. invest in something that makes you money. If you are debt free, you will have the financial flexibility to pursue the work and life style you want without feeling pressured. If required, have the courage to ask for financial assistance from family and friends.

The following tips are direct quotes from the people we interviewed in Learn to Bounce:

• Control your costs if you get laid off, to minimize your debt.
• Be prepared to start at the bottom if you go into a new field.
• Pay attention to your finances. A projection of expenses and income will tell you where you stand.
• Cut back expenses if necessary.
• Save and invest when times are good.
• Accept support from your family and friends.
• Don’t expect the same salary you were making in high tech before the downturn.
• Be prepared to start again from the bottom, if you are changing fields.
• Get your finances in order when times are good. Those who were prepared didn’t panic when they got laid off.
• Be financially prepared in case you get laid off. If you do, cut back immediately.

5) What proportion of the people in the book would still be happily in high tech if the meltdown had not happened?

Your guess is as good as mine. I suspect almost all. The reason I say that is that each and every one of the people we interviewed were relatively content with their work until the down turn happened. If you like challenge in your work and a positive work environment, which most people do, then the high tech environment satisfies your needs. High tech is a fast paced, challenging and exciting sector to work in. When people were laid off from high-tech during the early part of this decade, due to the terrible job prospects in the sector, people had the time, opportunity, and in some cases the financial means to explore other career options.

6) Is there any way to prepare people for a world of layoffs; who should do it - the employer, schools?

Interesting question. Being prepared for “a world of layoffs” is really being prepared for “a world of job change”. The only difference between being laid off and quitting a job is who chooses to initiate the job change. I think life experiences have prepared generations Y and perhaps X to live in a world of change and to expect a portfolio of careers. Younger workers typically do not expect to spend the rest of their life with one employer and certainly not in one job.

Regardless of who initiates a job change, the keys to landing another job quickly and easily are clarity of what you want to do next, and leveraging your social network to land the work of your choice.

7) Do you think there's a conflict between loyalty to the employer and loyalty to yourself?

Not at all. Loyalty to yourself is loyalty to your employer. Assuming that loyalty to yourself be working in an area of interest and doing work you are passionate about, then you will love your work. In turn you will do your best and your employer will love your work too! As long as what a person enjoys doing and the environment they like to work in, matches what an employer requires and what they offer, everyone wins.

8) Is loyalty to the employer an outmoded concept? How do you think people should manage the balance between what the employer wants you to do and what you want to do? Has your experience being self-employed influenced your perception of doing what you want vs what the employer wants? For instance, as a self-employed person are you able to do exactly what you want all the time?

Loyalty to an employer is not an outmoded concept. See #7. The definition of loyalty in the dictionary is “a feeling of devotion, duty, or attachment to somebody or something”. No where does it say for “how long”.

It is up to you to be clear about what you enjoy, what you want and what you don’t want in a job. Likewise it is up to an employer to be realistic and clear of the kind of work expected and the work environment it can offer. The key is to have a perfect match. If there is an aspect of a job that you perceive as not being totally aligned with what you think you want to do, it may be worth taking the risk and trying it. The reality is that until you actually try something, you really don’t know how much you may enjoy doing it. Recently a reporter told me and Lee Wallace a story of how she accidentally fell into a career of writing. She never thought she would enjoy writing until she did it.

There is always “stuff” that we prefer not to do. For some it can be the basics of caring for yourself, like cooking, cleaning or exercising. If you feel like you are leading a fulfilled life, you are finding a way to get the necessary things done, while staying focused on the things that fulfill you; doing the things you value and enjoy most. Work is part of living your life in a manner that fulfills you.

With respect to myself and self-employment, self-employment gives me flexibility in my schedule that suits my family life most of the time. I am usually here for my teenage daughters, the other relationships that I value, and for my volunteer activities. That being said, there have been many times that I have missed parent teacher interviews or other important school events because I was out of town. Those important responsibilities get completed at another time that suits my schedule or my husband is able to fulfill a responsibility for us. Just like everyone else, I am always managing my life and my schedule to strike that right balance.

9) Any more book projects on the go or in your head?

There is definitely more to come. We live in a world filled with opportunity. The challenge is choosing the work/project that I want to do next, the work/project that I am passionate about, and the work/project that will provide the financial rewards and life style that I desire. The beauty and challenge of self-employment is that the choice is mine. That choice comes with 100% responsibility for the results too.

As I write the answers to these questions, I am leveraging my network to determine what I will be doing next and how.

Book Review: Learn to Bounce by Anita Caputo & Lee Wallace

Bounce is a sneaky book. Read it straight through quickly and it will seem a bit mundane, dry and repetitious. That's a mistake. Read it slowly, one short case at a time, and you will find yourself drifting off into reflection on your own life and career. That's quite therapeutic.

Three quarters of the book consists of two to four page stories of twenty-eight real individuals or couples (most often with their real names and given some of the details they reveal, it was a brave act to do so ... but then I always found tech work culture and people to be more direct and open) going through a layoff and ultimately successful job search after the high-tech bubble burst. One of the authors, Anita Caputo, tells her own story. From high-tech job she has now made the career transition from IT business manager to career coach, motivational speaker and management trainer. Disclosure: I am proud to say that Anita is a former colleague at the big N and a good friend. Fellow author Lee Wallace brings his 30 years experience as a career counselor and coach to the book.

The other quarter of the book consists of the authors' tips and strategies for success in finding new work. The book focuses on the impact of emotions and state of mind since the authors believe through their experience and that of the interview subjects that those are the critical elements of a successful bounce back, not just into any old job, but something that is fulfilling. Curiously, the presentation and writing style is not emotional, it is very matter of fact, but maybe that's a reflection of the philosophy of successfully bouncing back - "_ _ _ _ happens", the sooner you accept it and move on, the better off you are.

The large number of stories allows the authors to present a very wide variety of types of people, obstacles and eventual outcomes. Many are more difficult situations - people highly specialized, mid-forties or fifties, lengthy time with one employer (and thus not used to the job search process), children to support, medical problems to deal with, spending years out of work (technical skills getting rusty etc).

All are success stories, there are no tales of permanent failure and woe, though hardships along the route to success are not glossed over. No doubt, the tech meltdown caused some to fail (I know some tech families ended up staying in the City of Ottawa's homeless shelter, though I don't know what happened ultimately). There are many ways to fail. The authors have decided to focus on the positive.

Despite all its subjects coming from high-tech, this is not a book about high-tech. Company names are completely absent from the text, evidently a deliberate attempt to distance the message from the specific industry. The significance of high-tech is that the meltdown provoked a quite unique set of extreme and highly instructive circumstances - educated, skilled and experienced people suddenly faced a situation where their industry and technical knowledge were more or less useless because there were almost no jobs in the sector. They were thus forced to be imaginative and resourceful. But the gratifying result is that they succeeded anyway.

The importance of networking appears consistently in many stories, how making connections through others produced far more results than browsing the Internet. The interviewees and authors say over and over that the time to do networking is always - never to stop. When I was out of work, I found networking to be the most awkward and difficult of things to do. But it did get me at least one job and played a role in the other job I found after my layoffs. Networking is a two-way street - being able to help others find a job is deeply satisfying. In financial terms, it could be termed social capital. Just as you have financial capital, which store financial assets to be spent when you need them, and human capital of training, education, knowledge, experience and skills, which store value of use to employers, you have social capital of connections with people, favours and services rendered, which you can lever/"spend" to find a job (and can be extremely useful in doing a job as well). The authors note that quickest to find work were those with the best networks in place.

In terms of personal finances, the book mentions in passing a number of principles that seem self-evident but they sure help or hurt if you do them or not so the reminder is salutary: having savings to fall back on relieves some of the pressure; having to take on debt during unemployment "rots the gut"; investing in high-tech while working in the sector is a stupid thing to do (mea culpa, I did it), i.e. diversification is more important than "investing in what you know"; household expenses can be cut drastically if necessary (one family cut down to a third of what it spent before the layoff), ideally when the warning signs appear; the time to pay attention to family finances is during good times, i.e. start saving, mind diversification now and if you are too busy working to do it yourself, hire a good advisor.

If you ever get caught in a layoff, you need this book. It will remind you that, no matter what your circumstances, you can bounce back and it will guide you how to do it. Others did it, you can do it.

If you are working in a job you don't like or you feel in a rut, there's a fair chance you will get laid off sometime to relieve you of this problem (e.g. in my mini survey on this blog half the respondents had been laid off at least once). This book will give you ideas what to do next to find something better and make you feel thankful for the layoff.

If you are happily working in a great job (as I was in high tech before laid off), this book will help you understand that being laid off is not the end of the world. It is not even necessarily a net negative. Happiness does not come in only one job. In short, the people in this book exemplify the philosophy in the Tom Hanks line of the movie Forest Gump, "Life is like a box of chocolates. You never know what you're gonna get."

My rating on this book: 4.5 out of 5.

To order a copy on-line, go to the LearntoBounce website. On Chapters it seems to be "temporarily unavailable". Update Jan.12 - Chapters has finally fixed the problem and it can now be ordered there as well.

Job Loss Survey, Emergency Fund and Bounce Book

Thanks to all who ticked a response to my latest mini survey about how many times you have been laid off during your working career. Though the survey is unscientific and comprises a very small sample, the fact that about half of you have been laid off at least once confirms to me that planning and for and making provision for a job loss is important for most people, as I had concluded in my previous post on Emergency Funds: Job Loss.

In a few weeks, I'll be reviewing the newly published book Learn to Bounce, which is about the experiences of a whole raft of people caught in the technology meltdown of 2000, how they turned a negative into a positive in their life. Written by Lee Wallace and friend and former colleague Anita Caputo, the very concept of the book - to show with real examples that a job loss disaster is not necessarily the end of the road - appeals to my philosophy: never give up and never be a victim.

Why an Emergency Fund? Part 2: Job Loss

This is the second in a series looking at the need for a special emergency fund to tide one over through various crises. Part 1 looked at Death.

Today's installment examines involuntary job loss, aka layoff, firing, redundancy, downsizing - take your pick, they all can hurt just as much financially and perhaps emotionally as well. Maybe some forms of suddenly voluntary quitting a job, like abuse or harassment, can be included too, the principles and effects are the same.

In keeping with the pattern of the series, I'll first look at the probability of the event, then the potential cost/consequences and finally the alternative risk responses to decide whether an emergency fund is needed at all and if so, how much is needed for this component. At the end of the series, I'll add the results up and deal with what form the fund (if any) should take.

Event #2 - Job Loss
Probability - There is no single answer for everyone, it depends on your circumstances and you must figure the chances for yourself.

If you are retired, then it's pretty hard to get laid off, no? Cross yourself off as needing an emergency fund because of job loss. Even the 17% or so of retired people who do work mainly seem to do so because they enjoy it, not because they need to, according to the Fidelity report I blogged about a few days ago.

Similarly, if you are self-employed you cannot really fire yourself, though a lack of work caused by external forces can happen and variations or gaps in income are part of the landscape for most. The self-employed contractors and individual consultants that I know tend to keep a financial reserve to even out cash flow from assignment to assignment. But what follows is mainly about and for those working for an organisation as an employee.

The chances of permanent layoff vary a lot according to a number of factors, as revealed in Stats Can's study Permanent Layoff Rates. Here is a rough summary:

Chance of being laid off within the next year -

• men 7-8%
• women 3-4%

Relative to the average, + = higher chance, - = lower
+ for younger people
+ higher paid
++ small firm, i.e. double the chance in a large firm
+ manufacturing (the rising loonie effect)
++ primary and construction industry
- public services
- highly educated

The chances of being laid off changed very little (less than a percentage point) between 1989 and 1999, both good periods for the economy. As the study says but doesn't quantify, layoffs rise during recessions. The study only states the risk of layoff within the next year, not a whole working career, which must be a lot higher. In sum, there is thus a significant chance that a person, on average, will be laid off sometime in their career. The risk is not negligible.

Special circumstances may arise at any individual organisation that can cause a very high risk of being laid off. I'd say that almost always, those periods of threat are very visible to the average employee and are also known many months, often years ahead. In my own case, I have been laid off two and a half times in my career - once, in a federal crown corporation that was abolished through a policy change, which took years from idea to action; once, in the high tech meltdown when the internal rumblings and the external slaughter started 8-10 months ahead of my own walk down the plank, and a half once (through an internal transfer I was able to escape my abolished job), at a municipal government where the council's budget problem was highly public knowledge six months ahead. When those storm clouds start building, don't ignore them!

Cost - The impact of job loss is without question enormous for everyone (again excluding retired people) as one's pay is the largest, most often the only significant, source of income to live on. Take your net pay and that's the effect you will feel. It is thus the multiple to use in figuring how many months - from zero upwards - you will need.

Risk Response -
How long will funding be needed?
Before looking at alternative responses, you need to estimate for how long you might need funding. That's a tough one because getting a new job and ending the emergency depends a lot on how much smart effort you expend on the job search and a little on luck (not the other way round ... remember the quote, ''The harder I work, the luckier I get'' attributed to both film mogul Samuel Goldwyn and golfer Gary Player?) It is possible to be out of work for a year or more. An often quoted rule of thumb is about 1 month of search for every $10,000 in salary. My own two layoffs lasted eight months and zero months.

I'd say a year is the maximum I would consider a job loss emergency to last. Beyond that it's no longer a short-term emergency, it's a major life crisis and much more drastic action than a simple emergency fund will be required - e.g. selling and moving home to a new city, career change. Of course, long term, short term it doesn't matter, one still might need to live without a job income and the possibility of such events is a compelling reason to save and invest money. Retirement isn't the only time in life when a person might want to live off savings.

What sources of funding do you automatically receive? These obviously reduce the need for a fund.
In Canada today, we are lucky to have sources of income support to which we are entitled:

• severance pay - for salaried workers in a permanent job, there is a rule of thumb of about one month's pay for every year of service, or for unionized workers it is normally stipulated in the labour contract
  
• Employment Insurance (EI) - the federal government's program kicks in when your severance expires (i.e. right away if you don't get any severance at all) and if you have worked long enough to meet the qualifying requirements detailed here; only about 20% of people who lose their jobs are ineligible for EI according to this 1999 Stats Can study; some of the key points of the EI program are:
• two week period at start of no benefits - the deductible
• max 28 days or less before the first cheque arrives
• payments last from 14 to 45 weeks
• pays 55% of insurable earnings (capped at $40,000 p.a.) up to a max of $432 per week

In other words, these two sources might take care of the funding requirement by itself, as it did for me.

Responses -

1. Reduction of household expenses - most budgets have quite a lot of discretionary spending but of course this is only a partial solution; battening down the hatches is better done once the warning signs appear not when the storm breaks of course
   
2. Job loss insurance - some companies in Canada offer interest protection on line of credit borrowing e.g. the Bank of Montreal's Disability Plus Insurance, some offer balance protection on credit cards e.g. TD Visa's, and others mortgage interest payment insurance e.g. Canada Mortgage and Housing Corp's Mortgage Loan Insurance, Reliant Insurance's Job Loss Program or North Shore Credit Union's Mortgage Insurance; you can thereby obtain cover on loans for house and car, which are the most important and largest expenses, apart from food, that any family is likely to have. Job loss is one of the main causes of foreclosures in Canada. You will be obliged to get insurance if you have a high ratio mortgage but if you are not, get it anyway, it's worth it. Apartment dwellers can obtain lease insurance, such as that of Canada Life.
   
3. Enhance your own human capital - capital is a store of wealth and just as you can have financial capital you can make yourself a more valuable commodity by constantly upgrading skills, competencies and job experience. Your usefulness is what organisations pay for and instead of waiting for an organisation to direct you, take charge, look around and get going where the demand will be and where you have an interest. You might either avoid layoff within the organisation where you are presently or be able to bail out faster at the signs of trouble. Job loss may then even become an opportunity - a programmer who reported to me was also laid off like everyone else, received his severance and then discovered he could make a lot more money as a contractor, pick the jobs he enjoyed and which enhanced his future marketability. He also made sure to set aside time and money for technical training to make sure he would stay in demand. So much for a need for an emergency fund for him!
4. Diversify - whether it is having both partners in a couple earning or having more than one source of income yourself, that can reduce the impact of the job loss. Whether it is investing in real estate to rent out, turning a hobby interest into sideline business or something else it is an extra, independent source of income
5. Family - sometimes mom and dad, or other family members, are able to help out; for some younger singles, moving back home until a new job is found can become the solution
   
6. Don't take a job you hate just because it offers job security - you will be miserable every day, that's not what life is about

In short, for a minority (less than 20%), depending on their circumstances, there may be a need for an emergency fund of up to a year to cope with job loss. For me, an emergency fund for job loss has never made sense even though I was laid off twice because I received severance packages and I had other savings by the time it happened.

One big problem is that in practise I would guess those who could most benefit from an emergency fund are the least able to save to have one: younger workers in cyclical, non-permanent jobs.

In anticipation of the discussion on how to provide the fund, one thing I would not recommend in the job loss situation is to rely on a line of credit. Not knowing when a new job will be found and the emergency will end makes the possible accumulation of debt open-ended. There is a limit to what lenders will give out. And it is stressful enough to be out of work without having the worry of a growing pile of debt.

Why an Emergency Fund? Part 1: Death

It seems to be a common truism or rule of thumb that everyone should have at least three to six months of living expenses in the form of cash. A quick Google search uncovers such advice at About.com, Bankrate.com, bloggers such as ChristianPF.com, TheSimpleDollar.com, the StingyInvestor, mainstream financial journalists like Jonathan Chevreau and professional financial planning guides like the CF1 Manual (unfortunately not available on-line) of the Chartered Insurance Institute's Certificate in Financial Planning in the UK. There is at least one dissenting voice at the Financial Blogger who states that one need only put in place a line of credit. But even he doesn't dispute the basic premise that there is such a thing as a financial emergency, an unexpected event that can provoke dire consequences without a fund.

Being the sceptic that I am, I will take a closer look at how unexpected and how dire such ''emergency events'' really are. Risk analysis and risk handling are a well established discipline in industry for project management (I knew that PM certification would serve me well some day...) so why not apply it to personal financial management? That involves identifying risk events, assessing their probability, the magnitude of the negative consequences, the alternative methods of dealing with the risk (which includes everything from preventing or actively reducing the chances of the risk occurring, transferring the risk to someone else at a price or simply doing nothing and accepting the chance).

Event #1 - Death
Probability - Nowadays, the life expectancy at birth is roundabout 80 years for men and women in Canada. That means it is unusual for people to die prematurely, much as we grieve for those unfortunate few. The younger you are, the less chance of dying soon. Insurance companies know this and charge less for life insurance for young people. In his fine book Insurance Logic (which I have reviewed here), Moshe Milevsky presents some data from Stats Canada that shows how rare is premature death. Though the data is from 1996, there probably has not been a big shift to today; if anything, I'd guess early death is a little less likely. Below is the table reproduced. It certainly surprised me.

What is the Probability of Dying Within the Next 10 Years?

Current Age	Female	Male
30	0.5%	0.9%
40	1.0%	3.0%
50	3.0%	6.0%
60	9.0%	16.0%
70	22.0%	35.0%
80	50.0%	66.0%

Cost - The first direct effect is the cost of the funeral and burial. Estimates range from $4,000 to $15,000 (e.g. Sandra E. Foster in her book, You Can't Take It With You, p.283). It seems the most common number is $5,500 to $7,500. This is a number which obviously can be controlled to a significant degree depending on the options one chooses.

The second effect is the possibility that the person dying may have dependents, for whom the disappearance of the breadwinner may have disastrous consequences.

Risk response -

1. First, note that by the age when death becomes a much more likely event, people will have reached retirement age and probably have accumulated savings or investments of other kinds to pay for funerals. Financial institutions will almost always allow the executor or family members to access such reserves of a deceased person for funeral expenses so it doesn't have to fall on you to pay for someone else before an estate gets freed up by probate. Investments can be sold within a few days and the money made available long before the bills come due.
   
2. Second, as noted above, death expenses can be kept at the lower end and that can decided at the time of the event.
   
3. Third, a person can avoid the problem by pre-paying for funeral expenses to a funeral home. The amount put aside can even grow tax-free waiting for your demise, a last comforting thought for those scrooges among us. Since for all but one person in history (and even that is disputed by some), death is a certainty, if you have the capability of putting money aside for an emergency fund then you can also direct that money to pre-paying your funeral.
4. Fourth, you can buy life insurance or just funeral expense insurance. This can spread the cost out in small monthly payments. Maybe you will even die early and get a bargain.

The response to the support for dependents should be dealt with through insurance, not an emergency fund. Death isn't temporary so a short-term fund of six months of living expenses won't do the job.

In short, death isn't a good reason to have a highly liquid emergency fund.

But there are other possible reasons that I will examine in the next posts: job loss, home repairs, injury or illness, car repairs, divorce/separation, legal problems, care for parents/relatives, pregnancy, wedding. And once all these have been reviewed we'll see where that leaves us overall.