Should I take a voluntary buyout package? Elaine Varelas explores the options

If offered a voluntary buyout package, what should employees think about before accepting? Elaine Varelas discusses how reviewing the options and planning for the future will be key in this situation.

Ask the Job Doc.
Ask the Job Doc. –Boston.com

Q: My company is planning to restructure and we were told there will be layoffs next year—which will likely hit my department the hardest. They have offered a buyout option for people who want to leave voluntarily before then. I’m still mid-career, like my job, and not ready to retire. Should I take the buyout? Or stay and hope I get to keep my job?

A: Some people would throw a party with this offer, and others are exactly in your shoes. And as with so many things, it depends. It depends on your specific situation and future goals. How financially advantageous is the buyout? Will it be easy for you to find a new opportunity? Is the package large enough to fund you through a job search, with enough left to put some money away? How financially secure are you? All of these factors are highly individual and the right choice will be different for everyone. Take your future career plans and financial situation into thoughtful consideration while weighing the options.

Advertisement

Typically, you can expect a voluntary buyout to be a more enhanced option than the later layoff package if you decide to wait it out. Organizations take this approach so that people who want to leave will leave, though most often not everyone is eligible. This lets the company manage the workforce as needed with a lower risk of developing negative employee relations that can accompany a standard layoff. Most companies don’t want to lay off employees who want to be there. From a company perspective, offering a voluntary buyout generates more good will and a positive reputation—both internally and externally—in terms of being committed to employees. Since voluntary buyouts are most frequently offered to and accepted by more senior people, this option will often leave room for more junior people to move up in the organization, which is another opportunity for a win-win situation for both employers and employees. One of the potential downsides for organizations is that high performers might opt to take the buyout package (if eligible) because they know they are highly marketable. For the most part, a voluntary buyout presents a well-timed opportunity for senior-level people to move on and junior-level people to move up.

Advertisement

If your department will be hit the hardest in the restructuring, what do you see as your reemployment options if you plan to continue working? If you are banking on being able to keep your job through the layoff, now is the time to talk to your manager about your status in your role—and your mobility within the company. It would also be wise to look at other departments within the organization and where your skills and interests could be transferable. When companies are looking at voluntary buyout options, they are also likely considering employee redeployment as a strong alternative option to layoffs.

Where you are in your career is also a significant factor in this decision. It’s worth noting that voluntary buyout packages are not frequently offered to early-career individuals. A mid-career person might be offered a buyout package when a restructuring is very department specific, as it sounds like this case may be. Certain people will also be explicitly prevented from raising their hand for a buyout—whether it is an individual whose skills are hard to find, in high demand, or highly valuable to the organization or whether it’s by departments or groups that are crucial to the functioning of the business. Even if you would rather stay with your company, make sure your resume and LinkedIn are updated and that you have a sense of your marketability. If you are ultimately part of a future layoff, you will probably get a fair severance package—but it may not be as financially advantageous as the voluntary buyout.

Advertisement

Only you and your financial planner can advise on your specific situation, but some general factors to consider when facing a buyout option is how long the compensation will last compared to how long a job search would take and what the benefits continuation package looks like.