When voluntary redundancy makes sense
It's a rare bank indeed that's not detaching staff in 2016. At Credit Suisse, which is cutting 30% of employees in London, people say it's a question of seeing who's gone on a daily basis. At Goldman Sachs, the cuts are more gentle, more subtle, but they're happening all the same. So, why not get it over with? Why not volunteer for redundancy, collect the package, and be done with it?
34,000 surplus job seekers, that's what. If figures from recruitment firm Morgan McKinley are correct, there were 33,788 more people looking for finance jobs in London than there were roles available during the first five months of 2016. Leave, and you'll be 33,789, struggling on the margins with the rest. Headhunters certainly have no shortage of horror stories, like the one about the ex-MD from a "tier one bank" who moved to "partner level" at a now defunct hedge fund and has attended 130 fruitless interviews in the past eight months alone...
It's tough out there, basically. You should probably only leave your job of your own volition in the following, very restricted, circumstances:
1. You've done what you came to do in finance and you have something else you'd like to do instead
So you've made your $5m net worth (or whichever amount you're targeting), you've been promoted to MD or senior VP or associate, you've lived out your 20s in a major financial centre. Now go.
"If you've always felt like you wanted to do something else outside of finance, then voluntary redundancy can be a golden opportunity to go and do it," says May Busch, executive coach and a former COO for EMEA investment banking at Morgan Stanley.
The clear and present problem with banking jobs is that if you've been doing one you'll probably have been working so hard that you won't know what you want to do instead. For this reason, Busch says it's an idea to devote time throughout your banking career to thinking of alternatives: "If you really love what you do, great - but if you don't, you want to lay the ground to something else so that when an opportunity to leave comes, you're ready to take it."
2. When you're fine with earning £45k
Do not be deluded: when you leave banking, you will make a lot less money. How much less depends upon what you go on to do, but bear in mind that the median UK salary is £28k and that if you quit to - say - make films, you could be earning £20k over three years.
Philip Landau, an employment lawyer with Landau Zeffertt Weir, who deals with banker clients, says redundancy packages in banking are typically one month per year of service. This is the same as if you're made redundant involuntarily - Landau says there's usually no real benefit to putting your hand up.
And then, once you're out of the market, you're likely to find it incredibly hard to get back in again. For this reason, headhunters caution against quitting if your aim is to make a comeback. "There's a swathe of really talented people on the street," says one headhunter. " - Far more than you'd expect. When you're out of a job you have less bargaining power and headhunters are less likely to find you. What's the worst that can happen if you stay? - Maybe a zero bonus. It makes no sense to leave."
Only leave, therefore, if you're prepared to walk away from all hope of working in finance ever again. "If don't want to stay in the business, take the package," says Busch. "- If you do, don't." Just don't delude yourself that you can do both.
3. When you're probably going to get laid off soon anyway
If you're thinking about voluntary redundancy, chances are that you're in the zone. And if you're in the zone, maybe you should take control.
"If you're offered voluntary redundancy, it probably means that your role is not critical any more," says Victoria Macpherson, a former banker and recruiter turned coach. "This means that you're hanging on, and that won't make you feel good. Sometimes it's best to get out with your stock, to take your redundancy package and to work out what you're doing next."
If you're a protagonist in your own layoff, you might feel better about it, agrees Busch: "The beauty of voluntary redundancy is that you have your confidence and emotional positivity intact. The psychological savings are huge," she says.
Huge they may be, but the psychological benefits of mastering your own employment destiny probably won't outweigh the financial disadvantages of being locked out of the lucrative finance industry indefinitely. Go carefully. Voluntary redundancy is rarely wise. Remember that in the months to come.