Historic inflation, rising interest rates, a Pandemic and a War. The results is a disintegrating stock market (housing market will follow) and downward spiraling economy. From many respects, I have seen this movie before (2008). In the job market, the pendulum has swung and layoffs have commenced. Here are five important lessons we can learn from a Recession.
- The 25% to 50% Salary Increases are Over – Everybody out of the pool, the party is over! For the past two years people have been asking for massive raises and getting multiple offers. That is awesome…until it’s not. People that were overpaid now have a huge target on their back. They will be the first to be laid off as companies trim payroll by 10% to 20%. Overcompensated people go first.
- Counter-Offers – Such a terrible career strategy, yet one thousands utilized during the Pandemic. Candidates would interview, get a job offer, and then run back to their current employer, “If you can match this, I’ll stay.” Let me explain why that is a bad strategy. First, almost 100% of those taking counter-offers are terminated within 12 months. Do you think you employer really wants to be leveraged into give you a raise? They will keep you around just long enough to replace you. Second, now that the economy is spiraling down, who do you think get laid off first? Those viewed as disloyal. Third, you wasted the time of the hiring company and the Executive Recruiter. Burning bridges is a terrible idea, especially in the gaming industry where everyone knows everyone. Karma is a ruthless gangster.
- Your Network is Your Lifeline – It’s amazing how many people believe, “It won’t be me!” News flash: No one is indispensable. Today you are family; tomorrow you are terminated and they are enforcing your non-compete. Stay in touch with your peers. Did you know that 85% of job opportunities come through your professional network? Develop a strong relationship with one or two Executive Recruiters. They have 10% of the career opportunities, and typically the best 10%. These are your lifelines during a Recession. Relationships trump transactions.
- Don’t Stockpile Debt – With rapidly rising interest rates, those with variable rate mortgages and credit card debt are going get clobbered. Consumer and credit card debt are at record levels. Keep your overhead low so if you lose your job, you don’t lose your house. As my Dad used to say, “If you can’t pay cash…you can’t have one.”
- Always Have a Rainy Day Fund – Have a six to twelve month rainy day fund for when the storm hits. I was fired exactly one time in my life. Back in the 1990s when I tangled with my Boss. The most embarrassing part was that I carpooled, so I had to sit on the curb for an hour waiting for my ride. As I sat on that curb I made two commitments. First, I would always have a rainy day fund of 12 months free cash flow. Second, I would never work another day in my life at a job that made me unhappy.
