THE SOUTHERN CALIFORNIA JOB MARKET: WHERE THE JOBS ARE : STRATEGIES : Handling a Buyout : What To Do If They’ll Pay You To Leave the Company

The announcement sets the office abuzz. To coax employees into quitting, the company is offering early retirement and voluntary severance plans loaded with financial incentives.

Does that mean it’s time to take the money and run? Depending on the circumstances, it can be anything from an easy call to a decision so overwhelming that it paralyzes an employee.

Still, even for people facing the trickiest choices, there are basic criteria to consider when an employee buyout proposal is on the table.

For people who plan to keep working, it comes down to weighing the buyout deal against two factors: their probable future with their current employer if they stay, and their likely prospects in the job market if they leave.

Probably the most important fact to keep in mind is that “there is a risk in staying as well as in going,” says Sandra Young, co-owner of the Tustin consulting firm Career Focus.

That’s because employees who don’t get out while the getting is good often are laid off and receive skimpier benefits, if any, later on. A recent survey by the American Management Assn. showed that 63% of the polled companies that cut staff through buyouts, layoffs and other means in one year wound up slashing the staff even further the following year.

“You have to take a hard look at yourself as to where you fit in the organization,” says Steven Weinstein, the Chicago-based national director of personal financial planning for the accounting firm Arthur Andersen & Co. “What happens if, six months from now, the company goes to an involuntary plan?” In other words, if you stay, might you be laid off later?

Even for employees confident of surviving layoffs in the short term, there is the longer-term future to consider. Firms that offer large-scale buyouts often are struggling, and there is little assurance that cutting staff will turn their fortunes around.

Early retirement and voluntary severance programs widely differ from situation to situation, but they follow certain patterns. Early retirement plans, mainly aimed at workers in their 50s or 60s, commonly offer employees a cash payment, continued medical benefits and an increase in pension payouts to offset the financial impact of retiring sooner than expected.

On the other hand, voluntary severance--also known as voluntary separation--generally provides just a lump sum payment pegged to an employee’s tenure with a company. The employee might get, say, two weeks of pay for every year worked.

Yet voluntary severance programs, particularly when they are directed at small groups of employees, are more flexible than early retirement packages, which are governed by federal pension law. In many cases, workers can negotiate for extras that make it easier to head out the door.

Rule No. 1: Try asking for an extra week or two of pay for each year worked, particularly if you have been offered the standard two weeks per year or less. Also, if you are giving up a company car or need office equipment, see if your employer will sell it to you at a cut-rate price. You might also ask for employer-paid financial planning or career counseling advice, along with continued medical coverage.

The decision on whether to accept a buyout is relatively straightforward for people interested in retiring rather than going to work for a new employer. For them, it’s mainly a financial question: Can they afford to live on the money and benefits they will receive from the buyout, together with their other investments and savings?

Rule No. 2: Be sure to check out tax issues such as the higher tax bracket that you may land in after getting a buyout.

Buyouts also appeal to employees aching to try something new. Apparently for that and other reasons, recent buyout programs by employers such as the Los Angeles Times, Los Angeles County and others across the country have attracted more employees than expected, despite the difficult job market.

Data processing specialist Robert A. Hehmann, 36, of North Hollywood, decided to leave Bank of America after the company offered him a buyout or a transfer to the Bay Area. He had managed a 75-person data processing unit for Security Pacific Bank, which was acquired by B of A, but felt confident that he had a solid future with the newly merged company.

Still, B of A’s buyout offer of three weeks pay for every year of service--which together with his accumulated vacation time, would bring him almost a year’s pay--was too hard to turn down. After more than 13 years in banking, he was interested in checking out data processing positions in other industries. “It’s very rare to have that opportunity, and have someone else foot the bill,” he says.

Hehmann left B of A’s payroll on Feb. 1, but given the feelers he’s already received, he hopes to land a job by the end of March. “I’d certainly like to keep some of that severance in my pocket,” Hehmann says.

Things can be tricky, however, for people with less sought-after skills. Along with trying to decipher whether they will be laid off down the road if they don’t accept the buyout now, these employees need to carefully assess how long it will take to land a new job.

“A lot of people jump on these (buyouts) because they’re enticed by the dollar amounts,” says Gary Kaplan, an executive recruiter based in Pasadena. But he warns that many executives spend a year or more without jobs and go through their buyout payments before landing new positions, so it’s crucial to investigate how strong the job market is for someone with your skills.

Rule No. 3: Get in touch with recruiters, friends at other firms and potential employers to size up your prospects. You should do this before you decide whether to take a buyout.

Consider the especially difficult choice that might face an aerospace engineer interested in staying in Southern California. Amid the continuing downturn in the aerospace industry, the engineer might be savvy to accept a buyout rather than risk an eventual layoff. Yet given the awful job market for aerospace engineers here, that employee might be smarter to hold on to his or her current job.

Particularly in cases where the economics of leaving versus staying are a close call, it’s important for employees to assess their own psychology. Are they excited about the idea of trying something new? Or are they scared out of their wits?

“Everyone would enjoy a two-week vacation,” Young says. “But can you stand being unemployed for six months or more?”