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Top 3 mistakes of executives upon termination

Whether a frontline employee on an hourly wage or a senior salaried executive with extensive and complicated variable compensation, there is an equally shared truth upon termination of employment:  it hurts, and you are now required to negotiate your termination package in the midst of emotional and financial turmoil.

Here are the top 3 mistakes I see executives making when terminated from employment:

1) Don’t fixate on the “why?”

As an analytical decision maker in the organization, asking “why” has been important throughout your career.  Sometimes people get themselves fired because of attitude and bad behaviour.  Just as often, however, executives are let go because of math.  For example,

  • a region is underperforming and headcount must be reduced;
  • the CEO in Houston decided certain functions in Canada will be consolidated into an existing role south of the border; or
  • an entire function is outsourced abroad to a cheaper jurisdiction.

These reasons for termination are all beyond the local Canadian executive’s power and are part of the larger strategy of the company.  The faster you can get over the “why” of your termination, the sooner you can move to negotiating a fair package without emotions getting in the way.

Even if there were only lukewarm feelings about your recent contributions, or your last performance review was assessed at only ‘meeting expectation’, the bottom line is the decision has probably been made for the bottom line.  Move on.

2) Don’t overestimate your importance

Yes, it’s a harsh heading, but ultimately, the termination settlement package you negotiate will depend on your leverage within the organization.  Do the decision makers like you and feel bad that you got the short end of the straw in a larger reduction in force?  Is the company otherwise under significant financial stress and desperate to cut all corners?  Were you seen as barely an adequate exec who didn’t do much beyond the call of duty?  Did you really mess up in the final months and this is a reluctant “without cause” package, leaving no appetite to offer you anything but a minimal termination package?

Even if you have enjoyed years of authority and success at the organization, your position (if it still exists) can very quickly be backfilled and replaced.  The company certainly won’t sink without you.

It is important to stay in contact with potential internal champions, and to really understand who is the decision-maker within the organization. If HR decisions are made by head office in a US at-will jurisdiction, your communications may require more background around Canadian executive packages.  If HQ is in France, congratulations!  Your generous package will be a deal compared some European jurisdictions.

3) Don’t breach your restrictive covenants (but do prepare for the next position)

Executives, particularly those in a sales role, are increasingly likely to have a non-competition or non-solicitation provision in their contract and/or in the termination package.  While these provisions are not easy to enforce in Canada, breach of an otherwise enforceable restrictive covenant can be very expensive for the executive.

The hypocritical problem with restrictive covenants is that while organizations will actively seek out experience, well-connected, highly referred executives – and proceed to hire you because of your connections – they will then try to forbid you from taking any such connections with you upon termination.

Enter LinkedIn!  While you still cannot walk out with the Rolodex or CRM file of company clients (and yes, they can tell through analysis of your returned laptop if you downloaded it all on a USB stick), your professional network is generally your own.  Unless you are subject to an agreement with your employer that ring-fences new connections made during employment, social media connections and the expansion of your professional network is typically not company property which would fall within a restrictive covenant.

If you anticipate termination in the near future, get networking ahead of time, with social media tools like LinkedIn.  While you will want to avoid breaching an enforceable non-compete or non-solicitation provision, you also need to prepare for your next position, which after years of high level specialized expertise, will likely be in the same industry in our relatively small Canadian economy.

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Lisa Stam, Spring Law

Founder of Spring Law, Employment and Labour Lawyer at Spring Law
Lisa Stam is founder of Spring Law, a virtual law firm advising exclusively on workplace legal issues for employers and executives. She practices all aspects of employment, labour, privacy, and human rights law, with a particular interest in legal issues arising from technology in the workplace. Lisa’s practice includes a wide range of entrepreneurs in the tech space, as well as global companies with smaller operations in Canada. In addition to the day to day workplace issues from hiring to firing, Lisa frequently blogs and speaks on both the impact, risks and opportunities of social media and technology issues in (and out of) the workplace, as well as the novel ways in which changing expectations of privacy continues to evolve employment law. Read more here.
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