Unemployment Risk Management

Over the past two years millions of people have come to realize that every employee faces some level of risk of unemployment. There is no reason that each person that is fortunate enough to have a job in this environment can’tidentify sources of unemployment risk and actively mitigate exposure. An employee who actively manages unemployment risk exposure can increase job security, open doors to career advancement, and identify and capitalize on career opportunities.

 I would argue that there are two main categories of unemployment risk: internal and external. Internal sources of unemployment risk emanate from within the walls of an employee’s current employer, while external sources of risk come from factors exogenous to the current employer. Internal sources of unemployment risk include intradepartmental, interdepartmental, political and business risk. Intradepartmental risk is related to the job performance of an individual. Poor performance can be noticed by both interdepartmental and intradepartmental colleagues and supervisors. In addition to actual performance, there is also the possibility that there may be a “perception” that an employee is not performing well. Any such perception can translate into unemployment risk if it reaches the employee’s supervisor. Political risk emerges when an employee does  not “play well with others” within the political landscape of their employer while business risk emerges if an employer is not performing well relative to its peers in its given industry which can lead to layoffs which start with fixed cost--- finance, accounting, and treasury professionals.

External sources of unemployment risk include professional, industry, economic, political and personal risk. Professional risk is the risk that the job function of an employee is no longer seen as being viable as an occupation. Industry risk is when the entire industry of an employer company faces a macroeconomic downturn. External political risk is the possibility that the actions of a particular industry make their way onto the political landscape.

The good news is that a few actions taken by an employee will work effectively to mitigate several of these sources of unemployment risk. Successful unemployment risk mitigation can be achieved through self awareness, professional development, embracing change and effective networking.  The golden rule of unemployment risk management is for an employee to follow the mantra “do what you say and say what you do” and take ownership for his actions. Following this mantra will help minimize internal unemployment risks that are often outside of the control of an employee.

Self awareness is also a powerful tool. An employee need not only be concerned with how he feels about his job performance, but also must be cognizant of and mange perceptions how others view his performance.

Proactive professional development and embracing change are also effective tools in mitigating unemployment risk. If a person has the skills most relevant to his profession then he will be valuable not only to his current employer but to other companies that may havejob opportunities available. Participation in professional organizations can help an employee stay on top of industrybest practices and also to anticipate trends. When changes inevitably happen, the best employees see opportunities and express a sense of optimism and excitement. The best weapon to mitigate unemployment risk is to enjoy your job. If you do success will follow as passion breeds world class job performance.

It is more important than ever to recognize and manage unemployment risk as the increasing stress of the current economic environment is inherently detrimental to job performance and “playing nicely with others”.  You do need to recognize what you “can change” and change it and not get bogged down on what you can’t change, but identifying your unemployment risk factors and focusing on the ones you can change is a worthwhile endeavor.

I will close with two main pieces of advice as everything else will take care of itself:

1.        “Do what you say and say what you”
2.       “Do what you love and love what you do”.