How many Lehman employees do you think have backup plans?

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My heart broke as I watched dejected Lehman Brothers employees carry their personal effects out of their offices on Sunday.  As much as they were aware of strain in their company, if they are like typical corporate employees, most did not expect the bankruptcy outcome.

I was so fascinated to see this right as I am polishing the chapter of the Escape from Cubicle Nation book on why corporate employees are afraid to leave their jobs to start a business.  A very common concern is that their "cushy" situation is as good as it gets, and they would be foolish to leave the "stability" of a corporate job for the "uncertainty" of entrepreneurial life.

I would bet that those Lehman employees who had small gigs going on the side:  consulting projects, eBay stores, blogs w/ad revenue, niche products, are feeling a little less panicked this morning.

The New York Times said yesterday (my paraphrase) that now might be a crappy time to leave your job to start a business. (must register to read). (hat tip to Carlos for referring this article)

Yes, things feel quite bleak in the market today.

But, I would argue, if you are sitting back with your head between your knees gripping your corporate job like a favorite teddy bear, you are putting yourself at risk.

I learned from my martial art days that the safest thing to do when under attack is to keep your eyes wide open, ground yourself, leverage your strengths and let curiosity, not fear, be the emotion your opponent sees in your eyes.

Like in any crisis or economic downturn, some people are going to thrive and grow despite the chaos. These are the people who are not afraid to try new things, work on side projects, network like crazy outside of their day jobs, and maintain a balanced and positive outlook on life.

What position are you in, feet firmly planted on the ground with your eyes wide open, or crouched in your chair waiting to see what will happen to you?

photo credit:  Reuters

38 Responses to “How many Lehman employees do you think have backup plans?”

  1. Alice DeMaid says:

    Being your own boss is not for everyone. I wonder how many of Lehman Brothers employees had quietly dreamed of owning their own business. Perhaps it was a charter fishing boat moored in Key West, or a Dairy Queen in a sandy sea shore town. Maybe one of them wanted to own a residential cleaning service in Tampa Bay, Florida (Hint, Hint)!

    I can think of many reasons to own a residential cleaning business. There is demand for residential cleaning. Residential cleaning is a cash business…no acccounts receivable. Residential cleaning franchises don’t require a great investment in equipment. The list goes on…

  2. brent says:

    Good post — thought you might enjoy the following:

    http://www.expertclick.com/NewsReleaseWire/default.cfm?Action=ReleaseDetail&ID=23231

    Although the loss of income and security is dealing an undoubtedly major blow to these former employees, your overarching message is critical: Opportunity can be hidden behind the face of danger and catastrophe. Many of these displaced financial experts surely possess skills that have prepared them well to exploit niche markets as entrepreneurs.

  3. Robin Ogden says:

    The photo you posted here brings back memories of my own – working for a company that went bankrupt. It was so instant…right down to the bank coming and putting a chain on the door so that employees could not get back in to get their belongings.

    Really horrible, shocking and eye opening. Hundreds of broken hearts – and bank accounts! (Of all things, it happened on payday or should I say the ‘un’ payday).

    Robin
    http://www.firedupcareers.com

  4. I quit my job to go back to school – luckily I had income from investments, blogs and ebay affiliate sites.

    while I’m not the next internet millionaire, knowing I can afford to pay rent, eat and pay for my frugal student lifestyle without incurring any debt is awesome.

    employees without a side-income will eventually get shafted.

  5. Nicky says:

    This is an excellent article. I live in Canada but am from the UK.

    I work in banking but last year set up my side business as a copywriter and marketing consultant. I do it evenings and weekends. Ladies – I joined a group called Ladies Who Launch which gave me confidence to actually start marketing myself… and I have a plan and deadline for going either part-time or better still full time f/lance. I also have clients. I’ve published a special report, built a mailing list, got a business coach 😉 set up a blog and my website, registered my business, got an accountant. I’m writing a business plan. I do none of this at my day job. I cannot describe how doing this takes away any worry of the longevity or – lack thereof – of my day job. As someone who’s been made redundant before I know first hand that the only job security is that which you create yourself. Job security is an illusion and health bens the golden handcuffs to keep people trapped where they are. I see people every day, worrying. I hear of 1,000’s losing their jobs in the UK and US. Just like that.

    Yes, I get very good benefits with my company for which I am grateful, but I will go under my husbands HI. So, I’m pretty busy, but the happenings of recent have convinced me that I am doing the right thing. If my job was to go tomorrow, I know exactly what I’d do. I’d be free from cubicle nation!! My productivity would soar.
    I encourage anyone thinking of launching a business, to just do it while you are employed. Create passive income if only to build a side income. Get support – it is out there.
    Thanks again for this article and the very interesting discussion.

  6. These days, we truly do have to begin to realize that the times they have-a-changed at the workplace. As a Gen Exer I’ve seen my grandparents work for the same company and retire pretty well-off with a pension and no mortgage, etc. I subsequently watched my baby boomer parents head down that same road until things started to unravel in the ’80s…neither one of them work for the same company they began their careers with and had spent 15 years at by the mid-80s. Today they have no retirement savings to speak of, haven’t planned for much and will consequently be working for a while longer. My generation is realizing this and is pretty much breaking new ground out there learning from what we’ve seen. And now,those same boomers are asking us for 700B to bail them out. It’s actually pretty ludicrous. I’m not complaining…mostly I’m rambling but…I agree with Pamela, more than ever we have to create more and more value for ourselves so we can constantly adapt to changing market and social needs in the world. I would recommend the book The Long Tale…it’s basically about the future economy being about selling less of more (niche products) rather than more of less.

    Great site, Pamela…I just found you…I’ll be visiting often.

  7. It seems to me that a wise employee doesn’t just show up to work and separate his job from his life. He builds all aspects of his life on the principles he has learned from his hard work and he does not just incorporate them in his one place of employment. He branches out and uses that principle in multiple places where he will build investments and find multiple fountains of income.

  8. Scott M says:

    Hey, thanks for your response to my rather rude rant. I have my performance review today and I’m a bit on edge.

    🙂

  9. Scott M says:

    Look, not everyone is cut out to start their own business. In fact, I would hazard a guess that MOST people are not cut out to start their own business.
    Most of us do one thing and we do it very well. I myself am a computer programmer. I’m very good at it.
    However, if I were to start my own business I would also need to have the following skill: financing, human resources, management, purchasing, marketing, tax law, etc.
    Most people don’t want to deal with that. Most people CAN’T deal with that.
    Yes, the people who are really going to strike it rich in life are going to own their own business. But most of us aren’t, and I think you need to get rid of this idea that starting your own business is the only way to make a living.

    Hi Scott:

    Hear hear! I totally respect your point. I absolutely do not think that everyone is cut out to have their own business. We need people in large corporations just as much as people on the outside creating small businesses.

    My point with this article is that I think it is a good idea for all of us to think about multiple sources of income, and not to get too stuck in the mentality that your one employer will provide everything. If, in the case of Lehman and many other companies, layoffs occur, I always want employees to have other strategies in mind.

    If you like being an employee, the one strategy I would suggest is to be really connected with peers/experts in your field in other companies. That way, if your ship sinks, you can jump to another.

    All the best,

    -Pam

  10. Wow, another day I’m glad to have the Canadian healthcare system available to me! I think though that there are often ways to start a business slowly and work up to where you realize you can afford private health insurance (even if super expensive) and that your health may even benefit from your self-employment! Good luck to us all as we make our own backup plans.

  11. John Dillon says:

    The issue of heathcare keeps coming up. In the UK we have a world class healthcare system for free.
    I understand in the US things are very different, but isnt this just another way the big companies keep the little people in line?

    Freedom is never free. There is always a price, and its alway worth paying.

  12. Steve C. says:

    Pam. I think I like your professor’s metaphor better. Thankfully, neither is universally accurate, as you point out.
    Steve C.

  13. Pamela Slim says:

    Funny you say that Steve, I am putting metaphor in book from my old professor Francisco Vazquez. He said it about Melting Pot used to describe U.S., but it can also describe unsavory corporations:

    “It is a melting pot! Those on the bottom get burned and the scum floats to the top.”

    Cynical, yes. True for every corporation, no. True for some, absolutely.

    -Pam

  14. Steve C. says:

    Pam, amen on the greedy/poor executive management decisions. They’re out there. Not unlike a sewage treatment plant, the really big pieces usually float to the top.
    Steve C.

  15. Ellen Hart says:

    I’m glad you wrote about this. It was very sad to watch. I’m more grateful now than ever, that I run my own business. This way I’m not at the mercy of greedy/poor executive management decisions.

  16. Megan T. says:

    Hi Pam,

    This was a particularly interesting post for me. My coaching practice is in Detroit, and our local economy has been in a significant slump for years with the shift in manufacturing jobs/turmoil in the auto industry. I often hear people use the “Detroit” perspective, similar to the “crappy time” view, to explain how they can’t make changes in their work lives. It becomes so overwhelmingly powerful for them. It is truly transcendent to see another human realize that “Wow, I can control my own life!” and what that opens up for them. There will always be obstacles, it is how we dodge, scale, or obliterate them that matters.

    Best,

    Megan Thomas

  17. Steve C. says:

    Hang in there Shannon. At least you’re still sleeping through the night, right? The difference between entrepreneurs and workers is, entrepreneurs are willing to take a chance, to take a risk, with their OWN money, not someone elses. There is a huge difference between making money and earning money. Good luck!
    Steve C.

  18. Shannon says:

    Ugh, I had those same thoughts right after hearing about all the Lehman layoffs. Or even the HP layoffs?

    I left my corporate job 2 months ago to help my husband open a business. It has been a full-time job making no income (we’re not “live” yet) but we are enjoying every minute. Ok, that’s a lie. Some mornings I pace around in my pajamas worrying about our savings account. But I’d rather have that anxiety than the anxiety of knowing every day I have to go sit in a cube and work for someone else.

    My only worry is that if the business isn’t profitable, i’ll have to return to the job market with a grimace and a wrinkled resume clenched in my fist.

  19. Steve C. says:

    Hope you’re right, JKH. It’s a much more uplifting picture than the one I imagine. Here’s hoping the housecleaning does us all some good. Cheers!

  20. jkh says:

    fully agree steve. – but the individual players in the banks – those who lost their job this week – they will just do the same thing they did last time: surf through the crises on a sunnier beach.
    these kids are alright. – what is questionable – and I fully agree with you – is the overall system. – but this has little to do with individual survival strategies and tactics.

  21. Steve C. says:

    Pam. Hope springs eternal, eh? I’m worrying about how all the VC’s around here will fair in this environment, since they provide much of the fuel for the startup engines of Silicon Valley. I sure hope we don’t go through another meltdown like the one you described in Cupertino in 2000. I know that the Fed and every policy maker in Washington is working overtime and sweating bullets trying to stop a disaster from happening, but the House of Cards/Domino analogy is looming away out there. In economics, nothing happens in a vacuum, and in reality, the Fed is not all powerful. You can lead a horse to water, but you can’t make it drink. Same logic applies to banks and lending. Lets hope that raw fear doesn’t take over, and that the collateral damage doesn’t take down too many innocents. On the bright side, look at the price of oil. Makes you wonder how much oil was being stored in paper tanks, doesn’t it? When stuff like this happens, it needed to happen, I think.

  22. Steve C. says:

    JKH, if all those at Lehman are so smart and bright, how did they end up in this situation? Your attitude that everyone just goes ho-humming off into the world, travelling and playing beach volleyball says a lot about what is wrong with the sorry state to which capitalism has fallen. Smart and bright has replaced wisdom as the most highly valued human capital quality. I suspect that this reality check will bring other things to the table.

  23. Steve C. says:

    That’s a lot of small businesses hitting the ground at the same time, with most of them needing to borrow money to capitalize, in a very restrictive(almost non-existent) capital environment. It’s kind of like trying to sell a house when everyone else is trying to sell out of a bad market. A huge paranoid inertia takes over. The only winners in a major economic re-alignment with reality will be the people with money, guts, and brains… mostly with money. As usual, cash will be king. I drove by the Lehman Bros. campus this morning dropping my kid off at school in Menlo Park. It was like a funeral home, a very big funeral home. I’ll bet this “not a recession yet” shakes even this unshakeable peninsula area to it’s core. Wish we had rented instead of bought. We’re trapped now.

    Wow Steve, amazing to hear about the Menlo Park campus.

    I remember the exact same scenario in 2000 in Cupertino after the crash. I had many clients along a main freeway corredor (forgot the name, been in Phoenix too long!), and I will never forget looking at parking lots that were formerly full of BMWs and Porches and seeing them empty. It was very disenheartening time.

    On the upside, look what happened — some technology startups survived, and went on to build some great apps.

    I agree that not everyone can start a brick and mortar biz which requires lots of capital. Even some simple consulting or other activities can help with cash flow, even if people are looking for other jobs.

    And I hear you — cash is king in a downturn. Without it, it is VERY hard to survive.

    Thanks for your comment.

    -Pam

  24. jkh says:

    most folks in lehman do have backup plans. or – to say the least – the right attitude and education – and the cash – to take some time off and travel the world and to see what other opportunities come theit way.
    it is those folks that in the last economical meltdown were kicked out of their positions in investment banks and started to work for NGOs or picked up the sport of polo in argentinia or somewhere else, or did whatever their curiosity drove them to do.

    do not forget: those at lehman are our smartest and brightest. – they are all hard hitters and they know how to take as well.

    the kids are alright.

  25. Karyn Romeis says:

    For reasons totally unrelated to the current economic crisis, I have been pushed into a position of self-employment. This Friday is my last day on the job.

    I alternate between excitement at the prospect and blind panic because of our large mortgage and the looming prospects of university educations for my children.

    Everyone who knows me assures me that I will be successful at it. I wish I knew what they base their confidence on, since I haven’t a clue how to go about this. I’d like to bottle that confidence so that I can sip it in my moments of low ebb. I only hope they’re right!

  26. James R says:

    Fortunately in Australia we have semi free health care.

    I remember 7 years ago, the day I was made redundant, one of my bosses said something along the lines of ‘one day you will look back on this and be thankful of this opportunity’

    At the time my inner voice was wondering how many times I could punch him in the face before people pulled me off him but the fact is that, regardless of the timing there are always opportunities for people with the guts to give it a go.

    Sometimes these events provides the necessary motivation to act

    We delude ourselves that a large company provides safety when really we are just a vulnerable to a company collapse, a new CEO who doesn’t think what we do is part of the ‘core business’ or wants to outsource the work to another country.

    Good luck to all affected by the current upheavals

    Now might be your time

  27. I do feel for those folks. I think the illusion of safety is just that. As challenging (AND exciting) leaving my employer was, I cannot ever imagine going back. Also, as up-in-the-air as it is, I feel much more agile and flexible. If it didn’t work out, I’d be very disappointed, but I’d also feel much more capable of handling the next thing, and *creating* it as well.

  28. My guess is that most Lehman employees didn’t have any back up plan. The irony of the whole thing is that a few years ago, these same employees in Lehman and other over leveraged investment banks were getting rich by paying themselves huge bonuses, for doing nothing more than riding the coat tails of a bull market.

    But just as leverage works wonders when things are going up, disaster strikes when things start going south. I feel more sorry for the stock holders that lost their equity than for the greedmeisters who created this mess, and who now have no choice but to clean up their desks and sell their Mac Mansions and yachts at bargain basement prices.

    On another note, judging by the comments, the issue of health insurance arises again as probably the biggest reason why most people don’t take the plunge. I believe the insurance industry will have to start paying attention to this new market as more and more people are laid off.

    Good luck with your book and let us know when can we pre-order!

  29. Pam,

    I forgot to mention how eager I am to see your book and the launch.

    Your updates have really lit a spark under me. I’ve used the excuse of being too busy with clients and speaking engagements to sit down and write a couple of the books I’ve always thought about. You’ve helped me see that it can be done by someone totally busy, and I appreciate that!

    Aw, Steve thanks!

    Actually, what my posts and tweets say is that a person with a big task at hand sure can waste time while appearing to be helpful and productive!

    Honestly, tweets keep me sane, and blog posts are tonic for my soul.

    I am excited by the book, and really overwhelmed by the task. Bird by Bird, as Anne Lamott says! We need your book! Write it (them)!

    -Pam

  30. After 30 years as an incorporated entity, I still sometimes lapse into “if only someone else paid my health insurance” mode. It’s a real need, a real consideration, and insurance companies make it difficult for those with pre-existing conditions. Because of where I live, I pay $650/month just for my own (self) coverage.

    Having said that, I’ve spent nearly 30 years building a practice I love (not just “like”), traveling the world to work with clients and taking my family with me, and living a life that I could not have lived had I stayed “inside.”

    Economic cycles do impact my business, so I’ve had to learn to better plan and save for those. And even though small businesses are the growth segment in the U.S, in many places we receive the least economic support and tax relief.

    All of that said, the question to ask is:

    “What kind of life do I want to have and what am I willing to do to have it?”

    Weigh the risk/benefits, look at the non-negotiables in your life if there are any, and put your stake in the ground.

    The CEO of Lehman received a $22 million bonus this year. His financial future is secure. Those carrying boxes out of the building might be re-thinking the “security” of big corporate life. If there is no longer a corporation, there aren’t any benefits.

    Wonderful response Steve!

    I just got really nauseated when you said the CEO got a $22 million bonus. That should be a crime.

    Thanks for taking the time for such a thoughtful response.

    -Pam

  31. Alexis says:

    That article was very depressing, but very similar to messages I’ve been getting since I started getting that entrepreneurial itch. Pam, are you coming to the BlogWorld conference in Vegas? I’d like to meet you, if so.

    Wish I were going to Blogworld Alexis, but book duty calls. Next year! 🙂

    -Pam

  32. Pre-existing conditions really do kill the deal. I was told flat-out by two different insurance brokers that with two pre-existing conditions, I was uninsurable as an individual. I’d have to form a corporate entity with at least one other person and buy group.

    It’s through-the-looking-glass nuts. Me alone = uninsurable; me + another body housed in a corporate entity = insurable. And that person can opt out of “our” group coverage!

    I admit that I was one of the blithe few who didn’t see the big deal about insurance until my Crohn’s onset. Now, paying $545 for crap coverage through the State of California (and damned grateful for the privilege), I get it in a big way, every month.

  33. I’m gradually moving towards the position that we’re not just in a post-job world; we’re in a post-one-prong-strategy world. Of course there are people who are more suited for jobs, others for operating businesses, others for solo professional practice, etc. However, it seems to me that those of us in our 30s, 40s, and 50s may be dealing with fairly unpredictable cycles for the remaining 20-30 years of our working lives.

    Who’s to call that Olympic business a “failure” at all? I see a woman who supported herself for X years with a business, now has a job, may have another business in the future, and so on.

    My take: I’m preparing myself by cultivating mastery in WORK (content) I love. Then I may do it in stints of employment, stints of freelancing, consulting, small business ventures that may have a beginning-middle-end, or many of those at the same time.

    Re: insurance. I think people who haven’t faced it don’t understand the magnitude of this problem. NASE, for instance, is the subject of investigation and class action suits for limiting benefits and some sketchy practices. I don’t think it’s fear that’s keeping people stuck around this issue – especially those who are either unmarried/domestic partnered or who must be the family benefits provider. It’s one thing to buckle down and earn $60K from a business rather than $100k from a job. Factoring in included benefits vs. $1,000-$2,000 per month for lesser benefits can be a REAL show stopper.

    “Insurance be damned!” may be the way around the “fear”, but this is a real future-jeopardizing risk, not a psychological one.

    Barbara:

    Don’t get me wrong, I totally acknowledge that health insurance can be a big show stopper. I do not believe in just using the power of positive thinking to overcome a systemic challenge, because it really can be hard to manage for families, or those with pre-existing conditions.

    That said, I do know that there is a lot of information about there now about how to make health insurance work for you. And, the trend is for companies to provide a smaller and smaller percentage of insurance coverage to employees. So it is something worth checking out.

    I do not have the prob w/preexisting conditions. When I was single, I paid about $140-160/month for decent coverage. Now for my family of 4, it is $700/month. Not perfect, but not bad either.

    I advise people to put the real costs in their business model before making any kind of stay/go decision.

    And … I like to challenge people who have only heard “health insurance for the self-employed is expensive” to check it out for themselves, factoring in their personal scenarios.

    Too bad we can’t all be Canadian! 🙂

    Thanks,
    -Pam

  34. Jen says:

    Exactly … the ONLY reason I don’t have my own business? Health insurance. And that it costs quite a bit to be a small business owner in my state, on top of that. The health insurance issue in this company is a major issue in this country and truly holds back a lot of talented people.

    Wow, Jen, and all those worried about health insurance. I am curious, have you really researched to see all the options for self-employed people? The National Association for Self Employed (NASE) has some plans, as well as many companies. I totally get the pre-existing conditions problem. But I wonder if with some research you could find good option.

    I’m writing about it for chapter in book — stay tuned!

    -Pam

  35. John says:

    Like others who have commented, I have the interest in going out on my own, but feel strapped by health insurance. I have a family member with chronic illness, and I don’t see an alternative to a big company group insurance plan. I’ve heard so many times from small/medium companies how their carrier dropped insurance (or renewed at very high rates) because one person got sick…

  36. I had the same reactions reading those stories and am thinking a lot about writing a comfort book for fearful times … we all need it, me most of all!

    Jennifer:

    You are so right — if ever there was a time when we needed your “comfort queen” magic, it is now!

    I don’t mean to sound like an unfeeling investment banker about it, but dang, your business should be booming right now! So many people are craving what you have to offer, and with your guidance, they will not be stuck in fear and can take positive action.

    I say get to the book pronto! 🙂

    Can’t wait to read it!

    -Pam

  37. Helene K. says:

    With health insurance so high, I expect I’ll never be able to afford to “go out on my own” and thus will always have to find a position with a company that offers health insurance benefits. It doesn’t help that I live in California either :-/

    Great blog, will look for book, and follow you on twitter 🙂

  38. When I read that NY Times article yesterday, I had a moment of panic and self-doubt. *Did* I make a huge mistake leaving my seemingly stable job for the “uncertainty” of being on my own?

    Thank you for the reminder that the answer is in me, rather than in the circumstances.

    Hey wait a minute: That’s what I teach! How come it’s harder to remember when it’s applied to oneself?

    Pam

    That is why we all need each other Pam!

    NOTHING is forever. And even though things are tough, think of all the options you now have to make money and add value!

    You have tremendous talent that is needed, and you will do fine.

    🙂
    -the other Pam

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