Career Coaching Blog

Corporate downsizing forces us to make difficult career choices. General Motors and Delphi workers face just such a choice ahead. To take the buy out offer or stay with the organization. When changing careers, opportunity cost are often the most overlooked. Opportunity cost is the cost of the next best alternative given up.

Let’s look at the risk and oportunity cost of each alternative. If you’re affected by the buyout, one alternative is to do nothing and leave the money on the table. For a 113,000 General Motors and 13,000 Delphi workers, the cost is between $35,000 and $140,000 depending of employment tenure and desire to keep health benefits. It appears this is money over and above what workers would receive from the pension lump sums. But this isn’t the only cost. One must ask what other career opportunities are you giving up? If you want to change careers then the buyout offer can provide financing for a transition period. However, what if you want to continue in your field? Then the decision gets more difficult. If you stay, not only do you forgo the buyout offer but you run the risk of future downsizings with a less attractive buyout package, if any, at all.

Research shows that organizations which downsize continue to downsize. Rarely is it a one time event. Downsizing begets more downsizing. So future cutbacks can be expected. Ask yourself, will GM or Delphi have more or less cash in the future? If you think more, then it may be worth hanging in there for a turnaround, especially if you’re close to retirement. But if you think less, then consider what you’re giving up. Not only the buyout offer, but also the chance to continue in your field. The automotive industry is booming in the south with several new plants opening in recent years. So the opportunity cost is the cost of loss income from not continuing in a high-wage industry like autos. Furthermore, the cost of living is usually lower. Career choices are never easy.

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