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The Trauma of Executive Termination – Part 1

As executive employment lawyers, the daily work of our practice is concentrated on counseling executives who are being hired or fired. The emotional climate of those two legal tasks could hardly be more different.

Executives being hired, particularly when they are recruited from existing and rewarding executive positions with other employers, are usually being promised increased responsibility and compensation. These executives, even as they are weighing the ramifications of a major career move, are understandably optimistic, upbeat and proud that their skills and experience are recognized and sought after.

This is in stark contrast to our executive employment clients who are being terminated. Their terminations may have little or nothing to do with their own performance. Their positions are being eliminated, or there is a so-called “Reduction in Force” to reduce the cost of corporate overhead. Perhaps their employer’s business has decided to dispense with an entire product or service line so as to focus energy elsewhere, or (most famously in academic or other non-profit settings), a Board of Trustees has simply decided to exercise its power and prerogative to “go in a different direction.”

Whatever the reason for the termination, an executive’s understanding that being fired is no reflection on his or her performance or abilities provides little consolation. Nor does the fact that the executive commonly has a background of educational and worldly success. It also doesn’t matter if the executive was dissatisfied with the job, aware of ongoing problems with the employer or even themselves thinking of leaving when they found out they had been terminated. It is simply a miserable experience to be fired, and the older and more senior the executive, the greater the — and I use the word deliberately — trauma involved.

We think of trauma as provoked by some severe physical or emotional shock or injury, but it is fully appropriate to describe the experience of an executive losing his or her job as traumatic.

In our experience as executive compensation attorneys, it is, quite frankly, like a death in the family. The feelings which accompany it are the same: grief, loss, fear, and the most primal feelings of uncertainty: “How will I (and my family) survive?” “Will we be destitute, out on the streets?”

This is often followed by shame: “What will my co-workers and neighbors think?” “Does this mean I am unworthy or inadequate, a failure?”

Anger, often extreme anger, is also common: “How could they do this to me?” “Don’t those idiots know that not only have I done a great job, but I actually kept the business running!”

These are universal and powerful human responses which can, and usually do, feel overwhelming to executives who have been given their proverbial “pink slip” (which in fact is almost never pink, but is an important package of papers including the key separation documents). Such feelings can flood the consciousness of even the most experienced and accomplished executive, leading to other feelings, including confusion, helplessness, and sometimes paralysis.

An important part of our work as executive employment attorneys is helping our clients process these powerful feelings so that they can positively respond to the important legal and practical decisions which they must make in a relatively short time period after learning of their termination. This does not mean that we can or should handle all of the emotional issues resulting from an executive’s termination — we are lawyers, not therapists — and sometimes the pure emotional ramifications of a job loss does require other types of professional help.

But what we can do, based upon our experience of hundreds of these situations, is to provide the steady legal guidance which prevents our executive clients from being doubly traumatized, not just by the experience of being fired, but also by failing to understand, think through and promptly attend to their legal rights, remedies and responsibilities.

The emotional shock of being fired does not, for instance, stop the clock running on important legal decisions which must be made. Proposed separation agreements, in which an executive is offered (sometimes inadequate) severance compensation in exchange for the executive agreeing to release all of his or her claims against the employer (and, usually, everyone connected with the employer), are governed by fairly short time deadlines which cannot be disregarded. And this is just one of the legal aspects of a job termination where the assistance of an experienced executive employment attorney can help cut through the fog of emotional distress in order that the executive can fully understand his or her options and grapple with the necessary decisions that must be made within a finite time limit.

Many years ago we were consulted by an executive whose distress, anger and confusion at having been terminated led him to hesitate to seek legal counsel until after a strict deadline for exercising his stock options worth more than a million dollars had irretrievably lapsed. There was nothing we could do for that particular client, but it was a cautionary tale which inspired us to make certain that future clients were not similarly disadvantaged if at all possible.

“Feelings are not facts,” as the helpful saying goes, and it is our job as executive employment attorneys to help our clients manage the feelings so that they can deal with the facts in a timely, positive and considered fashion.

In the next installment of this topic, we will offer a step-by-step guide to the prompt actions which an executive who has been terminated should take immediately upon being presented with separation papers.

About the Author

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George Birnbaum

Since 1980, sophisticated business people have relied on George to apply the meticulous preparation, attention to detail, and devotion to his clients he learned from fabled trial lawyer Louis Nizer. A graduate of Harvard College and Harvard Law School, George has over 35 years of distinguished deal-making, litigation, mediation and arbitration experience which he has used to negotiate high-stakes agreements for senior executives and select business clients throughout the United States.