Monday, June 20, 2011


For 17 years Joseph Rockom, 47, climbed the rungs of American Microsystems Inc., a semiconductor manufacturer in California’s Silicon Valley. Diligence and loyalty won him the rank of vice president and chief financial officer. Rockom’s company was hurting, and its parent, Gould Inc. of Chicago, was getting frustrated. ”I could feel what was coming,” he says. To cut costs, American Microsystems started laying off managers. One morning he was conducting a staff meeting when the division president walked in, postponed the meeting, and escorted Rockom to the president’s office. ”As soon as I sat down,” says Rockom, ”I thought uh-oh, I’m getting fired. As the president delivered the news, my mind wandered. I was thinking that in six months I would look back and be glad.”

AS IT TURNED OUT, Rockom’s quest for a new employer took far longer. And he isn’t alone. Tens of thousands of executives are being thrown out of work, even as the economy enters its fifth consecutive year of expansion, in an unprecedented wave of shrinking and realignments that is part of the restructuring of corporate America. At AT&T, Exxon, General Electric, and other companies once regarded as havens of career stability, the managerial ranks are beginning to resemble those of the Light Brigade after its charge. Although the casualties continue to mount, executives in imperilled jobs or already out on the street can take heart. An exclusive survey makes clear that most who are shown the door land elsewhere. Sometimes they are better off than before, though not before enduring what the job-hunting executives examined have been going through. Most retain a zest for business and a belief that all the upheaval — and the sweeping away of whole management layers, including their own — is for the country’s good. Talks with severed executives reveal that: — Competition in the job market is fierce. — The most effective way by far to find a new post is through networking — turning to friends and business acquaintances. — Executive recruiters seldom offer much help since their mission is the opposite of placing the unemployed: pulling in the 1,000-pound tunas still contentedly in the swim. — Outplacement firms practically never put anyone in a new job either, but they at least shore up battered self-esteem and provide training and tips that help in the search. — Once a job is secured, the anguish ousted managers felt in their time of trial often turns into appreciation. Some even say the move was the best they ever made. ”It was worth it,” says a north-eastern executive in his late 40s. ”I was getting complacent in my old job.

When shrubs are transplanted, there is new life and new growth. It happened to me.” More transplantation may be coming. The Bureau of Labour Statistics estimates that almost 500,000 ”executive, administrative, and managerial” workers lost jobs that they had held for at least three years. The numbers are probably increasing as companies now rush to cut costs and raise efficiency. Out-of-work managers have an easier time than lower-ranking workers do. Of employees displaced, the BLS says, 72% in the executive group have found new jobs, compared with 64% of the blue-collar and factory workers. The BLS ”executive” category includes such people as school principals, construction inspectors, and those who supervise a handful of workers. And the federal data do not convey the difficulty of finding work in a city where whole battalions of managers have been cast out. To get a clearer idea of what expelled managers face, FORTUNE asked E.A. Butler & Associates, an executive search firm with offices in several cities around the country, to set aside all unsolicited resumes . Then, late last year, the firm randomly asked a portion of the job seekers for permission to turn over their resumes to FORTUNE. The vast majority agreed, and 250 — nearly all male — were queried by telephone about the success of their searches. The 250 executives included some who said they had not been forced out of their jobs but merely were looking voluntarily for greener pastures. The great majority, however, had been fired or told by their employers to start hunting. These managers probably include a disproportionate number of problem cases. Failing to find work quickly, they have found it necessary to mail out stacks of resumes. The experience of those who admitted to being forced out differed little from that of the voluntary job hunters.

In FORTUNE’s survey, 56%, or 141 of the 250 participants, have found new jobs. Another 17% are looking but are still at their old posts. The remaining 27% are the ones in precarious straits: They have left the old job but have failed to find a new one. Of those who found jobs, only 21% did so in three months or less. But for 66%, the search lasted an arduous four to nine months. And 13% searched from ten months to almost two years. Some outplacement firms warn that clients can expect to spend roughly one month in the job market for every $10,000 in salary they are seeking. The search gets harder with age, but only up to a point. Among FORTUNE’s seekers, those under 35 have a much higher rate of success than the 35-to-44 crowd, which in turn has done better than the 45-to-54s. Beyond 55, at least in FORTUNE’s sample, the success rate improves again. This figure may be high partly because only the dedicated job seekers — or the desperate — are still in the labor force. Many executives who are let go at this age drop out of the market and retire. TO HEAR severed execs tell it, the age problem is entirely in the eyes of the beholders — the prospective employers. Richard Busby, 55, one of those surveyed, was director of purchasing at Goodall Rubber Co. in New Jersey when the company was acquired by Trelleborg of Sweden . Busby lost his position in a major reorganization. He has a strong job prospect now but says: ”I did mass mailings, as many as the computer would spit out. I got a lot of responses, but I think when most saw my age, something went awry.” Fred Holland, 51, spent most of his career with Conoco before becoming president of Irex Corp., a Denver drilling-fund subsidiary of Integrated Resources. After falling prices crippled the oil business, Irex shriveled from 70 employees to 12, and Holland, feeling underemployed, quit.

For several months he searched in the oil industry before giving up. ”Employers view older men as often set in their ways and hard to manage,” he says. ”Or, if the older guy is really good, then he’s seen as a threat.” This tale has a happy ending. Holland recently used his other skills — as a highly successful personal investor — to land a job as a personal financial counsellor with Lynn Hutchings & Associates in Denver. He says he is glad he will be judged on the value he produces from now on, rather than on his title. This year he expects to make about $25,000 in fees, down sharply from his previous earnings of $150,000, but he believes his income will eventually approach its former level as his clientele expands. It just might do that: Holland figures he has increased his net worth 20-fold over the past ten years, mostly through smart investing. SURPRISINGLY, nearly half the newly employed executives in FORTUNE’s survey have already boosted their income. While the remainder is earning the same or less, many hope to come out ahead because they have been offered more equity participation or their potential bonuses are larger. Take Thomas Johnson, 52, who used to be president of a Dallas subsidiary of Redman Industries that produces mobile homes Johnson lost his job because, as he puts it, ”There was a health problem: Jim Redman, the chairman, got sick of me.” After seven months, networking landed him a position as president of High Chaparral, a manufacturer of prefabricated housing and a subsidiary of Home Savings Association of Midland, Texas. Now Johnson is busily expanding the company from one factory to six. Like most in FORTUNE’s survey, Johnson won’t reveal his new salary, but says, ”While the base is down, the bonus opportunity is up. Home Savings believes in putting a big carrot out there, and I’m working much harder.” Most successful hunters bag their quarry by venturing into a different kind of business. In the survey, 62% of the job finders switched industries and 60% are working in smaller companies. Robert Freiburger, 41, used to be a director of manufacturing at a unit of ITT (annual revenues: $12.7 billion) that turns out night-vision goggles used by the military.

Now he is general manager of LC Systems, a division of Eagle-Picher Industries ($648 million) producing liquid crystal displays. Smaller is better, says Freiburger. He was promoted three times in his last ten years at ITT and says he treasures his experience there because it forced him to excel. ”But you had to put up with a lot of day-to-day agony. ITT wasn’t particularly people-oriented.” Eagle-Picher’s management, he says, ”gives us freedom from constant corporate review of everything. They don’t believe in prolific memo writing, policy manuals, and teams of executives descending on you every month. They believe in loyalty of the individual to the company more than larger bureaucratic organizations tend to do.” A few even say they wouldn’t want to work for a big company again. James Smith, 47, was a divisional president of the Donald L. Bren Co., a major real estate developer in Irvine, California. He was pushed out and now is a partner and senior vice president at Kimball Small Properties, another developer less than half the size of Bren. Smith says he’s much more comfortable at the smaller company. ”Big corporations don’t take care of the needs of their employees. Only the C.E.O.s’ needs are important, and they use the corporation as their vehicle. I was never told why I was being let go, and that bothered me tremendously.” Some of the more independent-minded have started their own businesses. Asit Shroff, 42, was a vice president and controller at the Iselin, New Jersey, office of Fleet Finance Inc.

Then the New Jersey operation was consolidated with another in Atlanta. Fearing a big loss on the sale of his home and reluctant to uproot his family, he has opened a computer dealership with a friend in Roslyn Heights, New York. Shroff says he’s making ”close” to what he earned at Fleet and has a 140-mile round-trip commute six days a week. But, he says, ”I like being my own boss. I don’t regret a thing.” Like Shroff, exactly half the job finders in FORTUNE’s survey now perform different tasks from those at their old employers. A slight majority are also supervising fewer subordinates. Some feel a sense of liberation. Johnson of High Chaparral, for instance, used to be insulated from his operations managers by a layer of seven vice presidents. Now he has no vice presidents. ”I’m getting in and doing things now,” he says, ”and having more fun.” JOYS SUCH AS THESE remain an elusive dream for those still on the Long March. As they work into the night cranking out resumes, savings dwindle and phone bills mount. Many are perplexed. They are not society’s underachievers and misfits, after all, but winners who steadily advanced to management jobs their companies now deem unaffordable. Laments an executive in his early 40s who never before experienced unemployment: ”This is the first time since I was 15 and applying for work in a local store that I have had to search for a job.” E. A. Butler of the headhunting firm, who is also the author of four books of advice for job-seeking executives, thinks many of today’s younger executives have a knack for shortening the ordeal. Most job offers that result from prior networking, he says, come in the first 60 days. The yuppie types, he observes, opportunistically grab the first job that comes along and, if it proves disappointing, press on with the search from their new position. The older crowd is too fussy, Butler says, at least for a while. ”The closer they get to retirement, the more careful they tend to be. They think this is going to be the last job, when they really should regard it as the next assignment.” At first they want as much money and prestige as they had before. Or their wives don’t want to relocate and their families, striving to be supportive, tell them not to settle for less than they think they are worth. Many, Butler adds, have ego problems: ”They think the mold was broken after they were created. It takes about six months for them to realize what they are up against and get religion.

By then valuable time has been lost and they have to explain why they have been out of a job for half a year.” Older executives often neglect networking. Butler guesses that only about 10% of executives in big companies actively cultivate useful acquaintances outside their firm. ”They labor at their work and raise their families,” he says. Joseph Rockom recalls the awkwardness he felt at first going to friends and business associates. ”I thought I was begging, hat in hand. You’d better get over that because people want to help.” Mere common courtesy goes a long way toward keeping a network strong. David Myers, 44, was vice president in charge of loss prevention and safety for Household Merchandising of suburban Chicago, the retailing division of Household International. When the division became independent in a leveraged buyout, about 40 corporate executives, including Myers, were let go. Myers, who saw it coming, began compiling a list of contacts before the ax fell. Says he: ”No one is too unimportant to keep in touch with. Nobody’s phone call should be ignored. People who don’t return calls make a mistake from a business and a personal standpoint by not maintaining contacts. If you end up looking for a job, the most important thing is being able to say: ‘Hi, I have a problem, do you know of anything? Here is my phone number.’ ” Within five months Myers had found a job with the Stop & Shop grocery chain of Quincy, Massachusetts. He is due to succeed one of the people on his network list who will soon retire from a position for which he recommended Myers. CONNECTIONS, of course, are not everything. A few of FORTUNE’s survey respondents got results by sending resumes cold to companies they had carefully screened for operations in their field of business. Freiburger’s letter to Eagle-Picher brought a company jet with execs one Thursday to his home town of Roanoke, Virginia. They took him to lunch and offered him a job starting the following Monday morning at a plant in Exton, Pennsylvania. Few get jobs by sending unsolicited resumes to head hunters, though it does happen. But one found salvation answering a classified ad in the Washington Post. Outplacement firms are sometimes criticized for being little more than healing balm for the corporate conscience, but these services got surprisingly high marks in the survey. Of the job finders, 33% used outplacement, and three-quarters of them say it was useful. Its main value, beyond boosting crushed egos, is in coaching people for job interviews. Outplacement firms often provide office space and secretarial services and encourage job hunters to don suits and ties, turn up at the outplacement ”office” every day, and view the search as a job.

By Peter Nulty

All of these tend to ward off a crippling sense of self-pity. Gerhard Mietz, 55, lost his position as president of RTE/ Delta, a subsidiary of RTE Corp. of Wisconsin. Using the services of Hindman Associates of Louisville, Kentucky, Mietz was trained in interviewing techniques with the help of videotapes. ”They shot me in a mock interview and then tore me apart. Boy, was the second interview an improvement.” Mietz believes that unless an executive is an experienced job hopper, he’s probably not very good at selling himself. ”The trick,” he says, ”is to forget your past glories. The interviewer doesn’t care. Find out what he needs in advance or by tuning in carefully to his questions.” He credits the training with landing him a position as operations manager of a division of German-owned Siemens Energy and Automation in Raleigh, North Carolina. One profound effect of all the bloodletting is a serious weakening of the emotional bonds that tied managers to companies. As one of the displaced sourly notes, ”The rules have changed; the old loyalty is gone.” Vows another: ”From this day forward I am who I am going to worry about.” Even so, most severed executives retain a zest for business, rather like athletes benched during a game but raring to get back on the field. What they seem to miss as much as the pay check and the perks is the thrill of bashing the competition. ”I want back in the game,” says one of the jobless. ”That’s what races my motor. Pardon my French, but I want to beat the bastards.” And what about Joe Rockom, the man who began this story? He is back on the playing field, but it took some doing. Because he was not a job hopper like many Silicon Valley executives, he had not developed a network of contacts during his 17 years at American Microsystems. But the day after he left, he plunged in. Nine months later, with the help of a venture capitalist he knew, Rockom became chief financial officer of a start-up company, Ikos Inc., a manufacturer of engineering work-station computers. His previous job paid about $85,000. Now he earns $70,000 but has what he calls a ”large equity position” in the company. If it succeeds, Rockom could come out way ahead. Formerly he had 80 people reporting to him — ”an army,” he says. Now he alone watches the money. ”I am the army. It’s fun.”

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