Take The Money And Run Or Take Your Chances

To many, the news hit like a punch to the gut: Last spring, 10,000 employees at IBM's East Fishkill (N.Y.) semiconductor plant learned that half of their number soon would be let go. But Philipe Van Itallie, a 50-year-old manufacturing systems engineer, wasn't so nervous: With 25 years' experience, he could retire early, taking one year's salary and lifetime family medical benefits with him. Says Van Itallie: "I had an offer I couldn't refuse."

Plenty of others are reaching the same conclusion. Despite a weak economy and a shaky job market, Van Itallie is just one of 50,000 IBMers who over the past few months have agreed to quit their jobs in exchange for a tidy bag of cash and an uncertain future--twice the number IBM predicted would leave voluntarily. Now, Big Blue is giving the buyout strategy another shot: On July 27, as part of yet another massive restructuring, CEO Louis V. Gerstner Jr. announced that the company would offer somewhat less generous packages in hopes that another 35,000 workers will accept.

"I LIKED WORKING." Chances are, they will. Chances are, even more will take the bait. At Safeway Inc.'s Canadian operations, 3,000 workers recently took the money and walked--50% more than the company's expectations. Some 6,400 people at GTE Corp.'s Telephone Operations subsidiary opted out in May--fully 8% of the unit's work force. Similar examples abound at General Motors, DuPont, Sears, and other companies.

With new jobs scarce, why the mass exodus? Often, workers leave voluntarily because they risk getting old-fashioned pink slips or a far less generous deal a year later. That was the case for Van Itallie. Now, with his kids' college tuition bills looming, he's having a tough time landing new work. And given a true choice, he would rather have stayed with IBM. "I liked working," he says. "I worked until the last minute."

Others can't wait to bolt. These are the entrepreneurs, itching to make it on their own. When Texas Instruments Inc. offered an early retirement plan in 1991, Melvin Sharp was one of 2,900 to opt out. As one of TI's top lawyers, he had helped secure more than $1 billion worth of licensing fees since the mid-1980s. Taking his contacts and knowledge of the industry with him, he started his own law firm with two TI co-workers and promptly took a seat on the board of rival chipmaker Cyrix Corp. Says Sharp: "If you can just walk across the street and get another job, then why not?"

For every happy retiree, though, there's often a former employer who wishes that person was still on the payroll. Companies are learning that buyouts can turn into expensive giveaways of gifted employees and experienced veterans. Ohio-based utility Centerior Energy Corp., for example, lost one-quarter of its highest-ranking managers to its current buyout program. And Eastman Kodak Co. had to scurry to refill the jobs of 2,000 of the 8,300 workers who unexpectedly took its 1991 buyout offer.

HAPPY RETURNS. That's not unusual. A survey of personnel directors by Right Associates, a Philadelphia consulting and outplacement firm, found that two-thirds of companies offering early retirement in recent years unintentionally lost particularly valued employees. "You open up a [door] and suddenly everybody walks out," says John R. Bourbeau, a Right Associates partner.

That can be costly. At General Motors Corp. and IBM, several executives took their buyouts, then accepted an offer to return to their employers. Others came back as highly paid consultants. IBM's underestimate of the number of employees taking buyouts cost it $2 billion in additional severance expenses, charged against second-quarter earnings.

In some cases, buyouts can bring to the surface festering morale problems or create new ones. The early separations can irk those who stay behind, who are often saddled with heavier work loads and a sense of foreboding about layoffs yet to come. At the Los Angeles Times, another issue emerged: The paper's offer of up to two years' pay and lifetime benefits pitted reporter against reporter last year when they started discussing salaries with one another for the first time. Veteran reporter Bella Stumbo quit in a rage--taking along a $142,000 package--when she learned that male reporters were taking home salaries that rangedfrom $20,000 to $50,000 a year more than hers.

There are happier endings. After 13 years with BP America Inc., 44-year-old Ron Colvin left his job as a marine fuels buyer and started his own business as a chimney sweep. Colvin says he's happy to be out of the corporate rat race and is making decent money. The only problem: "It gets lonely, working by yourself," he says.

But it's more than loneliness that's eating away at Van Itallie, late of IBM. Indeed, a bitter frustration that a lifetime's work is suddenly no longer needed may be the unifying symptom of the next 35,000 workers to leave IBM--and indeed, of this entire buyout generation.

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