Monday, March 24, 2008

How safe is a job offer

Many of you probably know about the acquisition of Bear Stearns by JP Morgan. What is not being discussed is the impact this is going to have on students graduating in May. There are currently eight students from Indiana University that between August and October 2007 received and signed job offers from Bear Stearn. When they signed, Bear was the fifth biggest investment bank in the country and their careers seemed limitless. Now, just over a month before they graduate college they do not know what their status as employees is. The company they signed with no longer exists and JP Morgan has not publicly announced what they are going to do with the hundreds of new hires Bear had lined up to start work in July. Along with this of the 14,000 employees Bear had they owned over a third of the companies shares. When this merger was approved they lost 85% of their wealth over night.

It is scary thought that just before graduation when you think the only thing left to do is finish school, you could potentially lose everything you have worked for over the last four years. I was wondering what people thought about this situation and also if you think there should be some sort of protection or type of severance if you have signed an offer and then lose your job before even starting.

6 Comments:

Blogger Lilly said...

This situation is very sad. I actually just spoke to someone today who had been hired by Bear Stearns, but she assured me that her job was 100% safe. I'm not sure if that is the case for every student hired by them- perhaps she got lucky. However, as a soon-to-be graduate who recently landed a job offer with a large company, I can't even imagine how I'd be feeling if I were in a similar situation. Going through interviewing and the whole process is more stressful than I can express, and to have landed such a terrific job, only to find out (over Spring Break, no less) that the company was bought out...well, it's awful.

You're right, four years (if not more) of hard work, lots of stressful interviewing, and perhaps even turning down other offers is not something anyone ever would imagine being lost overnight. As unfortunate as the situation is, however, I'm not sure that there is (or should be, or even CAN be) any kind of protection from losing your job before you start. A lot of people are hurting from this acquisition, and while I feel awful for recent grads with plans to work there, I can't even imagine what is happening to all the employees of Bear Stearns who are going to be getting laid off.

This is not something that people can ever predict or expect to happen. Thus, I don't think that companies need to plan into their budget a fund for recent hirees, as for most companies, this would fund would be untouched.

Lastly, I will say that I hope that if these students do lose their offers, JP Morgan will at least highly recommended them to other companies, or that they will even be hired by a reputable partner company based on the previous job offer.

5:59 PM  
Blogger Vic Simianu said...

I second Lilly's notion that, however unfortunate the situation is, it is not the end of the world. The financial industries are not the best we've seen, and although most major investment banks have taken a hit in the past year, the fact remains that this, too, shall pass. The housing crisis hit hard for most banks, and rippled through the entire economy, yet there have been many banks and firms that have managed to stay alive (Goldman, for example). If the students were able to land a job with bear Sterns, they should also be able to get into the multitude of other investment banking firms that provide equal, if not better, treatment and pay. Although the situation relays an insane amount of stress on the students, and the situation is unfortunate to say the least, having an optimistic outlook is necessary - especially since they're going into the realm of investment :)

2:59 PM  
Blogger Dylan said...

It would be difficult to impose any kind of burden on Bear Sterns, because clearly they meant no harm and had no knowledge of what would happen. It's an unfortunate situation and it's unlikely that anything can be done legally to hold Bear Sterns or JP Morgan responsible for the jobs of the soon to be graduates. In looking to the future however, perhaps this situation will create the need for a clause in job contracts to either waive liability or guarantee some sort of compensation in the event that this kinda of thing would happen to the company.

10:23 PM  
Blogger Brad said...

I may have overheard the wrong thing or speaking out of line, but someone told me that everyone who was supposed to receive a signing bonus from Bear Stearns is still going to receive it. First, could anyone confirm or deny the validity to this? Are companies contractually obligated to pay out signing bonuses? Considering signing bonuses do play a large role in the recruiting process and influencing candidates to sign on, I think this raises quite a unique and interesting situation for those that are terminated before working. Any thoughts??

As a side, I sympathize for everyone that experienced a loss in the Bear Sterns situation and I hope for the best for them and their families. As was hinted, I know a lot of us have friends that worked hard to land a prestigious job, however, can you imagine those that lost life-time investments?? We can only wish and hope for the best as our economy plays out the macroeconomic life-cycle.

9:20 PM  
Blogger Stephanie Grohovsky said...

To answer to Kyle's question, I think there absolutely should be some sort of compensation when a job offer is revoked due to company hardship. When you sign and accept an offer, you are entering into a contract with your future employer. You have the expectation to start your career with that company and make accommodations to do so. I know in my instance, I turned down three other great offers in order to take my offer. I would be furious to learn that I was left out in the cold after making all the accommodations to prepare to work for my future employer. If the Bear Sterns new hires knew they were going to be in New York, perhaps they have already signed leases for next year. Due to these accommodations, I believe companies should have severance packages set up to compensate the new hires for their efforts in preparing for a job there.

I’m not completely sure about the law, but I think they may even be able to sue under promissory estoppel. Under promissory estoppel, the plaintiff can recover damages if the defendant does not follow through on their promise to them and hardships occur as a result. If the situation happened to me and I received nothing, I know I would try to look into some sort of legal action against the company.

8:25 PM  
Blogger nschutz said...

To be completely honest, this is the first time I have heard of this. It completely upsets me because like Kyle said you have worked hard for so long to get a job offer and it is taken from you. Going off of what Stephanie said that it is important to remember that you had to turn down other job offers also.

To answer Kyle's question, I would hope that there is some sort of protection. Maybe I am naive, but is there not one currently? Wow. I would think that it would be in the contract. And I hope it is more than just the company that can no longer hire you, give you a good reference. I understand it is not their fault, but individuals who just lost their jobs (that they did not even start) need more than a good reference! Going off of that, what kind of "real" reference can they give your other prospective company if you never worked for them in the first place? Just information from your interview...we hired her/him...you should too.

11:10 PM  

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