How To Spot The Warning Signs of Layoffs
> Being laid off can be emotionally and financially devastating if you’re not prepared
It’s payday and your sense of relief is off the scale.
It’s been another tight month and you’ve barely made it this far.
You just had enough in your last paycheck to cover the rent/mortgage and every month feels like a constant struggle just to make ends meet.
Every payday, you can’t help but think about what would happen if you couldn't rely on a regular paycheck every month. How would your family cope financially?
You usually brush it off and carry on. After all, you show up to work every day and you've not been in any trouble lately so there's no real risk of losing your job, right?
But now the worry has got real.
Just last week, you heard some gossip around the water cooler and now you’re freaking out.
Michelle in HR let slip that layoffs are likely and there are some whispers that your department might be in the firing line.
You’ve barely slept since then. You can’t think of anything else.
What if the rumors are true? How will you cope if you lose your job?
It isn’t just paranoia that’s making you feel like this.
Lots of companies are laying off staff and there’s more to come.
Freaking out that you might be next makes sense and it can be super stressful.
This study from Social Sciences and Medicine confirms that the fear of being laid off can damage your health more than an actual layoff.
These days, the idea of a “job for life” is pretty much dead. Most of us work for multiple employers in our working life and it’s not always our choice to move on.
What if you could take the fear of being laid off and use it to your advantage to gain some control over the situation?
Instead of being caught off guard, you can read the signs and see if those water cooler whispers have any truth.
Signs Your Company May Be Planning Layoffs
There are situations when everybody in the world knows about a company’s poor financial health. When there are headlines in the media about pending and/or planned job cuts, it’s damn obvious that layoffs are gonna happen.
However, in a lot of cases, there are layoffs that seem to come out of nowhere - totally unexpected and it catches all of us off guard.
Even when layoffs seem to come out of the blue, there were likely signs that it was coming. You just didn’t know how to read them.
If you learn to spot these signs, your paranoia about your job security probably isn’t misguided, but can be grounded in some foundation of truth.
If there’s one person that has a good grasp of this, it’s Suzy Welch. She’s a business journalist and author that has covered the topic of company misfortunes tons of times.
Watch this short 2-minute video clip as she quickly explains the red flags of failing companies.
VIDEO: Red Flags Of A Failing Company
YOUTUBE: CNBC Make It
> Keep your eyes and ears open to what’s happening at work
> Unusual secretive activities and/or meetings are not good
> Be prepared and scope out other jobs or ride it out if you can
Let’s dig a bit deeper on a few of these signs plus a few more that weren’t mentioned in the video. This will help you become a better Sherlock Holmes at your office.
1) Your Company Is Restructuring
“We’re restructuring” are two words guaranteed to strike fear into any employee.
It doesn’t always mean job losses though. Sometimes, it can just mean that you report to someone different. And, sometimes that can include moving to another desk closer to your new manager.
But if your company has been involved in a merger or acquisition, it can lead to layoffs. Duplicate functions and/or responsibilities are usually the first areas that get scrutiny for some quick cost savings.
It may not be as bad as you feared but it’s always smart to be on your guard and be informed about what’s happening around you at work.
If you keep hearing whispers about “downsizing”, “rightsizing” or “efficiency changes”, it’s all just corporate bullshit jargon for cost-cutting measures. That’s the reality, so don’t get misled into thinking otherwise.
2) There Are Lots Of Closed-Door Meetings
Have you noticed upper management is spending a lot of time in closed-door meetings lately?
Take a peek at the meeting room calendar on Outlook and if the meeting topic is blank or just labeled as something generic like “senior management meeting”, that’s your hint that it’s a sensitive topic.
And is HR getting involved more than they used to?
Both of these can be signs that something is happening, and when HR senior managers are joining, that’s when you know that it has implications for the entire staff.
3) Your Manager Seems “Off”
Paying close attention to your manager can be a good move, especially if he or she has visibility and/or participation in executive-level meetings.
Don’t go crazy and come across like a stalker. Just keep an eye on any obvious changes in their attitude or body language that seem out of their normal character.
Does your manager seem wound up? Tense? Are they avoiding making eye contact with you?
Managers often know about layoffs before anyone else. While they can’t come out and tell you what’s happening yet, their unspoken behavioral changes may provide some subtle hints that something is happening.
4) Your Manager Is Leaving
Even if you’re not best buddies with your manager, be wary if they suddenly jump ship.
They may have had an offer they can’t refuse and it has nothing to do with your company’s health.
But they may also know something you don’t about where the company is heading. Particularly when there’s new leadership or when big changes are planned.
And if more than one manager in your company leaves at the same time, it can suggest bad times are coming.
5) Your Office Star Just Quit
This one doesn’t mean anything by itself. Your office star could have just been headhunted and is off to pursue new challenges. The common HR saying is that “Good people are hard to find and hard to keep.”
But off the back of other worrying signals, it could be another sign that all isn’t well in your company.
Star performers often have the eyes and ears of upper management. And if their frustrations and requests for support aren’t being addressed, it’s a sign that the company just doesn’t have the means or resources to help out - neither of which is good.
They can also pick up on negative vibes of the executive staff pretty quickly and they may decide to jump ship as a result.
6) Your Workload Is Changing
Okay, with this one, it can go either way.
Have you got less on your plate than you used to?
Once you’ve got over the initial hump, you might think it’s a good thing. Being less busy means less stress, right?
Getting fewer projects can be a sign that your company isn’t doing so well.
If things start going wrong for your company, it’s all about the here-and-now, and projects that are deemed non-essential are dropped.
However, the opposite can also mean the same thing. It’s when everyone gets tons more on their plate.
As companies struggle with meeting financial commitments or goals, they’ll often make cuts in non-essential outside support services or temporary contract staff which means everyone else needs to do more.
7) Your Company’s Big Product Is Struggling
Most companies have one flagship product or service that can be relied on to bring in more revenue.
All’s good until it takes a sales hit. If your company’s flagship product hasn’t been firing on all cylinders lately, expect profits to be down too.
And if upper management doesn’t have ways to cushion the blow, they’ll often make cuts.
Buddy up with a peer in the sales department to keep a pulse on how your company’s big product is doing and be on your guard if sales dip.
8) Your Company Is Cutting Back On Expenses
When was the last time your company made a hire? If it’s been a while since anyone new joined the team, there may be a hiring freeze.
It can be an even bigger sign if your company was intending to make hires but the interviews were canceled or job offers were withdrawn.
A lack of promotions can be another clue. Do you keep pushing for a promotion, only to be told it’s not the right time? And are raises and bonuses a thing of the past?
Sometimes, the clues are more subtle than this.
If you’re always frustrated that the office supply closet has stopped getting restocked, your manager may have been told to cut spending.
Or maybe you’ve noticed that the office snacks have been downgraded or sidelined.
These kinds of budget cuts can indicate that layoffs may be looming.
9) You Feel Invisible Now
Okay, this one doesn’t mean a lot by itself but when you’re already freaking out about your job security, it can add fuel to your paranoia.
Maybe people who you previously counted as office buddies have stopped eating lunch with you or they consistently make excuses to leave when you try to chat at the water cooler.
You can’t put your finger on what’s changed and it gets you thinking about whether something bad is about to happen. Have your co-workers heard something you haven’t? Is there a genuine basis to those whispers about your department’s future?
The real clincher? You’re being left out of meetings that used to be a regular feature in your Outlook calendar every week and you’re shut out of discussions about future plans.
Getting the cold shoulder can be a blow to your ego and it can be a sign of worse things to come.
How To Check Your Company’s Financial Health
Don’t worry if finance isn’t your strong point and you break out in a cold sweat at the mere thought of doing some number crunching.
You don’t need to be an accounting expert to get a handle on your company’s financial health.
Whether your company is publicly held or privately held, you can find clues about what’s going on behind-the-scenes.
Publicly Held Companies
Publicly held companies are “owned by the public” and are obligated to disclose their financials.
This is great news for you, since it means the details are already out there in the public domain. You just need to know where to look.
Try these tips to see the financial health of publicly held companies:
1) Listen In On Quarterly Investor Calls
Most public companies hold 4 calls each year. Typically, this will be within a month following the end of each quarter. It’s commonly referred to as “earnings season”.
2) Search YouTube For Opinions
Hop on YouTube and look for video clips from independent financial analysts. They might offer an opinion on how your company is doing and what their future prospects are, especially if it’s a decent-sized company.
3) Listen to Podcasts
Seek out podcasts from analysts. It’s another opportunity to get an outside perspective on your company. Search for your company name on the podcast library, download the episode and then listen to it on your daily stress break walk at work.
4) Read Financial Blogs
Look for financial blogs that review company performances and predict their future. They may have discussed your company recently, and this can provide a neutral perspective on the future. Or, at least some bedtime reading to help you fall asleep fast.
5) Read Your Company’s Quarterly Earnings Summary
Check out the press release summary of your company’s quarterly earnings. Here you’ll get info on net income, net sales, and earnings from continuing operations. And usually, these figures are all audited for accuracy.
Privately Held Companies
What if your company is a privately held one? They’re not required to disclose any information in the public domain but you can still get a pulse on what’s happening and whether bad times are coming.
Try some of these tactics to get a handle on its financial health.
1) Lean On Your Peers
If you’ve got a good rapport with people in the finance or accounting departments, ask them how your company is doing financially.
Know someone in sales? Find out if your company has been meeting monthly or quarterly sales targets and how they’re tracking towards annual targets.
Financial problems can be behind a lot of layoffs, and getting solid proof of whether there are any issues at your company can tell you a lot.
2) Examine Executive Summaries On Company Performance
The thought of reading through monthly or quarterly executive summaries might make your eyes want to glaze over but it’s a great way to get a handle on how your company is performing.
So, if your company execs share a “state of the company” type of report, don’t ignore it. Read it and if there’s anything that might suggest financial struggles, ask them.
3) Get Inside Info From The Warehouse
Talk to your peers in the warehouse and get the scoop on how quickly products are moving out. If the inventory is not being shipped out, there’s not a huge amount of demand for what your company is selling. And that’s never good news!
4) Ask Your Manager About Company Performance
Got a bad feeling that seems to be backed up by facts? See if you can get clues from your manager about company performance.
Asking about your performance and where you can take your role in the future can be enlightening. Is your manager avoiding talking about long-term plans? Keep an eye on their body language too.
Putting It All Together
Gossip around the water cooler is one thing but you need to know if it’s grounded in reality or just made-up bullshit that’s gotten out of control.
Most layoffs have warning signs, assuming you know how to spot the ones that can spell danger.
Checking out your company’s financial health and getting real feedback from key people that see or experience company performance can tell you whether these red flags are signaling bad times.
So, if you are worried that your company is heading for layoffs, get yourself in the driver’s seat ahead of time so you're not hitting the panic button if your fears are proved right.
Combine all the clues and hard data points and you’ll be much better informed as to what’s happening. And knowing what’s possibly coming down the pike can help you deal with the stress of layoffs.
And if all signs are clearly pointing to the company going under, you can take steps to prepare for layoffs and keep your emotional and financial stress to a minimum.