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11 Signs That Your Company May Be Going Under
The economy still hasn’t swung back from 2008’s devastating crash, and businesses everywhere are hurting. Even if you were lucky enough to avoid a layoff, you may still be worried that your company is in trouble.
If you’re at risk of losing your job, you’ll be in a better position if you have advance knowledge of the situation, and can take the time to prepare a résumé, scout out other opportunities, collect references, and begin interviewing for other positions. But if your boss isn’t willing to let you in on your company’s financial state, how can you tell if your employer is on the verge of failure?
There’s no way to know for sure without hearing it directly from your higher-ups, but watch out for these warning signs.
The company is cutting back on staff perks. Has your company suddenly stopped supplying free sodas and coffee in the break room? Taken away the 401(k) employee match? Watch out—cutbacks on employee expenses and benefits could be a sign that the company is struggling. That was the case for Natasha Boyd, who worked as an administrative manager for a New York City consulting firm. “Instead of booking flights for employee travel, we started booking Amtrak,” she says. “Company lunches and car services also ceased.” Before long, the company itself had folded.
You’re being asked to tackle additional duties without being given a raise. Especially in cases where others have been laid off, your employer may begin asking to you tackle other duties that weren’t part of your original job description—without giving you a salary boost to go along with the extra work. “I went from receptionist to office administrator when the office admin was let go,” says Boyd. Despite her new responsibilities, her paycheck remained the same. In the case of Li Summers of Houston, Texas, who was laid off from a title company along with 74 other employees, the company “announced that there will be no more overtime, yet I had to suddenly do my boss’ job while he was taken to another department to cover someone.”
The business is paying close attention to each worker’s efficiency. In some cases, a company may bring in an efficiency consultant to talk with employees about their jobs and take note of which tasks they perform each day. In others, “managers suddenly start walking around with a clipboard and watching you work,” says Summers. Generally, this means that the company is preparing for layoffs and wants to determine which staff members can be cut from the team.
Customer orders are slowing down. As an administrative assistant, you’re in prime position to see how well company sales are doing. Take note of the phone calls and emails you receive. Have new inquiries dropped down to virtually nothing? Have old customers decided to switch to cheaper vendors? Every business has a bit of ebb-and-flow, so a slight drop-off isn’t a big cause for concern—but if you’re noticing that your company’s sales are in a serious slump, it’s a good indicator that there’s something wrong with the business.
Other employees are being laid off. If a company has already begun laying off workers, it’s a sure sign the business is in financial trouble. Even if your job was spared in the first round of layoffs, it’s time to start looking for work elsewhere—you may be next in line for elimination, if the company itself doesn’t shut down.
Higher-level employees are leaving. Even if your employer hasn’t started handing out pink slips, you should be suspicious if you’re noticing big changes in management. Human resource managers, in particular, “are usually preview to conversations about pending—or worse, imminent—layoffs way before others, and often 'jump ship' before the doodoo hits the fan,” says Duke Merhavy of Phoenix, Arizona, who was laid off during the dot-com crash.
Your company has recently been sold, or merged with a larger company. Generally, when a larger company takes over, they care more about your business’ assets than its staff—which means layoffs are likely. In some cases, they’ll lay off an entire staff and relocate operations; in others, they may just eliminate positions that are similar to those that exist at the larger company. In either case, if you catch wind of an impending sale, you may want to think about finding a new job.
If your company is publicly traded, its stock symbol has recently made a dramatic drop. When shareholders are unhappy, it’s usually a signal that management will be under pressure to shake up the system—which means that they’ll be likely to send a lot of their staff home with pink slips.
The bills are piling up. “I worked for a printing firm that was grossly mismanaged,” says Jean Fritz, of Indianapolis, Indiana, “and one of the major red flags for me that they were going under was that they never paid their bills on time, specifically those for raw materials.” If you’re receiving constant calls from vendors about outstanding invoices, it’s a good sign that something is wrong with your company’s finances. In Fritz’ case, “within three months, one of the major creditors absorbed the firm and fired the management.”
Your manager is suspiciously silent. If you work in a company where the higher-ups are generally open about quarterly performance and new initiatives, but they’ve stopped saying much of anything lately, there could be cause for concern. In this case, senior-level staff members are often aware of the business’ bad financial situation, but have been forbidden to spread the news.
You’ve been asked to take a pay cut or an unpaid leave. Both requests are desperate measures to help failing companies cut costs. In some cases, these cost-saving measures can prevent layoffs or bankruptcy, but generally, when these situations arise, it’s evident that your employer is not on steady financial ground. Take the pay cut or unpaid leave if you must, but be prepared to line up another job if the bottom falls out of the company.
Remember, none of these warning signs on their own will guarantee that your company is in serious trouble—but if you notice at least a few of them, you’re likely right to be concerned. If it seems like your employer is struggling, try not to get depressed about the situation: Just keep doing your job to the best of your ability, and focus on lining up a new position at a company with a brighter future.