While the economy is as strong as it’s been in a while, we are in an era where layoffs are commonplace. Odds are that if you are at a stable company and do a great job everyday, you don’t have much to worry about. However, if you are concerned that layoffs are in the future at your employer, you have a few tricks up your sleeve to better assess what’s to come. If you are worried about layoffs, you may have a tool you can use to help spot the problem before it happens.
1. Check the business’s credit profile.
The first step to take is something that bank’s normally do to you: a credit check. Businesses are more likely to turn to layoffs during a period of financial stress, and there is no better signal of pending financial turmoil than missed and late payments. While this could also be a sign of poor vendor management or an inefficient accounts payable team, it could also be a sign that the company is strained for cash.
Unlike personal credit scores, which only you or a lender with your permission can access, business credit data can be checked by non-owners. Some businesses use this as a tool to vet vendors or research competition, but you can use it as a way to make sure your employer is doing OK. This doesn’t come free though — there are products like Dun & Bradstreet’s Business Information Report that allows you to check a business’s credit report for $121.99, for example. And some of the major business credit reporting agencies only allow you to get a snapshot of the business’s report instead of the full version. Also, be aware that while many businesses have business credit scores established, some smaller firms may not have a full business credit report you can check. (You can also track up to five business credit profiles as part of a Nav Business Manager, Business Boost, or Business Loan Builder account.)
You should look out for business credit report red flags like tax liens that have been filed against the business, any major accounts that are more than 90 days past due and large judgments against the business. And keep in mind, just because your employer is struggling financially or has these negative items on its business credit report doesn’t necessarily mean layoffs are a given. Plenty of businesses make cuts in other places besides payroll or bounce back after a tight cash-flow period to be stronger than ever. The credit report can simply serve as a way to check on the business’s financial health.
2. Be aware of vendor relationships.
The next red flag to look for after getting a business credit profile is to look at current vendor relationships. Is the business paying invoices on time? How does the business treat vendors overall? Has there been a shift where vendor relationships have become more strained?
If a business regularly makes late payments and lets vendor relationships go sour, it shows that the business is either not focused on strong, valuable partnerships or is trying to solve another problem. Assuming the company values vendor relationships, late and missed payments to vendors can be a sign that the company is in financial trouble.
A company has many options to manage cash flow and timing vendor payments can be a part of that process. However, if a company is running so low on funds it can’t pay the bills, layoffs may be coming next. Some of these vendors may appear on the business credit report, others may not, depending on where you get that report and whether the data is reported to that credit reporting agency. You can always take an in-the-know employee of the accounting department out for a drink or coffee to continue the investigation.
3. Look out for more layoff warning signs.
In addition to the financial signs that layoffs are coming, there may also be behaviors at the office signaling upcoming layoffs.
Account access turned off – I once worked for a company that was known for large rounds of layoffs. One day a coworker lost access to a couple of key internal accounts, including his email. Access was restored by IT the same day, but less than a week later he and legions of others were given layoff notifications.
Managers acting aloof – Is your normally friendly and helpful manager giving you the cold shoulder and acting shifty when you stop her in the hallway with a quick question? It could be nothing, but she might know something you don’t about the future of your position.
Executives share plans for restructuring – “Restructuring” is often code for layoffs. Sometimes executives bring consultants in to help with the “transition,” circa Office Space, but any time a top-down restructuring is announced there is a chance layoffs could be part of the process.
Worker Adjustment and Retraining Notification filing – If a company is planning a large layoff, it is required by law to file a Worker Adjustment and Retraining Notification, or WARN notice, with the state. Here is more information about the federal law so you can see if your employer qualifies. If you believe a layoff may be coming soon, check your state’s public WARN notice page to see if your company is listed.
Job board goes blank – If your company implements a hiring freeze, it could be a sign that they are trying to protect current employees’ jobs by avoiding a larger headcount. If the internal job board goes blank, it could be a sign that layoffs are pending and the company is looking to avoid additional trouble shuffling people around between roles.
Of course, these warning signs can also be a regular part of doing business at some companies. Just because you saw one or two warning signs does not mean you should start updating your resume. However, if it becomes clear that the company is getting ready for a big shift, getting a jump on the job hunt may not be a bad idea.
4. Always look toward the future.
Even if you are at a stable company with growing profits, it is possible that layoffs will come your way. And, at a company with layoffs pending, it is reasonable that you will survive the culling if you are a vital part of the team. But don’t put all your eggs in one basket trusting your employer to keep you around forever.
A few decades ago, it was common for people to spend their entire career at one employer. These days, many workers’ compensation will stagnate if they don’t move to another company every once in a while. As a full-time employee, you should still always be working to improve your skills and increase your prospects for bigger and better roles in the future. If you don’t, you are the one who will ultimately suffer.
For now, just keep your ear to the ground and be aware of what’s going on around you. If you think something big is on the horizon, it can’t hurt to look into your company’s credit, vendor relationships and other signs of pending layoffs. No one is more concerned with your career than you, so take the initiative to protect yourself, your job, and be ready to jump through open doors when you see an opportunity to take on new challenges. That is the surest path to a stable and successful career.