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On this page: If you know what to watch, you can sometimes recognize the warning signs that a layoff may be pending.  Watch for these signs.

Signs that a Layoff May Be Pending

There may be signs that things are not going well with an employer - warning signs that may give you an opportunity to lay the groundwork for protecting your assets and finding a job with a new employer.

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Solid employers like Kodak have disappeared when they missed a change in important technology.  Mismanagement has caused the disappearance of apparently prosperous companies like Enron, and technology companies soar and crash or are acquired.  All can result in massive job losses.

6 Warning Signs of Potential Layoffs

Sometimes you can see the layoff coming, but it may be very difficult to figure out.

Some employers strongly resist losing their employees, like Southwest Airline which was the only airline that did no layoffs in response to the Great Recession. 

Other employers view layoffs as a way to stay "lean and mean," and regularly have layoffs even when business is good.

Using Google, with Google Alerts sent to your personal (not your work!) email account can help you see signs of trouble ahead - read Using Google for Layoff Avoidance.

1.  Internal rumblings that business is bad and layoffs might be necessary.

Listen to the company gossip (within reason) and watch for changes in the company procedures with a focus on saving money, company budgets being squeezed too tightly, travel reductions, and/or hiring freezes. Also be wary of internally well-regarded "key employees" leaving, abrupt senior management departures, management known to be seeking a buyer for the company or parts of it, outplacement firms asked to submit proposals, etc.

Pay attention to an increase in the number of management meetings, particularly with topics like "budget reductions," "headcount," and "restructuring." Even an unexpected round of performance reviews can be a bad sign.

Tighter finances may only mean a temporary cash-flow problem, or it could indicate bigger problems, depending on what else is going on.

2.  The outside world predicts bad times ahead.

Pay attention to the news about your employer. Sources can range from "industry analysts" to the local business or nightly news.  Is there speculation about dropping sales, reduced profitability, management misbehavior, serious problems with current or pending products or services, or other negative news about the company or senior management?

Check out the "Layoff Early Warning: 50 Google Searches to Avoid Layoffs," and set up a Google Alert on your employer's name, and watch what is being written.

3.  The company financial reports show falling sales, profit losses, or other bad news.

In the U.S., the Securities and Exchanged Commission (SEC) requires reporting from a publicly-held company (one with shares of stock sold on one of the public stock exchanges).

Quarterly financial reports ("10-Q reports" in SEC-speak) and an annual report ("10-K reports") are published on a regular schedule. Get access at your public library, the SEC Website (via EDGAR), or commercial Websites like AnnualReports.com.

A company's annual report is audited by an outside accounting firm, which should make them trustworthy, but quarterly reports are not usually audited by outsiders so they are viewed as less reliable.

Look at the profits and read the footnotes. See what the executives are being paid, and how much of the company's stock that they hold are they selling. Low profits, and the executives (more than 1 or 2!) dumping all or most of their stock are bad signs.

Pay attention to the dates covered by the reports you are reviewing! These reports document past performance which may, or may NOT, be a good indicator of the future.

4.  The stock price of a publicly-held company has consistently dropped for months.

If the employer is a company with publicly-traded shares of stock, watch the price of the stock.  Stock price consistently dropping over many months (or years!) is not a good sign. The stock market may be wrong, but it may be right...

5.  The company has announced it's "on the market" or is being acquired by another company.

Often, even with prosperous companies, layoffs may be triggered when a company (or division/section of a company) is purchased by another company.

When 2 companies are combined, some job functions are duplicated - 2 HR staffs, 2 financial staffs, 2 sales organizations, etc. Both sets of staffs are not usually needed, and, typically, the company which was acquired is the one in which people lose their jobs. But, sometimes, management decides that the acquired company has a better staff, so no one should feel particularly secure during an acquisition - either the acquirer or the acquired.

6.  A WARN notification has been published.

In the US, companies meeting certain specifications are required to provide 60 days notice to affected workers and local governments in advance of plant closings and "mass layoffs." This is a requirement of the WARN (Worker Adjustment and Retraining Notification) Act.

A WARN notification is required if more than 500 people (or 33% of the "active workforce") are being laid off. Check your state's Department of Labor (or whatever it is called in your state) to see the notices that have been filed by employees in your state.  Set up a Google Alert on the company's name plus the word "WARN."

Bottom Line

So, those are some of the major signs. Many companies teeter on the edge of disaster for a long time. Others, seemingly on top of the world (e.g., Lehman Brothers), dissolve very quickly. Even apparently very financially healthy companies (e.g. Google) have layoffs.  So, keep your antenna up, and never assume that your job is secure and "permanent."  Read Preparing for a Layoff for tips on what you can do for yourself.


About the author...

Online job search expert Susan P. Joyce has been observing the online job search world and teaching online job search skills since 1995. A veteran of the United States Marine Corps, Susan is a two-time layoff “graduate” who has worked in human resources at Harvard University and in a compensation consulting firm. Since 1998, Susan has been editor and publisher of Job-Hunt.org. Follow Susan on Twitter at @jobhuntorg and on Google+.