It’s better to be prepared than surprised, so track the warning signs of your upcoming layoff.
It’s important to realize that in today’s volatile business environment, each week, large-scale layoffs are becoming increasingly common. And unfortunately, the current ones can occur with little formal notice to the impacted employees (Note: the recent “one day notice” to Twitter employees for a staggering 50% layoff). So in my view, protecting you and your family is prudent. Have as much preparation and planning time as possible prior to any actual layoff. I have found, after decades of analyzing layoffs, that the best way to ensure you have sufficient planning time is first to identify and then track each of “the early warning indicators.” Individual employees can spot these with only a little effort on their part. Also, because the topic is currently, unfortunately, quite relevant. Here is my updated checklist covering those early warning indicators of layoffs.
Start With A Superior Shortcut – Get A Knowledgeable Human Employee To Tell You If Layoffs Are Already Being Planned
Prior to doing a lot of research and legwork it’s critical that you realize that “someone always knows” when a layoff is being planned at your organization. And that knowledge from a human is likely to be much more precise than relying on the indicators that are provided here. So your first goal should be to identify the individuals that know about any current plan. And then, get one of these individuals to at least share an outline of the plan and a target date with you. So it’s essential that you use your network to get inside information from those who actually know.
First, if your company has had recent layoffs, attempt to identify by title those involved early on in the last layoff plan. Otherwise, use your network to identify those most likely to know when layoff planning is currently underway (i.e., the CEO, CFO, COO, corporate lawyer, head of HR, head of outplacement, or even a secretary). Getting the needed information directly from humans is possible because humans are inherently weak. So realize that it might only take a little influence, nudging, or a trade (by you or a colleague) to get one of these individuals to hint at whether the current plan is likely to impact you.
Part I – The Top 5 Early Warning Signs Of An Impending Layoff
The first step in preparing for upcoming layoffs is to identify and then periodically track the 5 most accurate “early indicators” that layoffs are pending at your company. Below are the top five most accurate warning signs.
- Identify first-mover firms in your industry that have previously been the first to layoff – in most cases, layoffs in the industry occur in a “follow the leader pattern.” So it makes sense to monitor the layoff activity of other firms in your industry (or region) that have historically been among the first to initiate layoffs. A concerned employee can learn about previous industry layoff activity by asking any long-tenured manager. And you can learn about more recent layoff activity by reading a sampling of “industry analysts” that write about your industry. And because of the WARN act (which requires companies to provide notice of layoffs). Each state will also have its own website listing large-scale layoffs within that state. Also, realize that there are several US websites where across all industries, all major layoffs are listed (Here is an example of one).
- Listen for these layoff indicator phrases that will become more frequent – there are many common phrases that, fortunately, can effectively serve as layoff early warning signs. The use of these “layoff indicator phrases” begins with your executives, but they soon filter down so that they are used by every manager. In some cases, these phrases may only be an indicator of belt tightening. But in a down economy, they also might mean that planning for layoff has already begun.
|Learn to do more with less|
We need to get leaner and meaner
We must eliminate redundancies
We need to restructure and consolidate
We need to be hungry like a startup
We need to streamline/restructure
We must increase outsourcing
|We need to reprioritize/sharpen our focus|
We have over-hired
Every business unit must pivot
A shock will build our sense of urgency
Scarcity creates clarity on what’s important
Our workforce needs rebalancing
We must dramatically cut variable cost
- Identify and track major business problems – the primary drivers of layoffs are usually not HR problems but instead strategic business and financial problems. So track any major changes in revenue, corporate costs, or stock price. Also, identify other major catastrophic business events that directly contributed to your company’s decision to have a layoff in the past. Those internal significant business events often include a major new product failure, the loss of a major customer, supply chain problems, and an impending merger. External business events that might lead to layoffs include changes in interest rates, stronger regulations, a decrease in consumer spending, or the unexpected strengthening of a major competitor.
- Watch your leadership team for sudden turnover – members of the executive team are the first to know about upcoming layoffs. And because managing right before and during a major layoff can be less than fun. A common precursor to layoffs is when members of the executive team suddenly leave for greener pastures. So employees should use any significant sudden executive team turnover as an indicator that bad things and layoffs are likely on the horizon.
- New hires in strategic positions further ensure cost-cutting/layoffs – whenever you have a new CEO, CFO, or COO. You should realize that any newly appointed or hired strategic business unit leader will, during tough business times, likely restructure and then conduct layoffs to cut costs (as their first step toward showing that they can make hard decisions). So if you have new people in these executive positions, it’s wise to plan for layoffs.
Part II – Additional Warning Signs Which Are Listed In Chronological Order
After tracking the top five warning signs. The next step is to identify any additional warning signs that historically have been present before previous layoffs. And finally, you should periodically track each of these 12 remaining “early indicators” that layoffs are pending at most companies. These remaining layoff indicators are listed below in the chronological order in which they are likely to occur prior to a formal layoff announcement.
- Take note when internal job transfer postings are taken down – because any current internal movements will complicate layoff plans. Many companies first take down all internal job postings for several weeks prior to any planned layoff. So, I would assume that this rare internal job posting removal action is the first precursor to layoffs.
- Note when contingent work is reduced – in a last-ditch effort to save regular employees. Many companies reduce the hours and stop hiring or the renewing of contracts for contingent workers. The next step will be the outright release of all current contingent workers.
- Notice when mini-freezes begin appearing – long before any major layoff actually occurs. Your executives will try to reduce operational and workforce costs using a wide variety of what I call “talent freezes.” The first freeze is usually the “don’t buy anything memo,” which restricts a wide range of common office and employee purchases. Next, look for restrictions on employee training and travel. Also, look for a reduction in both work and overtime hours for your nonexempt employees. And finally, look for restrictions or additional approvals to be added to any proposed salary increases or promotions.
- Take note when early retirements are offered – because senior employees are generally more expensive. Expect one of the early steps to be an attractive early retirement offer to workers over 50.
- Realize that employee buyouts may be the next step – because many companies find it difficult to actually select which employees will make the layoff list. Some organizations, during this step, will offer buyouts to employees in certain redundant jobs. Under this buyout approach, employees who agree to leave are paid a lump sum to resign without suing. The amount is based on their years of experience at the company (unfortunately, your best workers may be the most likely to agree to take the money and then seek a job at your competitors).
- Adding more hiring requisition approvals are also an indicator – prior to actually instituting a hiring freeze. Many companies will take the next step, which is increasing the number of approvals before a new hiring requisition can become operational.
- Look for dramatic reductions in recruiting resources – it pays to stay connected to your company’s recruiters. Because before an actual hiring freeze is implemented, the recruiting budget will be cut. And this is likely to begin happening. Because recruiting has now slipped from #2 to #8 among HR’s priorities for next year. Then, as part of the next step, contract recruiters will be let go, and there will be a freeze on hiring permanent recruiters. There may even be discussions about recruitment process outsourcing (RPO). And after a hiring freeze is finally instituted, some permanent recruiters will be laid off.
- Take special notice when a general hiring freeze is announced – often, the last step before large-scale layoffs is an across-the-board “hiring freeze .”Unfortunately, an across-the-board approach can mean that corporate growth will actually be limited. Because critical “growth impact positions” will go unfilled for months. This hiring freeze announcement often means that large-scale layoffs are less than a few months away.
- Be wary of an increase in discussions concerning outsourcing options – because the outsourcing of various business processes provides more flexibility and makes it easier to reduce labor costs quickly. Whenever you find that your managers are increasingly considering business process outsourcing (BPO). It’s generally a good assumption to assume that any new BPO will lead directly to upcoming layoffs.
- Take note when many managers interview all of their teammates – often before the final employee layoff list is created. Every manager will often be required to hold a one-on-one meeting with each team member to ask them about their current skills and interests. When you see that this “interview everyone approach” is being implemented across the company, take this practice as an indicator that selecting individuals for layoffs is already occurring.
- Large-scale coordinated HR activities are likely an indicator – preparing for and actually executing a large volume of employee layoffs requires a great deal of HR work. So, use your best HR contacts to periodically get an informal “heads up.” Then immediately before any predicted layoff. Look at the company-wide conference room schedule to see if there are any Mondays or Fridays where HR has booked a significant percentage of all available conference rooms for all-day (the rooms will likely be used for one-on-one exit interviews).
- It’s official when a WARN act layoff notice is formally submitted – companies with more than 100 employees are, in most cases, required by law to post a notice covering details on their layoff with the Department of Labor and a local state agency. Be aware that both the HR and the PR departments will know about this notice at least a week before it’s officially posted.
|If you only do one thing – in almost all cases, several “regular employees” will be aware of upcoming layoffs. These knowledgeable individual employees will likely include most HR generalists, the heads of outplacement, security, and facilities, and the top corporate lawyers. Also, be aware that in many cases, their administrative staff will also have somehow found out. Unfortunately, when contacted, in most cases, these individuals that know won’t answer direct questions verbally. But they will often provide an informal wink or a nod if you privately and confidentially ask them if you are likely to be negatively impacted under the current layoff plan.|
Over the last several years, hiring has been extremely difficult. And as a result, many organizations have been extremely reluctant to institute mass layoffs. And more recently, the concept of “talent hoarding” has reminded executives that laying off employees may actually be more expensive than keeping them through a short downturn. However, with the recent large-scale layoff announcements at Twitter, Meta, Amazon, Ford, and many others. And the continuous introduction of new technologies that can easily do the work of employees. There is a much lower level of reluctance on the part of executives to pull the trigger on layoffs. So as an individual employee, it now makes a great deal of sense to devote a significant amount of your time toward predicting whether you are likely to be laid off. And what actions you should take if the probability is high.
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