How to tell if a layoff is coming

Clues that a Pink Slip May Have Your Name on It -- and What to Do About It

How to tell if a layoff is coming

These are the signs that job cuts are likely on the way.

By Larry Buhl

Almost all mature companies have shed employees at some point -- and in most cases the pink slips don't come as a surprise. "Very often senior management will delay a decision to cut headcount, so unless there is a quick catastrophic event, layoffs have been a long time coming," explains Scott Steinberg, CEO of TechSavvy Global. 

How can you know if your job might be on the line? Employment experts point to several signs.

Subtle Signs

These are clues that it might not be just your imagination: 

  • Nonessential Budgets Are Reduced or Cut: Executives are flying in business class or coach. The gourmet coffee in the break room is now a lesser brand, and the Friday bagels are gone.
  • Products and Projects Are Postponed or Canceled: In prosperous times, businesses are awash in initiatives for growth. In leaner times, they hunker down and return to basics by focusing on what is guaranteed to bring in revenue now, rather than looking to the future.
  • Your Sphere of Influence Shrinks: "This is something employees 'feel' but often can't quantify," says Jim Link, managing director of human resources for the staffing and recruiting firm Randstad. "It may be that certain people used to ask for your opinion but now bypass you," he says.

Serious Signs

These are clues that you're probably not imagining things: 

  • Budgets Are Cut Way Back: Travel is permitted only for people who are actively bringing in the bacon, and they fly coach. Office parties are eliminated. The coffee in the break room is generic. Bring your own mug.
  • Senior Managers Resign: One resignation might not mean a lot, but two or more resignations could mean that executives in the know are seeking lifeboats, according to Mike Manoske, a business development manager and recruiter for the staffing and consulting firm Yoh. "When key people leave abruptly at the same time, it's typically because they don't have a lot of confidence in the company," he says.
  • The Flow of Communication Changes: Things that used to come verbally now come in writing or vice versa. Or worse: You're excluded from meetings where you used to be a key player. These changes could be due to reorganization or a manager who wants to do things differently. "But when no rationale is given for the changes, it's a bad sign," Link says.

Alarm Bells

These are signs that you should have a solid "Plan B": 

  • Budgets Are Cut to the Bone: All travel is curtailed. Bring your own coffee. And offices are downsized and moved to smaller, less-expensive digs. (Experts say this is a major warning sign.)
  • Divisions, Teams or Offices Are Consolidated to Eliminate Redundancies: Entire functions are outsourced or cut.
  • Vendors Grumble About Not Being Paid: This is likelier in smaller companies whose cash flow is more precarious. Workers in purchasing and accounting would know about this problem first.

Building Your Own Lifeboat

By the time you see several big warning signs, it's probably too late to save your job, experts say. But there are several actions you can take before the company's problems mean a crisis for you: 

  • Get the Facts: Rumor mills are very common, but they aren't very helpful in figuring out what's going on, according to Manoske. "Keep the channel open with your immediate supervisor, and across divisions so you have a good flow of accurate information about the company," he says. Manoske also recommends becoming friends with purchasing agents and accountants in the company. "They are ground zero of cash flow, and as long as you don't put them in an awkward position, you can use them to find out what's really going on financially," he says.
  • Be Invaluable and Productive: Companies often look for ways of eliminating redundancies, even in flush times. If your job duties overlap with someone else's, your job is more likely to be on the chopping block when things get tight.
  • Show That You're Invaluable and Productive: You should be always looking for new opportunities to prove yourself, Steinberg says. "Take on projects not in the scope of your job description," he says. "Show you are enthusiastic, active and inspired in helping the business. If you are laid off anyway, those skills will serve you better when looking for a new job or starting your own business."
  • Always Be Learning: "Nothing is certain in today's economy, and you have to stay up with changes," Steinberg says. "That means continuing education, expanding your skills and taking the initiative to gain more experience in the company."