How To Notice Layoffs (Ahead Of Time)
Preparation for redundancies is a covert process. Like any covert process, however, it has triggers and side effects that are visible. If you can notice them, you can avoid an unpleasant surprise.
Layoffs suck. This year to date, TrueUp has counted 865 lay-offs across tech and startup companies. For the 123,389 affected people, it is a shocking and devastating event, causing a lot of self-doubt: “if only I knew, I could’ve prepared.” During my career to date I experienced five rounds of layoffs; three of them in one company. I was lucky and was not laid-off in any of them, this gave me an opportunity to see the before and after of the companies. I learned a few tell-tale signs, that I will expand on in the rest of the article:
Tectonic shifts in the economic environment.
The company not hitting its targets.
Cost becoming a high priority issue.
Hiring freezes, no backfills & rescinded offers.
Salary cuts and performance review feedback.
Delays on budget agreement.
Reorganisation of teams.
Leadership stalling strategic focus.
Calendar intelligence.
Irregular senior leadership movement.
Briefings at short notice.
Invitation for breakfast in the morning.
I became quite good at noticing them. On the most recent occasion I called out layoffs a month before it was announced. I will share more on how that happened at the end. Meanwhile, knowing how to notice these signs can help you reduce anxiety, frustration, and have a plan for when it happens. A visual guide:
The Signs
A redundancy may seem like an abrupt event, organised in secret, but it is not an overnight affair. You can read an issue of The Pragmatic Engineer on how to execute layoffs. It is a complex process:
Most employees are hidden from this process until the very last moment. But with a trained eye you can notice the signs and triggers.
Tectonic shifts in the economic environment. Macroeconomic factors have a tangible impact on businesses. You should learn how rising inflation & interest rates, fuel & living costs impact customer behaviour. But it does not end with macroeconomics. Government policies, and partners / competitors can wipe reckless businesses. One day a company can be doing well. The next - find its main revenue streams cut off.
Following the economy and industry news helps keep up to date. For public companies - quarterly earning calls with their coverage can provide insight. For private companies it would be government mandated annual financial statements. In the UK, companies submit them to Companies House. Assuming you can find and interpret them (a great skill on its own!), they can give you a vague idea of a company's health.
The company not hitting its targets. Most tech companies and startups share their performance metrics with employees. You should have an understanding of how your organisation is performing against expectations. If the company repeatedly misses its targets - it will trigger attempts to restructure the teams or optimise cash flow. Relative time frames when this will happen depend on many variables. I would become concerned if the company missed most of its targets 2 quarters in a row. Especially if it is revenue or growth targets.
Cost becoming a high priority issue. Before layoffs happen, certain important initiatives are dropped, with a vague explanation. Third party services are cancelled. Contractors disappear at short notice. Requests may come to reduce infrastructure expenses. It is all about cutting costs. Being aware of your company's money outgoings can help you distinguish between housekeeping and irregular changes.
Unexpected hiring freezes, no backfills & rescinded offers. Roles in companies are budgeted ahead of time. A very well graded health check is the company's hiring policies. Stopped backfills is an early sign. Hiring freeze is more concrete evidence. Rescinded offers are a clear flag that a company is trying to repurpose a lump of pre-budgeted money, probably to extend the runway.
Managers may not even tell you about rescinded offers or a hiring freeze. You can still notice it. The average time-to-hire in the UK is about 30 days. If people are leaving, and replacements do not appear within a month - backfills are frozen. Another simple way to notice it is to visit your company's careers page. If there is a drop in advertised roles - hiring is frozen. Of course, modulo any reasonable caveat.
Salary cuts / performance review insights. Listen to the company's reasoning behind any promotion rejections, stingy salary increases, or unexpected pay cuts. Silent cuts are less obvious. If the company is rewarding you with more stock (especially, options) instead of cash, while the rest of the market is flying as usual, it's a way for the company to save money. Stock sales can be restricted and options are worth 0 until proven otherwise (not to mention - vested).
Delays on budget agreement. You don't have to have visibility into budgeting, but you need to know expected timelines and whether discussions are ongoing. Any sign of it taking too long is a signal the leadership team is in a financial tug of war. Increased constraints (costs) leave less available money to work with, forcing tough decisions.
Reorganisation of teams. Companies do not wake-up and choose reorganisation - it serves a purpose. The leadership is trying to optimise for more focussed work with higher leverage. Hoping that it will produce better results and improve the bottom line. If reorganisation is happening - listen carefully to the reasoning behind it. It can be a simple optimization, or it can be a company betting all-in on the highest leverage problem.
Leadership stalling strategic focus. If teams are on hold waiting for a strategic focus shift, and it is past the deadline - it can be a signal. If it is unusual, it may mean that other things became higher priority. There are very few things that have higher priority than unblocking teams. One of those things is identifying high leverage projects and cutting off the unnecessary ones. If you ever thought a company changed priorities in a backhanded way, think again. The discussions might have been invisible, but endless.
Calendar intelligence. You can follow other accounts on Google Calendar, and other systems. Public events make it easy to know about certain discussions. Private events (where it says "busy") can be correlated with other participants. If there is a sudden influx of long running meetings that include HR - something is up. If the leadership calendars go completely dark - an immediate red flag.
Some may call it nosey and intrusive, I disagree. My calendar is available for anyone to see and schedule in a free slot. Some meetings are private and "busy," But by definition it is there for you to know when something is happening. Therefore, if I hide my calendar from my team behind a Calendly - it is not about me helping you. It is about me hiding from you.
Irregular senior leadership movement. People are more likely to give good news remotely, and significantly bad news in person. It is great to welcome a very senior leader in a remote office. But, if it has never happened before it can be an ominous sign. Same with leadership off-sites. If there is an irregular pattern, it can signal that serious discussions are happening, away from curious ears. The Pragmatic Engineer newsletter had an example of exactly this in a recent scoop issue:
On the evening of Tuesday, 6th September, software engineers in Uber’s Vilnius office in Lithuania were getting nervous. They just received a message asking them to prioritise attending a meeting in person the next morning organised by HR. Directors also sent a note that day, asking their teams to be in person as important news concerning everyone will be announced. All five directors with a team in Vilnius flew in from the US to personally share this news.
Briefings at short notice. Not all briefings are ominous, but I do get anxious when there is a meeting booked at short notice without a description. Especially with a large group of people. That's the last moment before the announcement. Note the Uber example.
Invitation for breakfast with the founders. This may be specific to me, as I have only heard of this once. A company has to somehow separate people affected by layoffs from the rest. This is easy to do it on Zoom, as we have seen during the pandemic. One of the companies I worked for used a breakfast ruse to get affected people physically elsewhere and to tell them they were fired. You can read about it on Your ProductPill, Eduardo was on the receiving end.
What To Do About It?
First of all, the signals are context dependent. Leadership can have long meetings. HR calendars are all-busy all the time. Teams get reorganised as a routine process. Cost saving can be part of house cleaning. However, if the signals are too strong to ignore, and it seems like layoffs are coming, these are available options:
Don't panic. It might be beneficial to wait until the event happens, unless you risk staying. You might not be affected or a severance package might be worth it. In the end, layoffs may not happen. Firing people is the last resort.
Open avenues of inquiry. You can ask 'will layoffs happen soon.' Most likely you will be politely brushed off. If, however, you give a few examples of evidence, you might get a small token of assurance.
Know your rights. Most tech companies and startups do want to do good for their employees, even in difficult circumstances. That does not prevent disagreements or occasional bad actors. Knowing about your rights and company’s obligations in your jurisdiction is important. It is not something to read upon after it happened, it is something to be familiar ahead of time.
Join a union. A friend suggested it as an option, while I was writing this article. United Tech & Allied Workers is one such union in the UK. They can help you negotiate your rights. I have mixed feelings about unions. On one side what they promise is good, on the other - they can lead to a complicity culture and poor performance. In any case, this option exists, should you wish to join.
Prepare for a bumpy ride. The day when layoffs happen is not the end of the process. It is an announcement of a beginning change. Not everything will go smoothly, so be prepared for a shaky ride. It is a good time to consider what’s next. The hope is that things will get better, but it is not guaranteed. As I wrote in Everything is Negotiable:
No one knows what they are doing (but not in a negative sense). Most decisions are experience or intuition based projections, rather than guaranteed paths to outcomes. Might as well call it a well informed guess.
Define what good looks like. I usually give the company three months, a quiet probation period, to see if the change brings an improvement. I don’t share this with anyone, but I make a note of a rough idea of what I expect signs of improvement to be. It is always better to define what good looks like, than reflect whether it was good. Less hindsight bias. If I don't see an improvement, I become more receptive to changing a workplace.
End Of My Story
I told my manager I don't know which end of the stick I'll get, but my experience tells me there’s a cause for concern. The principal signs were:
Shifts in the economic environment.
Cost became a high priority issue (and amounts already saved were significant).
Unexpected hiring freeze.
Long time to agree on the budget.
Lack of strategic focus clarity for longer than expected.
I was told my evidence was valid cause for concern, but my team was not affected. I did not pry beyond that, nor did I tell anyone what I knew. There is always a small chance it won't happen. On the other hand, knowing it was happening reduced my levels of anxiety. It also provided an explanation why other things were going slower than expected.
This is of course a single perspective based on few companies. Writing this article I gathered feedback from my friends and former colleagues. I have not yet reached a level where I'd see the hidden side of the process (not sure I'd want to see it!). I would like to hear from you. If you were affected by layoffs or if you were a founder or a senior executive involved in these decisions - do the signals match? Would you add anything more? Is something misrepresented?
In any case, I do hope that this article will help you see the unseeable and feel more prepared.