Pay Attention!
Being aware of your surroundings, even subtle cues, can mean the difference between being caught off guard and proactively preparing for what lies ahead.
If you’re grappling with the unsettling question, “Are layoffs coming?” here’s how to discern the signs:
Understanding Layoffs
Layoffs, also known as workforce reductions or downsizing, refer to the systematic termination of employees.
While they may be a strategic move to streamline operations and cut costs, they can also signal underlying financial instability or organizational restructuring.
To decipher whether layoffs are on the horizon, it’s crucial to pay attention to various indicators within your company and the broader industry at large.
How Do You Know When Layoffs Are Coming?
Generally speaking, in the corporate world, executive leadership does everything it can to hide the reality of impending layoffs from their employees as well as investors.
Remember: their primary mandate is to safeguard shareholder value, which entails maintaining workforce stability while keeping investors invested.
To accurately gauge the likelihood of layoffs, it’s imperative to adopt a discerning approach and rely on objective criteria rather than executive messaging.
Here’s how…
There are several categories of indicators that we’re going to discuss, ranging from internal indicators such as company finances and executive behavior, all the way to macroeconomic indicators like unemployment or inflation.
Watch what they do, not what they say, and all shall be revealed…
External: Industry and Market Trends
These are external indicators outside of your company or their control. Keeping a close eye on industry and market trends is essential for anticipating potential layoffs:
- Unemployment Report: A significant increase in unemployment rates may indicate economic challenges that could lead to layoffs across various industries.
- Economic Conditions: Economic downturns, industry disruptions, or geopolitical uncertainties may necessitate workforce cuts. Pay attention to indicators such as GDP growth, and consumer spending patterns.
- Competitive Landscape: Mergers, acquisitions, or strategic shifts among competitors could trigger ripple effects, prompting your organization to change staffing. Changes in market share, pricing strategies, and emerging competitors should be taken seriously. Especially watch your competitors, if your competitors are winning big, you may be in trouble.
- Inflation: Monitor inflation rates, as they can impact the cost of goods and services, affecting consumer demand and company revenues. High inflation coupled with stagnant or declining revenues may prompt organizations to implement cost-cutting measures, including layoffs
Internal: Financial Health Indicators
These are internal, objective indicators affecting your company. They can be important indicators of financial trouble, and are less open to interpretation:
- Job Cuts – Existing or Previous Cuts: Job cuts are perhaps some of the best indicators of further job cuts. Evaluate whether your company has a history of implementing job cuts during periods of financial difficulty. Past actions can serve as predictive indicators of future behavior.
- Revenue Trends: Monitor your company’s financial performance closely. A sustained decline in revenues, especially over consecutive quarters, especially if it includes missed targets – these may signal trouble.
- Cost-Cutting Measures: Take note of any cost-cutting initiatives or austerity measures implemented by management – pay special attention to petty cost cuts such as taking away vending machines or downgrading office coffee.
- Hiring Changes: Actions such as freezing hiring, reducing benefits, or slashing discretionary spending, could be precursors to layoffs.
- Profitability Metrics: Revenue is meaningless in the light of profit. Analyze profitability metrics like profit margins and return on investment (ROI). Significant declines or prolonged stagnation may prompt organizational restructuring.
Internal: Organizational Dynamics
These are internal subjective indicators that are open to interpretation. While they form an important element of your analysis, you should not be alarmed at every single instance they occur. Usually, trouble is signaled by a confluence of factors, not a single factor alone.
- Leadership Changes: Pay special attention to the appointment of executives with a track record of downsizing or restructuring. Demotions, as well as bringing in more ”senior” leaders to assist current executive leadership are also negative signs.
- Investors Involved: If investors, including institutional investors, associated with your business suddenly start appearing in your office, especially if your executives are performing non-stop pitch meetings for ongoing projects – this is a bad sign. Investors want returns not involvement, and if they are involved it’s usually because they are afraid they will lose their money.
- Back to The Office: Look for appearance focused office-centric policies, such as canceling of remote work arrangements and forcing everyone back into the office. These and other superficial “business improvements” are designed to impress non-savvy investors (oh look we did something, our numbers will surely improve). These initiatives may be distractions from underlying financial challenges or impending layoffs.
- Communication Patterns: Pay attention to shifts in communication patterns from senior management. Unwarranted increased transparency or, conversely, evasive responses regarding the company’s future plans may both offer insights into the likelihood of layoffs. The rule of thumb is: pay attention to change because change is bad and trust your gut.
- Employee Morale: Pay attention to the morale and sentiment of your colleagues. Widespread anxiety, rumors, or sudden departures of key personnel could very well be important indicators of underlying instability.
Third Party Warning Signs
In addition to the above indicators, some third party sources can provide valuable insights into the likelihood of layoffs within specific sectors, industries, or companies.
Here are some third-party warning signs to consider:
- Trackers for Layoffs: Websites such as Layoffs Tracker and WARN Tracker offer real-time updates on layoffs across various sectors, industries, and companies.
- WARN Notices: The Worker Adjustment and Retraining Notification (WARN) Act of 1988 mandates that companies with 100 or more employees provide a 60-day notice of planned closings and layoffs. Visit the Department of Labor website for more information.
Sorted Table of “Layoff Warning Signs”
Combining all of the indicators above we put together the following table of “layoff warning signs”.
Again, a single warning sign may not be a serious problem, but a confluence of indicators should be treated with almost care.
| Sign | Reason | Severity Scale (1-10) |
| A WARN Act is circulated | Legal requirement prior to mass layoffs | 10 |
| Your company is bleeding money | Financial distress often precedes workforce reductions | 10 |
| Executives leaving | Loss of key leadership may signal instability | 9 |
| Your CEO is trying to get new investors | Seeking investment may signal financial instability | 9 |
| Your executives are unloading stocks | Large sell-offs could be a leading indicator of financial trouble, which could signal upcoming layoffs | 8 |
| Layoffs are happening in your industry | Industry trends may dictate organizational adjustments | 8 |
| Outsourcing labor | Cost-cutting measure often involves outsourcing functions | 8 |
| Mergers and acquisitions | Organizational restructuring often follows mergers/acquisitions | 8 |
| Budget cuts | Cost-saving measures hint at potential staff reductions | 7 |
| Back to in person office from remote work | Potential restructuring of work environment and policies for “show and tell” only distract investors for a short time | 7 |
| An emergency meeting has been scheduled | Urgent meetings may address impending workforce changes | 7 |
| Consultants enter | External consultants may be brought in for restructuring | 7 |
| Decreases in company performance | Decline in performance may necessitate workforce adjustments | 7 |
| Recruitment / Freezes | Hiring freeze or slowdown may signify cost-cutting measures | 6 |
| Employees who leave are not replaced | Attrition without replacement suggests downsizing | 6 |
| Your boss behaves differently | Big shifts in behavior may indicate organizational changes | 6 |
| Employees have fewer responsibilities | Reduction in workload may indicate impending layoffs | 5 |
| Your manager keeps avoiding you | Lack of communication may signal impending changes | 5 |
| HR suddenly books up conference rooms | Meetings may indicate restructuring discussions | 4 |
| Overlooking alternatives | Failure to explore alternatives (i.e. innovate, grow the company) may indicate impending layoffs | 4 |
Frequently Asked Questions Related To “Are Layoffs Coming?”
There isn’t a specific “common” day for layoffs as it varies depending on company circumstances. However, HR experts claim that Thursday is the “best” day for layoffs. Also, layoffs often coincide with the end of fiscal quarters (March, June, September, December) or during periods of economic downturn.
Employees are typically notified of layoffs through meetings with HR or their direct supervisors, but usually these notifications happen after it’s all said and done. If you’re hearing about layoffs, they have usually already occurred. Some companies may also provide written notice or utilize email or even text messages.
The Worker Adjustment and Retraining Notification (WARN) Act requires certain companies to provide advance notice of layoffs. However, the specific notification period varies by jurisdiction and company size. If your company is over 100 people, you may be required to receive a 60-day notice.
Yes. Generally speaking, being laid off is not a black mark against you. It does not diminish your employability. Employers understand that layoffs are often beyond an individual’s control and focus more on skills and experience
Being laid off does not necessarily make it harder to find a new job on its own. But there may be additional competition if many other people are also laid off and competing for the jobs you’re going after.
Yes, layoffs can occur in waves, especially during periods of organizational restructuring or economic downturns. Companies may implement multiple rounds of layoffs to achieve desired cost-saving targets. They may try to stay away from news spotlights by breaking the layoffs into multiple sections, or they may need to restructure their organization in phases.
Yes, layoffs can occur in waves, especially during periods of organizational restructuring or economic downturns. Companies may implement multiple rounds of layoffs to achieve desired cost-saving targets. They may try to stay away from news spotlights by breaking the layoffs into multiple sections, or they may need to restructure their organization in phases.
Layoffs can be an early indicator of an economic downturn or recession. Companies may initiate layoffs as a preemptive measure to mitigate the financial challenges they expect.
A soft layoff refers to a situation where employees are encouraged or incentivized to voluntarily leave the company through early retirement, buyout packages, or reduced work hours.
Layoffs can have legal implications related to employment contracts, severance pay, discrimination, and compliance with labor laws. We recommend you consult an attorney, if you have specific questions about the legal implications of a layoff (this is not legal advice, just a friendly suggestion).
Employees can prepare financially for a potential layoff by creating an emergency fund, reducing expenses, and exploring alternative income streams. It is also useful to be aware of the details of your employment contract as well as your severance package.
If you do not have at least 6 months worth of emergency funds, a layoff can be catastrophic. Focus on proactive measures such as updating skills, developing new career skills, and expanding professional networks to alleviate the risk.
The requirement to announce layoffs depends on legal regulations such as the WARN Act. However, even companies outside of this jurisdiction often choose to announce layoffs to maintain transparency and manage employee and investor expectations.
Layoffs occur on specific days for logistical reasons, such as at the end of fiscal quarters, before holidays, or on days with the least statistical likelihood of backlash. HR as a discipline has truly become an expert in layoffs.
No. Instead, monitor company performance and communication channels to gain insights into the likelihood of layoffs. Watch what managers do, not what they say.
Some layoffs may be planned weeks or months in advance, while others may occur more abruptly in response to immediate financial challenges.
Companies may provide warnings about layoffs through internal communication channels, such as town hall meetings or company-wide emails. Additionally, legal requirements such as the WARN Act may mandate advance notice in certain situations.
A layoff notice is usually easy to identify for what it is. It typically includes information about the reason for the layoff, the effective date of termination, severance package details (if applicable), and any available resources for transitioning employees. In some circumstances the package will contain relevant information about Unemployment Insurance as well.
The 60-day rule refers to the requirement under the WARN Act for covered employers to provide at least 60 days’ notice before implementing mass layoffs or plant closings affecting a certain number of employees.
Big companies may lay off employees for various reasons, including economic downturns, restructuring initiatives, changes in market demand, technological advancements, or strategic shifts in business focus. In other words, big companies lay people off for the same reasons small companies lay people off – we just hear more about them as more people get impacted.
Conclusion: Forewarned is Forearmed
Watch your surroundings.
Being aware of your company’s financial performance, organizational dynamics, and prevailing market conditions, you can gain invaluable insights into the likelihood of impending layoffs.
If you know it’s coming, you can prepare for it.
You can get a head start on your job hunt. You can tie loose end. You can get your references ready. You can update your resume. You can prioritize your career development over your “about to disappear work responsibilities”.
Be sure to remember: wishful thinking will not get you anywhere. Neither will being scared, anxious or overwhelmed.
Layoffs are not the end of the world, just another twist on your career adventure.
Proactive vigilance is your most potent weapon against uncertainty in the corporate world.
Stay observant, stay informed, and let our experts help you.