THE BLOG
09/15/2011 04:22 pm ET Updated Nov 15, 2011

7 Warning Signs of an Impending Layoff

While the economy as a whole has been slowly growing, many industries are still shaking off the effects of the recession. The only constant is that no single industry has been completely safe from job cuts.

In July 2011 alone, several multi-million dollar corporations announced massive layoffs: Borders closed its remaining 400 stores, eliminating 10,700 jobs across the U.S.; drug giant Merck & Co (NYSE: MRK) cut its staff by 13,000; and Cisco (NASDAQ:CSCO) reduced its payrolls by 6,500.


Top that off with nine major global investment banks announcing cumulative layoffs of more than 60,000 bankers, and you may start to wonder about possible cuts coming to your workplace.

Is another recession on the way? While it's too early to tell for sure, July 2011 saw 1,579 corporate layoffs involving 145,000 workers -- the most mass layoffs since January of this year.

To help protect yourself and your financial well-being, here are seven signs that a pink slip could be in your future.

1. Industry-Wide Layoffs

Many companies follow industry performance data along with actions of their successful opponents. When leading Wall Street investment bank Goldman Sachs (NYSE: GS) announced plans to lay off 1,000 bankers in July 2011, Credit Suisse (NYSE: CS) followed suit with plans to cut 2,000 jobs just a week later. Barclays (NYSE:BCS) joined its rivals soon after with promised eliminations of 3,000 more jobs.

If you see a pattern of layoffs in your industry, pay attention to what positions are being cut; investment banks have been targeting "junior" bankers. If your position is in the crosshairs, it may be time to start job searching.

2. Shrinking Office Space

Office leasing is a large expense for most businesses, so this may be one of the first line items to be cut before "reorganizing" the labor. If your work is downsizing into a smaller space or selling the second floor it used to occupy in the building, it may be signs of weak profit margins and future staff reductions.

3. More Hoops to Jump Through to Do Business

In the face of a poor earnings report, many businesses may be looking to cut back on even the smallest expenses. While it's normal for a corporation to be cautiously frugal -- foregoing office amenities like espresso machines, flat panel TVs and $1,000 ergonomic desk chairs -- it starts to become serious when there are abnormal cutbacks on standard business expenses.

To reduce expenses everywhere possible, employees may start to see stricter requirements for travel and other business-related expenses. Workers may also notice emptier office supply and inventory rooms, as businesses cut back wherever possible on overhead and inventory.

It's not necessarily the end of the line, but it could be a warning sign of things to come.

4. Office Closures and Pay Freezes

If your company or its competitors are closing office branches, your office is probably under the performance microscope. Sit in on your company's quarterly performance meetings and be wary of shrinking profit margins and declining revenue trends. Also watch out for pay freezes or pay cuts in your industry or workplace. Even though these measures may prolong a layoff, they don't always protect workers in sluggish or dying industries.

5. Acquisitions, Mergers or Buyouts

When a company is acquired by a similar organization that offers many of the same services, there are bound to be "redundant positions" with job cuts to follow. Also, management strategies between two companies in a merger may be too different to keep many of the existing higher-level staff at the helm.

If the bidding company lacks market exposure in the area you're in, however, your branch may be spared.


For example, Wells Fargo (NYSE: WFC) kept many of the existing Wachovia branches (and staff positions) that were in previously untapped locations after the acquisition. However, many existing Wachovia branches that were practically next door to Wells Fargo branches proved to be redundant exposure and were closed.

If there's still time before a merger or buyout, study the services the other company offers and see if you can arrange a move into an open position.

6. Boss Behavior: From Nice to Curt

A manager who's changed his happy tune and avoids the usual water-cooler conversations may be making a non-verbal cue that employee performance has been suffering. "If you're in good standing with your boss, you should be having frequent informal talks," according to Rich Gee, who's been coaching executives of Fortune 100 companies for over 10 years. He suggests comparing how your boss interacts with coworkers as an indicator.

Additionally, if your boss starts frequently holding "secret" meetings or closed-door phone calls with senior executives, it could mean that private decisions are being made to eliminate positions.

7. Tanking Stock Price

If you work for a publicly traded corporation, watch your company's stock value closely. A falling stock price can lead to a desperate CEO promising anything -- including a mass layoff -- to keep shareholders from selling.

Cisco's 6,500 staff cuts came after its stock price fell 20% in July 2011, and Bank of America (NYSE: BAC) announced 3,500 layoffs within weeks after the stock plummeted 31% from its August highs.

The Investing Answer: Not all layoffs are preventable, but knowing the early signs can help buy you time. The more time you have, the more money you can save and the longer you'll have to prepare a solid resume for your next job.

Company-wide layoffs start with management decisions, so make it a priority to show your boss how you improve the bottom line. Get proactive, participate in new company projects, take on more responsibility and try to be a part of the solution for your company's problems. If you manage to demonstrate that you add value to the company, you may be seen as an invaluable asset rather than another unfortunate statistic in the next jobs report.

- By Christian Hudspeth of www.investinganswers.com