It wasn't long ago that companies chose bankruptcy as the last resort, a legal remedy to crushing debt and, rough restructuring, the chance to pull themselves out of a financial mess and continue in business. During this era, bankruptcy carried with it a stigma; those who were forced to seek it as a shelter-businesses and individual’s alike-felt a certain shame and frustration at ending up in that position.
No more. Today bankruptcy has become a management tool. There's obviously something wrong with this from an ethical perspective, to say nothing of its damage to the economic health of the nation.
Companies tottering on the brink of bankruptcy are to be seen as losers, places for investors to stay away from. Today, in this crazy world, these companies are often seen as pots of gold for financial wheeler-dealt who, through the popular process of leveraged buyers can make millions (even billions) from them.
While all this probably makes sense to a new breed of financial wizard, the negative impact on the lives of millions of employees is too often ignored. I'm talking about you, the man or woman seeking a better job, or at least trying to find some security and advancement in your present job.
In 1987 there were 22,564 Chapter 11 filings under a Federal Bankruptcy Code. That's more than four times many as in 1980. This is good news for people who know how to make money from failure. Analysts estimate that investments in the securities of companies in bankrupt or on the verge of bankruptcy, now exceed $20 billion compared with $1 billion ten years ago. In other words, now have a much greater opportunity to invest in failure even though the real failure is the disservice done to all the men and women who lose their jobs in the process.
Mergers are another popular game that can lose you your job and cut down on the number of opportunities better jobs in your future. We've become a merger-hap takeover-crazed society. Back in 1982, the value mergers and acquisitions reached an all-time high $82.6 billion. By 1986 that figure was up to $190 billion. The number of takeovers valued at $1 billion quintupled between 1983 and 1986. Seventy-five of the hundred largest mergers in our history have occurred since 1981. Only the most blissfully naive worker fails to understand what happens to jobs when the corporate raiders arrive. You merge two companies and you instantly have two vice-presidents of sales, two controllers, two of just about everything else. It is no rocket science to figure out what some people have to go through.
This tumultuous atmosphere raises a number of obvious questions:
- How can I protect my job if my company is taken over by someone else?
- How can I read the signals regarding my future for a company that has been acquired?
- How can I prepare myself to lose my job in such a situation?
- Are there advantages that I might seek to exploit where mergers and takeovers have become a fact of life?
How can you turn this situation to your advantage?
There's an old saying, "Necessity is the mother of inflation." When your company is acquired- and you're fired-is not the time to begin thinking about finding another job. People expecting success in this world had better start operating from the basic assumption that they will have to look for another job at some point in their careers, whether they want to or not.
An absolute necessity is to be constantly on the look for signs of when your job is in jeopardy, whether it results from a merger or acquisition or just general circumstances.
Have you found yourself being cut out of many projects that you would have been involved with before? Has your boss, who usually communicates with you orally, started putting everything in writing? If so, it could be because he or she is building a file to be used to justify firing you.Has some of your work been shunted to some else? Has the easy rapport you've always had with your boss and colleagues become strained and less friendly?
You may be reading the signals wrong. Maybe the position is rock-solid, and you've allowed paranoid sneak into your psyche. Then again, maybe you are about to be fired.
Be ready to be fired, even in the best days of your job. Keep up your personal personnel file, noting every achievement in your present job-how you contributed to the efficiency of your department, cut costs, increased profits, brought in a new client. A good resumecan show accomplishments. Don't rely on your memory of years on your present job.
There is then the need to maintain an up-to-date networking list. If you haven't done it on an ongoing basis, you'll end up in the same position as a person who suddenly must come up with sterling smug. The Boy Scout motto has always been "Be prepared." That motto ought to extend to every working man and woman in America.
How do you know your job might evaporate when talk of your company's being taken over becomes known? Rule number one: Assume it will.
This, of course, leads into a whole debate over whether my call for a return to loyalty, and urging you to consider staying where you are, is at odds with this job. I don't think there is a conflict in these two philosophies. Being prepared to look for another job doesn't mean you must put that preparedness into action. So long as you're receiving a paycheck from your employer, you owe them your loyalty. But the concept of an employer's demonstrating enduring loyalty toward its employees is a thing of the past. The company's management is looking for the best possible financial deal in a takeover or merger. It won't eliminate your job until that becomes a reality, but the company prepares for that, and so should you. This doesn't mean sendingresumes, making appointments with headhunters, answering ads in newspapers. It does mean that if this moves become necessary, you're ready.
I remember receiving a call a few years ago from a company looking to hire a controller to help through its financial woes. I said I'd try, and pulled five resumes of highly qualified individuals, none whom I thought would be interested in such a risky undertaking. I was wrong. Four of them eagerly went ahead for the job, and one got it.
A few final thoughts on our bankruptcy, merger manic industrial society.
I recently called a friend at home. His wife, who was employed at a major TV network that has recently b announcing massive cutbacks, answered. I asked, "How are you?" Her answer was "I'm still there!" That sums the attitude of many workers in this crazy world.
Don't assume that after your company is merging with another and you are the one chosen to stay, everything will be clear sailing. A number of studies have been done on the survivors of the Holocaust. Many of them seem to carry a sense of shame at having survived. That same phenomenon, in a much less dramatic way of course, often creeps into the attitude of employees who survive massive cuts.
The management of some companies that take over others is decent and honest. Executives will sit down with employees and say, "Some of you won't be here a year from now." That's a fair warning, and allows everyone to gear up for making a change. On the other hand, there are those who take over companies and say, "No one here has to worry. We're committed to keeping everyone employed." The next year, they start firing. The former is to be respected; the latter is to be distrusted. In either case, make sure your resume is up-to-date, your networking list is complete, and your eyes are open to new opportunities.
As a nation, we now spend more on mergers than the combined expenditures for all research-and-development and new investment. Our companies demand more work from fewer people in an attempt to compete with aggressive and creative foreign competition. There are fewer jobs to be had, and they are more difficult to find.
To put the increased competition for jobs in perspective, consider the emergence of women in the workplace, eluding those qualified to hold middle- and high-level jo0bs. They represent a vast army of people who twenty years ago were not serious contenders for most of these executive positions. Add to them the growing number of older men and women coming back into the workplace, and the number of people competing for your better job becomes evident. Recognize these factors as you look for better job. Accept the challenge they present, and take whatever steps are necessary to overcome them.
