Often when a business is having financial problems, company management will be concerned about panic and defections among the employee population. Even if they are planning to lay off several workers or several thousand workers, the management of the company will be concerned that the right people stay or go. Often they will be concerned that talented or highly valuable employees will get nervous about the situation and decide to start looking for a more stable position with a more financially sound company. As a result, the management of a financially troubled company will often use general memos or company meetings to try to calm the growing sense of anxiety among the general population.
This type of "everything's okay" meeting is analogous to the owner of a professional sports team being "100 percent behind the coach" during a losing season. Because the team's management wants to keep some semblance of order among the players, the owner will ardently and often tell the press, "He's our coach for the future, and we're 100 percent behind him." At the same time, the team management is likely to be scrambling in the background, trying to find someone to replace the guy they're about to fire. If it looks as though your company is currently losing badly, but your management insists there is nothing wrong, it may be a sign that there is more going on than they are ready to disclose.
Marlene, the editor mentioned earlier in this chapter, believes this was the case in her situation. Because the company was small, its rumor mill was well developed and working over- time at the time of the layoff. The magazine had a technical focus, which would make it difficult to replace some of the more experienced writers or editors who might choose to leave for a more secure environment. The company's goal in having an ''everything's okay" meeting was to ensure that the right people stayed when the company chose to downsize.
The memory of this meeting was particularly difficult for Marlene during the six months she was out of work. "I felt so gullible," she said. "I should have watched his face instead of listening to what he was saying. That meeting has made it difficult for me to trust people in business situations."
Such a meeting can be an important sign that you need to move quickly. Marlene's situation was somewhat unusual because the company acted so soon after the meeting. In most instances, you will have more than one or two days to prepare. However, when your company is in financial trouble, it's never too soon to start. One positive aspect of these meetings is that they bring the company's situation out in the open. By acknowledging the rumors, your manager unknowingly opens the door for you to discuss the company's situation in more detail with him or her.
Such an open discussion may allow you to read between the lines and gather information that can help you.
The Incredible Shrinking Paycheck
A business that is losing money will often try a variety of cost-cutting measures before laying off any employees. One strategy often employed is an across-the-board pay cut or pay deferral.
The pay cut or deferral may also take the form of cancellation of earned vacation, vacation deferrals, or short-term "vacations without pay" for some or all of the employee population. Such plans are based on the hope that by slightly reducing everyone's pay, no one will have to be out of work altogether. Sometimes the tactic works; more often it is a harbinger of outright layoffs in the near future.
"Before the layoffs they tried all kinds of cost-cutting measures in the beginning," said Frank, "with the most drastic being an across-the-board 15 percent pay cut. I think they hoped some people would leave on their own once that was announced, taking them off the hook for the layoffs that were probably already in the works. We tried to joke about it. You know, 'Another day, another 85 cents.'"
Other cuts may accompany a company's sudden cost-consciousness. Travel budgets may be reduced or eliminated. The company may decide to reduce or eliminate such benefits as employee training. Sometimes the cost cuts are petty and desperate, as when the company decides to eliminate free coffee for employees. In any case, a string of cost-cutting measures may be followed by the more severe measure of general layoffs.
You need to remember that a company desperate enough to start taking money out of its employees' paychecks is likely to be on the verge of more severe actions. This warning sign may be one of the most important. Remember, if they lay you off after the pay cut, you'll receive that much less severance pay during a time when you'll really need it.
