How to Evaluate a Potential Employer in a Downturn

How to Evaluate a Potential Employer in a Downturn

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Stacey* had a stable job as an executive recruiter at an executive search firm, but she really wanted to work in-house at a technology company. When she accepted an offer with her dream company, she took some time to hire her replacement to leave her firm in a good place. Days before her start date in her dream role, her offer was rescinded, leaving her stunned. “I felt confident and had numerous conversations about runway, where my role fit in, what would happen if hiring slowed down, and candid conversations about where they were in the market if the market shifted,” she told me.

When the offer was rescinded, she learned there was no severance compensation, she didn’t qualify for unemployment because she had resigned from her previous company, and there was no student loan deferment option. “I’m lucky. I have savings and a great network.” But she recognizes that this isn’t just happening to her.

With rising interest rates, high inflation, political issues, and war all contributing to a roller coaster global economic outlook, it’s hard to know whether to stay in a stable job — no matter how unhappy you are — or make a move when it’s unclear how changing economic conditions could affect your employment. While you can’t eliminate the risks entirely, here are some ways to lower them when making a move.

Research the company.

Public companies are required by law to disclose their financial performance, so there is a plethora of information about them. You can review earning reports such as 10-Q and 10-K reports in SEC’s EDGAR system to understand the company’s profitability, financial standing, and the overall business performance. If you want even more data, join earnings calls, where financial analysts ask questions about the reports. Many companies provide access to the recorded calls on their websites.

It’s harder to find information on private companies and startups, which are not required to disclose their financial performance. Understanding how the company is funded — whether it’s by friends and family or a reputable venture capital firm like Andreessen Horowitz, Kleiner Perkins, or Bessemer Venture Partners — will help you assess risk. When VC firms or other successful companies invest, they’ll usually do everything in their power to protect their investments. Also, research the CEO and their track record at other companies. And if you really want to show your investigative prowess, research the local courts for civil lawsuits, which can tell you if the company has ever been delinquent in paying suppliers, has any tax liens, or has filed for bankruptcy in the past.

Finally, whether the company is public or private, check websites like Crunchbase and Intellizence for layoff-reporting data. Reviewing LinkedIn for the average tenure of the employees at the company may also help you understand how it’s growing and whether employees stay long term.

Understand the industry.

Do you work in an industry that’s recession proof, or one that’s particularly vulnerable? For example, when interest rates increase, home sales decrease, so realtors and mortgage companies are particularly vulnerable. Long Island-based lender Sprout Mortgage abruptly closed this month, laying off more than 300 workers. In June, Redfin announced an 8% staff cut, and Compass announced a 10% cut.

Looking at other companies in an industry may help you forecast how market changes impact the industry. For example, One Trust, a security software company, laid off 950 employees — 25% of its workforce — as part of a reorganization even though the company had record quarters and increased customer demand. While it may seem like there was no way to predict this, reviewing competitors like Lacework, which cut its workforce by 20% a month earlier, may have been a predictor of other companies’ future in the same industry.

Understanding the industry requires reading press on the company you’re interviewing for, its competitors, and the industry itself. What differentiates one company’s product from another? How is the customer base growing? What is the company’s brand awareness in the overall industry? Of course, also read Glassdoor and Blind reviews, but keep in mind that many people post after they leave a company, so the information may be skewed.

Ask strategic questions during the interview process.

Stacey was reassured multiple times that the new company wouldn’t be slowing down hiring. She now recognizes that as a red flag because the recruiter dismissed the question instead of having deeper insight into the company’s talent acquisition plans. “That rings alarm bells, because every company should be adjusting what they’re doing right now.” She wishes she had pressed a bit harder and asked more specific questions. Here are other questions to consider:

To the hiring manager:

• How is the company adjusting its hiring approach to market fluctuations?
• Are there any concerns about hiring freezes or hiring slowdowns in the future?
• How far out does the company model its strategic plan?
• If the company is a startup, when will the company be seeking its next round of financing? What happens if economic shifts make it hard to obtain funding or delays it? It’s important to understand whether the company can maintain its workforce if funding falls through.
• What is the vision for the company? If they can’t answer that, there’s a chance the strategy is not strong or hasn’t reached lower levels of the company.
• How many employees did the company have four years ago, three years ago, two years ago, last year, and now? Is there consistent and stable growth?
• How many people were hired last year compared to 2020 when Covid-19 hit?

To other interviewers:

• Did the company have layoffs when Covid-19 shut down the country? The answer could show a trend when there’s an interruption in business.
• Have supply chain issues impacted the business? If yes, how has the company overcome them?
• How long has the current department leader been in place? If it’s been a short time, is the department bracing for a reorganization (which could mean layoffs)?
• Did employees receive market raises the past two years?
• Were bonuses paid out at the company?

If your questions haven’t been answered, ask if it’s possible to follow up with someone who can answer them for you, which will give you more peace of mind.

Talk to your network.

If you know a current or former employee or have a contact who can put you in touch with someone at the company, ask for a meet and greet. The best way to learn about a company is to talk to people who aren’t on the interview panel who can provide you with their real experiences. If you talk to a former employee, their information may be skewed depending on how and why they departed the company. But the more information you can gather, the less risk you’ll have when you make the move.

When Stacey’s offer was rescinded, her former employer asked her if she wanted to stay on, but she still had the same goal to work in a tech company, so she declined. “I’m not a recruiter who knows a bazillion recruiters out there,” she said, but she realized people were willing to help. Even the manager who rescinded the offer made some introductions. After talking with numerous companies and evaluating each company’s stability thoroughly, she accepted a new offer in a tech company and started immediately.