Recognizing Red Flags Before a Layoff: A Guide to Preparation
I'm Tiffany, and I've personally experienced two layoffs in a row. I want to share the red flags I noticed before each layoff, so you can be prepared, regardless of your industry. While layoffs are often unavoidable, recognizing these signals can give you time to prepare and take control of your career.
Signal 1: Budget Freezes
One of the clearest red flags is a sudden freeze on budgets. This often manifests as:
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Hiring freezes.
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Canceled team travel.
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Postponed team off-sites.
For my role as a product researcher, this was especially evident. The first time, our team's tool renewal was denied because the finance team was unresponsive. The second time, at a startup, I was asked to conduct research with literally no budget, relying on friends and family of employees. Although seemingly unconventional at a scrappy startup, it was a clear sign that leadership was trying to conserve money, a common prelude to workforce cuts.
Signal 2: Projects Disappearing
Be alert if projects start disappearing or priorities shift without explanation. This could also involve a major product suddenly being killed off. Companies preparing to shrink often reduce or consolidate their efforts. If your work is suddenly deemed non-strategic, it's a cause for concern.
In my first layoff, the team was shifted from strategic, impactful projects to quick, top-down fixes. All of the big bets work that we were working on got cut off in one day. The second layoff lacked a lot of strategic work to begin with, as we were constantly putting out fires.
Signal 3: Financial Concerns
If your company is publicly traded, monitor the latest earnings reports. For private companies, pay attention to terms like "restructuring," "cost optimization," or "focus on core operations," as these often indicate cost-cutting measures, including potential job cuts.
This can be a difficult sign to recognize. Leadership often avoids explicitly stating financial struggles to prevent panic among employees and investors. In both of my experiences, leadership touted the company's success and exciting future during all-hands meetings, even as major projects were being cut. This discrepancy created a sense of inauthenticity.
Signal 4: Role Shifts Without Warning
A subtle red flag is a shift in your role without a clear explanation. This may involve:
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Reassignment to a different team or project.
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Being handed lower-impact work.
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Your responsibilities being quietly absorbed by others.
In my second role, I was suddenly asked to do QA work and project management, less of what I was hired to do which was testing and research. I was doing less of what I was hired to do, which was testing and research. While the startup environment emphasized flexibility and wearing multiple hats, it was, in retrospect, a way of preparing for my exit.
Signal 5: Leadership Goes Quiet
If your manager suddenly becomes unable to answer basic questions, especially about the upcoming quarter or expressed concerns, it could indicate decisions are being made behind closed doors.
In my first layoff, my manager was transparent and apologetic about the vagueness of the situation. However, in the second layoff, critical questions from the team were met with even more vague answers, which was standard for them at the time, making the layoff harder to predict.
What to Do When You See Red Flags
If you start noticing these signals, take action immediately:
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Update your resume and LinkedIn profile: Don't delay. Being prepared doesn't hurt, even if you currently have a job.
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Download performance reviews and work samples: Gather documentation showcasing your accomplishments and skills.
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Build a list of recruiters and companies: Start reaching out to your network.
Don't wait until it's urgent. Acting proactively prevents you from making desperate decisions and potentially accepting unsuitable positions with lower pay.
Don't take it personally. Layoffs are usually about business decisions, not your talent. While layoffs are difficult and often out of your control, spotting the signs early gives you time to take control of your career.