Given the current volatility of the economy, many companies are struggling to stay afloat. Often when there is a severe economic downturn, executives must make the decision to layoff employees. Generally the information is held in strict confidence at the highest levels, leaving workers stunned when a layoff is publicly announced. While it is impossible to avoid imminent corporate downsizing, employees can look for advance signs in order to be prepared if it occurs.

Normally a layoff is only done as a last resort. Companies try many other ways of improving the bottom line before letting go of their workforce. Workers should pay particular attention to the human resources department. Many times, there are significant changes to retirement or insurance benefit plans, hiring freezes, restrictions on corporate travel, and increased visits from human resources representatives and upper managers.

In addition, workers should keep abreast of the company's performance. Publicly help companies are required to publish annual reports. Workers should pay close attention to the profitability of the organization and regularly look for fluctuations in stock price. Many companies invest the matched portion of 401K contributions in corporate stock. Workers should be careful to diversify their portfolios in order to avoid large losses if the company should file for bankruptcy, as was the case in the Enron collapse.

Workers can also look for changes in behavior among managers. Often, there are increases in the number of off-site meetings or visits to headquarters, abrupt resignations among supervisors, and rumors of a pending layoff. Managers may also attempt to reduce frivolous corporate spending, change commission plan structures, and implement higher performance standards in an attempt to increase profits. In addition, supervisors may receive increased requests for comments from the media.

If the decision to downsize has been made, companies are required by the Worker Adjustment and Retraining Notification Act (WARN Act) to give employees sixty days advance notice of plant closings and mass layoffs. There are exceptions to the WARN Act, however, making it inapplicable to some instances of corporate downsizing. If notified of an impending layoff, workers should avoid procrastination and begin the search for a new position immediately.

Corporate downsizing can be a very difficult process and can take workers by surprise. If employees keep abreast of things happening within their companies by paying attention to subtle clues, however, they can be prepared in advance if it should occur.

Learn more about this author, Jessica Whitta.
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