Warning Signs of Company Crisis: Are You Working on a Sinking Ship?

Crisis signals in companies are a warning sign of a sinking ship. Workers should remain vigilant – especially during the following alarm signals.

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Suspicion of bankruptcy: is your employer on the verge of going bankrupt?

It is a nightmare for employees: They long for job security – and are suddenly dismissed for operational reasons. Your employer is broke, the orders are missing. Although the applicant market offers employees good prospects, the sudden end of a company means a change, yes, a potentially existential threat, in times of crisis possibly social decline, a crisis of meaning – a big change.

If you already intend to change – no problem. The feeling of having to start all over again and having to endure the uncertainty about the future is particularly stressful for employees who are dependent on their current job, have even moved to a new city for it and have dropped everything. Maybe even your previous job.

Not every alarm signal points to a possible bankruptcy. If these accumulate, you should be vigilant in order to be able to prepare yourself.

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Crisis signals: These signs indicate that your employer may go bankrupt

In order to prepare yourself for a possible end, it helps to pay close attention to developments in the company. Here are some important crisis signals to be aware of.

1. Conflicts between shareholders, management, interest groups

A so-called “stakeholder crisis” is a phase in companies that is rarely easy to recognize and is therefore particularly dangerous. This leads to disputes between important participants in a company, such as disputes between managing directors or fundamental conflicts in the upper floors. Suppliers and business partners can also be involved.

The crisis is difficult because conflicts are fundamentally part of corporate management, but they can become entrenched and are the first sign that there are serious economic problems – and employees do not always notice this.

Tipp: If meetings now take place suspiciously often, in which only the company management participates, it can be a sign of such a crisis. Issues are discussed “behind closed doors” so as not to put the workforce on high alert. Due to a lack of transparency, however, the opposite often happens, because there is more room for speculation and radio communication.

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2. Despite the lack of staff: No new colleagues in prospect

Although there is a lack of personnel and specialists, vacant positions are simply not filled? This can also indicate that a company is not liquid enough to be able to afford new workers.

A hiring freeze should not unnecessarily put workers on the alert. However, if this warning signal occurs together with other suspicious signals, it is quite possible that there is currently a crisis.

3. Important investors or customers flee

If projects burst, investors jump out and even loyal customers slowly switch to the competition, everything points to bankruptcy soon. Indications are the increasing number of complaints from customers because the company has failed to respond to the changing wishes and needs of its target group. You weaken in the market and there is a loss of important shares. Workers who notice this change usually have a legitimate suspicion that something is going terribly wrong.

Good to know: If the company is strong in competition and well positioned, it can usually survive such crises – for example by recruiting new prospects. If these fail to materialize, the initial suspicion that bankruptcy is imminent is often confirmed.

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4. Employees and managers leave voluntarily

The labor market has become more attractive for skilled workers and employees are changing jobs more frequently. A higher willingness to change is therefore not a suspicion that your employer is in crisis. It is only a sure sign of a crisis when there is an increasing number of personnel changes – and when top performers who are actually well paid say goodbye.

Top performers fulfill important tasks and have an important function in companies. To compensate for their loss, a replacement is often essential. If no effort is made to find a replacement, it is clear – because companies that are already on the verge of collapse do not have to look for new top performers.

5. Irritable atmosphere at work

Intimidated colleagues, annoyed executives, side blows, discussions – does that sound familiar to you right now? A mood of crisis in the company is sometimes unavoidable, but also an indication of a sinking ship. Executives in particular who are in the know may already be reorienting themselves or worried about their careers, so that they behave differently than usual. Of course, it can also be “just” a personal crisis for individual superiors. But if this is not the case, sensitive employees with a good knowledge of human nature will quickly realize that this is a bigger crisis than others might assume.

6. Time and again there is talk of “savings opportunities”

The fact that companies are asking their employees to actively look for ways to save is not a bad thing in economically difficult times, but it is a possible suspicion that points to far-reaching problems. It can also be a measure intended to contribute to the sustainability of a company – or an attempt to prevent bankruptcy.

7. Suddenly changing structures

It is not a crime to distance yourself from your previous values ​​and principles when companies are trying to become more modern, more attractive and more people-centric. On the contrary – they do everything to achieve positive change.

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And yet striving for structural change can provide an important clue. Because changes often only take place when competitiveness and survival are at stake because the previous strategies are no longer up to date or no longer work.

8. Wages are paid later (or not at all).

Now it’s obvious: If you don’t get paid, colleagues have the same problem and companies put off their employees, the company may have to close soon. Because now employers can no longer fulfill their obligation to honor contracts they have entered into with their employees.

A one-time “mistake” may occur in rare cases. Nevertheless, you should not ignore this crisis signal. If employers cannot pay, it is a prerequisite for opening insolvency proceedings. Your current employer cannot use the bankruptcy as the sole reason for termination. Nevertheless, if orders are missing, for example, there can be a termination for operational reasons.

What to do when the alarm signals are piling up?

Whether concrete suspicion with solid evidence or just an initial suspicion: Employees are free to apply elsewhere despite an existing employment relationship if they assume, for example, that their current job is no longer secure. So you have the opportunity to keep an eye out for other positions and to actively apply in order to be prepared in case of an emergency.

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If you decide to do so, it is important to keep a few points in mind. Applications are not a work matter, but a private matter, so you should not do related activities during your working hours.

Exception: According to Section 629 of the German Civil Code, employers must give their dismissed employees a reasonable amount of time for job applications. So if you’re stuck looking for a job because your current employer is laying you off, it’s entirely possible to attend an interview by taking time off.

Bild: RealPeopleGroup/RealPeopleGroup