There are lots of ways to get fired and there are lots of ways to get laid off, the distinction being that getting fired is directly about you and getting laid off is purportedly first about your position.  When you get laid off it is because the company has decided that it needs to avoid the costs of your compensation more than it needs the services you are providing.  When this happens it is because something has changed.  It might be the general business environment.  It might be how your particular company is doing in the market, perhaps because you are losing to direct competition or perhaps the buggy whips your company makes are in less demand.  Or it might have something to do with your job function.  Maybe it is being replaced by automation or outsourced or management figured out that they don’t really need it after all, at least for now.  Whatever the cause, you are in the wrong place at the wrong time.  How does this happen?

One of the things every manager is expected to manage it his or her career.  Of course it is also in your boss’ job description to help manage your career, but if you aren’t going to give your career some thought, then don’t expect much from your boss.

The most likely reason for a lay off (also called a reduction in force, RIF, or being found to be excess) is the company is not meeting the financial expectations of the owners (a.k.a. the stockholders).  This doesn’t necessarily mean that the company is losing money; just that the owners think that, relative to other investment opportunities, it should be doing better.  Let’s talk about the dynamics of a company in financial trouble, and most companies get into trouble at one time or another. There are all sorts of things the company might try to do to raise income, but the fastest, most obvious, and most controllable way to get income and expenses in balance is to slash expenses. In cyclical industries, this happens every few years and in fact, from the perspective of executive management, does a good job of helping clear out deadwood.  An equally likely scenario is that the executives responsible for taking the company down the wrong path have finally had reality catch up with them.  To try to save their own skins they are cutting everyone’s job but theirs.  It happens.  A lot.

So inevitably there will come a time to slash expenses.  Where do executives look first?  Here is a list:

First on the list are Corporate staff.  If you make a lot of money and have no one reporting to you, you are at the head of the line, at the guillotine.  Every time you hear a case of a company in trouble that brings in a new CEO, the first thing he or she invariably does is slash corporate staff, which the new top dog views as insulating them from what is really going on, slowing down decision making, wasting money, and likely lacking loyalty to the new regime.

VP’s and Directors.  Lots of people want to be promoted to be VP or Director.  It is a highly visible position and makes a lot of money.  Which are exactly the characteristics that make those positions prime targets for the ax.  Is the value that is being created not so clear?  Well, the costs certainly are.  Of particular focus are people high on the organization chart with few, if any, people reporting to them.  Words like “relationship,” “strategy,” “university,” “long-range,” and “corporate history” are particularly dangerous to own.  Executives will often do a “span of control” audit.  If fewer than 6 or 7 people are reporting to you, your position will be examined.  To be last on the cut list you want to be close to the customer’s wallet.

Research.  Cutting research can be a stupid thing to do over the long term, but it happens a lot anyway because the long term happens after the next quarterly earnings report. Long-term research can be difficult to defend because a lot of times these breakthrough results turn into “public goods,” which is certainly not what a for-profit corporation wants to fund.  Think of it this way, for every additional year out the expected benefit of a research project is, assume that the expected return must be 20-35% greater. Another job that is often even more suspect is the company venture capital arm, if it has one.  (This is different than mergers and acquisitions, often called “business development.”)

Then there is the issue of “a blocker.”  Most people don’t realize that they can be doing a perfectly good job but still be viewed as a problem.  The issue is as follows:  Over time every organization needs to promote the most promising people up the organizational hierarchy.  It may seem looking up the organization that the pyramid gets thinner and thinner at the top and there are lots of people vying for those jobs.  That is true, but from the top it always looks like there is a scarcity of talent and the best people are ready to jump ship.  It is a huge roll of the dice to bring in someone from the outside and it doesn’t help internal morale any either, so well-run organizations generally try to promote from within.  A nice visible potential career path also helps retain the best employees.  Of course very few employees will make it anywhere near the CEO position so most people top out somewhere in their career, hopefully before the Peter Principle takes hold.  There is no dishonor in this.  However, what tends to happen is that the at certain places in the organization one gets a collection of people all of whom are, for some reason, unpromotable (meaning management can never see them taking their boss’ job) and all reporting to a single individual.  People in positions like this are considered “blockers” because they keep the people below them from advancing.  Each of these blockers may be doing a perfectly fine job, but the overall result is a problem for the corporation because the company needs to worry not only about this year’s job but the perpetuation of the corporation.   So if you look around and none of your peers have a realistic shot at the next level job and neither do you (perhaps you don’t want it for work-life balance reasons, for instance) then you should be aware that someone is (or should be) thinking about how to shoot someone at your level to remove the block and replace them with a high potential employee even though that new person doesn’t know the job as well.

Another thing people sometimes don’t understand is the double-sided sword of being indispensable.  It is great to know important stuff better than anyone else, but there are two dangers.  First, you boss will be given the objective to make sure that none of his or her direct reports are indispensable. “What is your plan if Sally gets hit by a bus?”  If there isn’t one, then the boss is required to come up with something.  If Sally doesn’t cooperate, then the company is in for a lot of pain when she inevitably leaves.  So the strategy then becomes picking the least worst [sic] time to experience that pain.  It can be quite a shock.  It goes without saying that Sally cannot get promoted, regardless how good she is, if there is no one who can do her old job if she moves up.

In the high-tech world, the technology marches on at an amazing rate. If you are in this business, then you need to keep current.  You don’t want to be involved in a dynamic where every year you cost the company more but add less value.  At some point there will be a reckoning.  And the longer this takes, the harder it will be for you to find your next position. It is important to have a good idea of how you are valued by the corporation. Sadly, in many companies managers do not do a good job of giving frank feedback to their subordinates.  So how can you really tell?  There is a simple test that often works.  Everybody screws up now and again, even you.  If you visibly screw up and no one in your management chain comments on it, then they have written a zero on your forehead –you are a dead person walking.   Don’t ever feel relieved not to get yelled at!

Don’t be a member of a losing team.  I don’t mean don’t be on a project that is in trouble or fails.  That happens a lot and, while sometimes dangerous and always painful, it is not what I am talking about.  If you tried and failed and learned, you are more valuable.  Cool.  But there are sometimes teams or groups in an organization that seem to be in the habit of failing.  Executives know that winning teams learn how to win and losing teams learn how to lose.  You can often tell losing teams by their defeatist and cynical attitude.  If you are on team that habitually loses, get the hell out of there.  Someone is going to come in and clean house and fewer than 20% of the original team will be left when they are done.

Finally, it is better to be in a growing company than a shrinking one.  In a growing company, managers are less focused on cutting costs (a.k.a. people) than in a shrinking one.  When it is cost cutting season, managers are often given headcount targets that they must reach (in addition to spending targets.  Both are given because that makes it harder to game the system.  Experienced managers know that costs walk in on two legs.). They may think you are the nicest guy in the world and that it is going to be a huge pain to lose you, but your managers are required to make cuts, none of which are attractive, or they will lose their jobs.  So they will make a rank order of pain and if you are “critical” but their only alternative is “essential,” then “critical” gets axed.  You and your manager may both think this is insane, but this is how the world works.  Higher up in the organization they don’t have enough details to figure out who should stay and who should go, but they are counting on the fact that if you put a lot of pressure on a good manager, e.g., your boss, that person will find some way to get the job done.  So the pressure mounts as the executive team tries to wonderfully clarify his or her mind.

So what can you do?  We already mentioned a few things:

• Get closer to the customer’s wallet
• Keep current with the state-of-the-art and increase the value you add each year faster than your compensation
• Work for a growing company
• Don’t work for a company going down the wrong path
• Understand where you stand in a flat world
• Don’t work for a habitually losing team
• Have a large number of direct reports that you are managing effectively

Here are some other things to do too

• Like walking in a dangerous neighborhood, be aware of what is happening around you and constantly and dispassionately evaluate the situation.  Make sure you get and hear real feedback from your boss.
• Work to increase your options, e.g., learn new skills, take on new projects
• Try to work in locations where, worse comes to worse, there are other jobs to escape to without your having to sell your house
• Work long hard hours.  Do the work of 10 men.

Good luck and stay alert!

“How do you know if you are in a bad place? When you screw up, you get no reaction.” Randy Pausch, from The Last Lecture.