Help a Reader: Vetting an Employer

Recently got this email from a reader:

I have what appears to be a great opportunity to move from a larger, corporate environment to a smaller consulting firm that is more focused around the type of work that I love. They have been around for about 6 years, have experienced continual growth, and are busier than ever even during this economy. The people seem nice, the environment is relaxed but enthusiastic, and they're offering me a bit more money (and a better position) than my current job. It also appears that I would have potential for fairly rapid growth at the smaller company, and I have no doubt that I would really enjoy the work.

The thing is, I don't dislike my current job, and I have a fantastic relationship with my boss. My performance is great and I am on track for good things there, but have no idea how quickly promotions might come (this larger company is being hit hard by the economy). Although pay increases and promotions in the near term are uncertain, my current job security is better than it would be at a smaller company -- I'm almost certainly not going to be laid off, as I have proven my worth and am in a critical department. I should note I'm young and have only been in the workforce a year and a half.

And here's the final wrinkle: although the smaller company appears to be growing and doing well, I have heard a couple things that make me slightly concerned. A couple months ago, someone told me that one of their VPs had confided in him that they were having a few "cashflow issues", and then I heard that the local newspaper is sending them to collections because they didn't pay an advertising bill. Then again, while my current company doesn't have any trouble paying bills (as far as I know), profits are falling fast.

So what questions do I ask to find out if this company really is on sure footing? Would it be impolite to tactfully bring up those concerns with an exec there? Should I just believe what I saw and heard on the lower levels, that everything seems to be running great?  What would you do -- stick with larger company, more security, or take the risk of a smaller company, better pay, more interesting work but less security?

What would you suggest he do?

Comments

[Tina]

I would suggest you first take a couple of minutes to consider what you want, consider how much your real wage would be after factoring in commuting and all the extras like how much stress this new job will cause etc.

If that job at the larger company still pays more after factoring in all else, and you dont want to leave your present company maybe consider asking for a raise or a promotion. Now that you actually have another job as leverage, whats the worse that can happen. The can say no, but there's nothing to lose. If you are a good employee, its cheaper for them to retain you by giving you a little more than to hire someone new...You could end up with a higher paying job/title without having to switch companies if you use a little game theory.

As for job security, there isn't much of that in corporate America nowadays anyways... so I say don't worry about it too much.

[Irina]

If I were you I would stick with your current employer. I will use my experience as an example. The company I work for has been undergoing downsizing this past year. The ones to go are the last ones in. If you switch jobs now you may be the first to go during a downsizing. Hope this helps.

[Mr. ToughMoneyLove]

Your reader should obtain a Dun & Bradstreet report on both businesses before doing anything else. In today's economy, if he has people who depend on his income, he needs to stay with security.

[Hungry4thatruth]

I suggest searching for current and past employees on Linkedin and ask them questions. In addition to D&B reports, do searches on Hoovers and search for articles in your local business newspapers and business section of your main newspapers. Finally, if this company is publically traded you can figure out how much cash the company has if your able to get their reporting info.

[ken]

What kind of consulting does this firm do? You should be able to tactfully ask what sort of project you are going to be on and for how long. Also, given the economic climate, you should be able to ask questions about the stability of the company without any negative consequeces. the fact that they are hiring is a good sign, but you know that if something turns bad, typically the last ones on are the first to go. Unless you can get some solid feedback about the stability of the consulting firm, you may want to reconsider making a change and wait for things to develop. Do and say whatever you can to leave the door open.

Interesting problem.

I guess I have to ask: you have been in the work force for a year and a half. Is this new position really that much of an advancement? Don't take this as a suggestion it isn't. But I'm just a firm believer in moves, if at all possible, should be clear to outsiders why you did them (i.e., why it was better for you should be fairly clear). I have a tough time believing it's that better of a position if you have only been in the workforce for a year and half and it sounds like the money difference is negligible. So you are boiling it down to people, the place and the type of work.

Let me say something from experience with professional services partnerships. Small shops can be great, but unless they are managed really well, economic downturns can destroy them. And cashflow challenges are a leading indicator of problems. Is this the type of firm where a big fish has most of the client work? Any worry he might bolt if there are cashflow issues?

Personally, I'd suggest looking into things more deeply if you can before making the jump.

[MBirchmeier]

About a two years ago I found myself in a similar situation.

I was working for a small consulting firm, doing ok, established I was two years in etc... and talked to a small startup, about 30 people, doing more exciting stuff etc.

Anyway I took the job, and I loved every minute. It was a completely different environment, there was excitement in the air etc. We actually grew to about 50 people. It was a great experience.

Then some major customers pulled out at about the same time. We went from 50 people to 15 overnight. I was hit in the second round of layoffs when they went from 15 to 10. I worked there slightly less than a year, and currently the company is now down to about 5 people.

Despite being laid off less than a year later, it was a great experience for me for the following reasons:

* I left my current job being open and honest, It wasn't that I disliked them, It's just this opportunity was too good to pass up. They made it clear that I would be welcomed back if the new position wasn't for me.
* It was a highly volitale environment, but I made it a point to put aside ~1/3 of my take home pay. This left me with an adequate buffer incase something went wrong.
* It provides a great opportunity for additional networking, working with all of these new people and getting to know everyone, plus in a small environment you're more likely to get noticed even though you're new.
* Layoffs occur in waves. Should the new company fold in 6 months, you and everyone you're working with will be hitting up contacts etc. This is a good thing. Work with recruiters in groups, hit up other peoples contacts. Should you get laid off, the position you just left might be perfect for someone at the new job, and vice versa.

I took the job because I had no wife/kids etc. Losing a job just means I will find another. If you feel the same way I'd say go for it. If you're worried about the next paycheck and/or have mouths to feed every week I'd stay put for now.

-MBirchmeier

[Mr. Budget Wise]

I agree with Hungry For The Truth and Tough Money Love!

Number 1: Do Your Research! Get those D&B reports and Linkedin, and also checking out the Better Business Bureau. Collections on a small ad sounds pretty fishy to me, but again check the company out to find out what's the real deal.

Number 2: Weigh the Pros and Cons! Sit down and write out this list. Make sure you go through all of them not just the obvious ones, even if it includes adding the commute to work - is it long? Will you get a sign-on bonus as an extra incentive? What are the gross sales of the company minus their liabilities - i.e. can they afford to pay your salary?

Number 3: Make A Decision! You will make this based on your research and arguments (pros and cons) about each company and where you stand currently in your life. Your decision will be based on this sound logic.

Finally, if you have a family who is dependent on your income I would say stay put personally - in the current state of the economy I wouldn't chance it. If you're single you may be able to take a chance at the new company. Good luck with your decision!

[Apex]

I made this exact move exactly 10 years ago. I was actually employee #4 counting the husband and wife owner team (so really the second outside employee hired). We were just entering the crazy phase of the dot com boom and we were doing computer consulting. We grew rapidly. Pay was great. Bonuses were plentiful. The people and management were great and very good to work for. New "leadership" personnel were being brought in to help grow the company. Then the dot bomb hit. Management had no experience with this. The new "leadership" brought in didn't either as they didn't really have the right leadership skills for the rolls. Deals dried up fast. Big clients cut consultants out. Smaller clients were tight on cash.

Management was niave about how to survive the situation. Over the course of about 2 years we had built considerable cash reserves. In this case management was too nice and actually didn't start doing layoffs. Instead we got a lot of happy talk about how things were a little tough but they were about to turn. Every month there was talk of all the deals in the pipeline. Those never materialized. I worked on so many proto type projects during those days that never resulted in any deals, or sales, or contracts. Eventually the cash was drawn down and management was forced to cut some of the worst dead weight (which they should have done sooner). I eventually left the company in 2003 because of how poorly management was navigating the downturn and recovery. I later found out that management had mortgage his house and everything he owned until the bank would not give him any more money just to keep the company afloat. Things turned just in time for them and they survived and grew to even bigger than our peak days of the dot com. I hope during this down turn he learned some lessons about how to stay healthy.

And even though they survived the lessons mentioned above about management skills and cash flow were so true in this case too. Management didn't have the skills to navigate the downturn and the cash flow gap almost sunk the whole company.

Going to a small company that has never had to face a market downturn is a big risk especially as you are the last one in the door in this type of an economy.

As someone mentioned above, if cuts come there is little chance that someone who was just recently hired will not be one of the first to go.

I can't know the specific details in your case but small companies are inherently risky and in general I would not recommend them in a faltering economy. There is a reason small stocks do worst in a recession and best during growth phases. Small companies die quick and painful deaths when the economy tightens and its due to both a lack of resources and often a lack of good management experience in dealing with those issues.

Unless you are in a position to take a large risk, I would recommend staying with the large company for now.

[Greg]

Time to work on networking. In addition to using the Internet, when you do discuss, ask if there are two other people they recommend you talk to.