Pay freeze, delayed salaries, staff getting laid off – the difficult economic situation is taking a toll on workers across sectors.
This makes it all the more important for you to ask the right questions while considering a job change or evaluating an employment offer. Here’s a checklist to avoid getting short-changed.
ARE THEY GENUINE?
Taking up a job is a big investment of your time and effort – it should pay off well. So it makes sense to verify the credentials and claims of a potential employer.
“Gone are the days when reference checks were one-sided. Today, candidates actively use their networks and relationships to unearth the genuineness of claims made by prospective employers. The opportunity to ‘socialise before joining’ with the manager and team is fast becoming a healthy practice in the industry,” says Nishchae Suri, Partner and Head of People and Change Management, KPMG in India.
Check out the LinkedIn profiles of the business and its staff. Contact and enquire with a cross-section of current employees to make an informed opinion.
Ask whether the business treats its employees fairly and pays on time, whether appraisals are conducted objectively and adequate reward and recognition follow.
How your pay is structured is important too. For instance, is it too skewed towards variable pay? This could mean low take-home for you in a tough market situation. Use the Internet to research a prospective employer. Go through news at least a year back.
ARE PAYMENTS DELAYED?
A business which delays payments and does not settle dues on time is likely in financial distress. In your enquiries with current employees and over the Internet, check whether this is the case.
Staff salaries not paid for months on end could sooner or later mean a business shutdown. Focus on sustainability than on glamour.
Likewise, businesses facing cash crunch often hold on to money which they owe to the Government. For instance, they may delay depositing tax deducted at source and service tax. Delays in depositing employee provident fund are also common among such businesses.
Also, an inordinate delay in paying vendors, beyond usual credit periods is a red flag. Supply shortages and legal cases may ensue.
ARE THERE GOVERNANCE ISSUES?
Entities which constantly run into trouble with regulators and have serious governance issues are best avoided. Restrictions on operations are a real risk in such entities – this could mean employees rendered redundant.
ARE FUNDAMENTALS SOUND?
This may seem like drudgery, but go through the financial statements and annual reports of the company to see if it has been posting good results. These statements are usually available on the company portal or on Web sites of the stock exchanges where the company is listed.
Is the company growing and profitable? Does it have too much of debt compared with its equity, and are interest costs eating into its profits? You may be better off not taking up a job with a company which is running losses consistently.
However, note that even otherwise financially sound companies may post losses in bad economic conditions.
So, read the management’s discussion and analysis (in the annual report) to know the reasons for the performance.
See if the troubles are temporary and if the company is expected to do better in the future.
Make sure to read the auditors’ report to find out whether there are worries about the going-concern status (long-term financial viability) of the business.
Reading the reports of third-parties such as brokerages and rating agencies on the company will give you a more objective view about the company.
In case you are considering an opening with an unlisted entity, try to obtain financial details of the business from the Web site of the Ministry of Company Affairs.
Ok, so you’ve ticked the above check-boxes and decided to take up the job. Now, don’t let your guard down. Be alert for signs of financial distress in your company. If it warrants, cut your losses and shift before it’s late.
EMPLOYER’S STOCK
Don’t invest too much in the employer’s stock. If the company fails, you will suffer not only loss of salary but may also lose your investment (remember the crash of Lehman Brothers in 2008). So, distribute your eggs across different baskets.
NOT WITH SPOUSE
Try to avoid a situation where both you and your spouse work with the same employer or in the same sector. If the organisation or sector falls upon bad times and starts laying off, the income of both bread winners may be in peril. What if you decide to marry a colleague? It may be wise for one of you to seek a new job, but after doing your homework well.
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