Signs Your Company is Struggling & It's Time to Find Your Next Role
You know these intuitively, but are you taking proactive action?
“We’re going to have to do another round,” Gloria shared with some resignation at the weekly executive meeting.
Mirabelle’s insides twisted.
It was the 5th round of layoffs in less than 2 years. She trusted Gloria, her boss and CEO, and their CFO, Jeff. They were thoughtful and thorough leaders. They wouldn’t do this unless it was necessary.
But sh*t — this wasn’t going to do anything to help team morale.
Mirabelle’s husband had been telling her to start a job hunt after the first round, but she just didn’t have the time.
Well, truthfully, she didn’t want to start to search. She wanted to believe that they could turn it around.
But was she simply sticking her head in the proverbial sand and ignoring the obvious signals that it was time to jump ship?
The market was terrible. Her friends, other senior leaders, had been searching for months — some for over a year without success.
When the markets were shaky, wasn’t the best bet to stay put?
What if she joined another company and it also started to struggle, but she would then have no street cred or existing relationships? Wouldn’t that make her more vulnerable?
Mirabelle was the primary breadwinner for the family, and with two young kids under the age of 5, she and her husband, Anthony, had their hands full.
The prospect of job hunting while trying to lead through disruption and caring for a young family, it all felt like too much.
Mirabelle was facing what felt like an impossible decision that many leaders are grappling with: the conundrum of whether to stay or go when the stakes are high, and the rewards are unknown.
Just like any other challenging decision-making process, Mirabelle needed to break apart the problem and review her options with as much evidence and little emotion as possible.
She came to me to help her navigate this moment, and here is what we reviewed.
Sticking around when others are leaving is not always a bad decision.
Before I dive into the signals that indicate it’s time for you to go, there are many reasons to stick around even if a company is struggling, including learning new skills or honing existing ones:
Turning around an operation that is underperforming
Shutting down an organization
Exploring a sale or liquidation process
Managing a bankruptcy
There is demand for the skills listed above, and having them under your belt may give you more career options in the future.
In addition, being known as someone loyal to the company until the end might buy you brownie points with the Board and investors, who might be more inclined to call upon you in the future
That said, most people want to get out before the doors start to close.
Why?
Because they don’t want to navigate the experiences above and run the risk of having a gap on on their resume. I don’t mean to suggest that these experiences aren’t worthy, nor that a gap on your resume is bad — because I feel quite the opposite.
But from my experience, most leaders want to be on the growth end of the curve and not on the decline side of the business lifecycle. Some combination of fearing the end and wanting to secure their future financial prospects means that most leaders want to leave earlier, not later.
I’m not judging your proclivity — in either direction.
What I do judge (just a little) is if you don’t try to interpret the signals and take action.
Sitting on your hands is also a decision, it just happens to be one of the worst kinds — a passive and possibly unconscious one that often leads to disappointment.
10 Signals that it Might be Time to Go
Not surprisingly, the signals that matter most are a mix of company attributes and your needs. In general, when they no longer align, it’s time to go.
These aren't necessarily indicators that the leadership team is evil or even bad. It could be that the market dynamics are changing so quickly, the business model just isn't set up to withstand the challenges.
But let’s get more specific.
Here is the list I have honed after more than two decades working in 5 different sectors and living through 3 different major market downturns.
1. Consecutive quarters of missing revenue targets without commensurate cost-cutting
So it might feel like cost-cutting is the sign that you should go. It isn’t.
Cost-cutting can be a sign that you should stay. I’ll say that one more time, cost-cutting can be a sign that you should stay.
The issue for many companies is that they don’t operate in a financially prudent enough way. When cash flow starts to slow or decline, they don’t take action fast enough to preserve the cash they have.
Scaling back spend isn’t always the smartest move. Sometimes, you need to invest more to change the direction of the business.
But more often, you need to cut back, especially when the market is uncertain, you’re not sure yet of the solution, or you need more time for your solutions to bear fruit.
If your organization is missing consecutive quarters of revenue, even if cash flow is still healthy in the short-term, it’s likely to get unhealthy soon. Unless you have a tremendous pile of cash and a very patient Board and investors, you should be conservative with your money, and that means cutting back proactively, early enough and large enough to make a difference.
When the CEO and CFO aren’t making the call to conserve cash, I would be concerned about their priorities and decision-making approach, and whether that is creating more risk than is necessary.
TAKING ACTION:
Understand the company’s cash position and the impact of revenue on cash flows.
Track company performance and review it monthly.
If the organization isn cost-cutting, don’t assume why. Ask the CEO and CFO. Make your decision based on their answer and your level of confidence as a result.
2. Rapid shifts in strategy
Agility is considered a positive attribute in most organizations, but there is a difference between being nimble and being untethered.
Testing new ideas and approaches is good, but how you go about it determines whether the organization can be successful. When leaders shift the focus of an entire organization quickly and without some evidence of the likelihood of success, they are risking creating whiplash and lack focus.
This is usually a sign that leadership is struggling to understand the issues and what to do about them.
Flailing is not a strategy. At least not an effective one.
Contrast that with a more structured test and learn approach that is orderly, methodical, and predictable, and you’ll observe the difference between an organization filled with people who are challenged, but energized versus a team that is stressed, overwhelmed, and struggling.
Changing course quickly is not a sign of decline.
Changing course quickly without bringing your team along with clear reasons why and data to back up the approach is a signal that leadership is losing its way.
TAKING ACTION:
Track if your company is making rapid strategy changes.
Don’t just look at your department, observe others as well.
When in doubt, ask other leaders what they are perceiving.
3. Deep misalignment at the top
There will always be some disagreement — you don’t want your executive team to be in a state of blissful alignment all the time. That just signals groupthink.
The best teams comprise people who differ in skillsets and approach. Those differences will naturally lead to conflict which if handled well will be productive and lead to better decisions.
Deep misalignment is not productive conflict.
Deep misalignment is when different members of the leadership team are at odds with each other on a fundamental level: the strategy of the company, financial management, culture, and interpretation of market dynamics and their response.
The depth of the misalignments refers to how strongly held these differences are and whether leaders can come to a level of agreement that allows them to collaborate and execute effectively together.
The decision makers here also include investors and the Board. They are the ultimate fiduciary stakeholders for the company, and if they are not aligned with management, there will be negative consequences.
When there is misalignment at the top that is destructive, leaders are distracted, stressed, and ill-equipped to focus on the business day-to-day because they are unresolved at a strategic level.
TAKING ACTION:
If you’re on the executive team, pause to reflect every month or few weeks about how well-aligned you and your leaders are.
If you aren’t on the executive team, observe what is shared at town halls by each executive leader. Do you hear dissonance?
When you are not clear about the rationale for a change in direction, ask for clarification. Use information to inform your interpretation.
4. High and rapid executive turnover
As someone who has hired and participated in the hiring process of more than a dozen executives, I can tell you firsthand that the failure rate (~40%) is high for a reason.
Hiring successfully is difficult at any level. There is only so much you can discern from a resume, and during the interview process. The candidate and the company are usually not showing all of their cards, and in hybrid and remote work environments, it takes even longer to suss out how it’s all going to turn out.
Executive hiring is even more challenging, even if the stakes are higher and the process more thorough (or belabored). And if the failure rate is already so high, how much higher can it get. It can be worse — trust me.
High and rapid executive turnover is a sign of misalignment at the top (see above) and an early indicator of turmoil that will trickle down. Teams are resilient, but when there are multiple leadership changes in rapid succession, it’s harder to build trust, maintain a consistent strategy, and keep up morale.
TAKING ACTION:
Executive turnover isn’t something you might normally pay much attention to, now you want to. Just keep a log of when roles are open, when folks are hired and when folks leave.
If you start to see a pattern that is increasing in rate, it’s a good time to take a deeper look.
5. More than 3 rounds of layoffs
Why wait for 3? Isn't 1 enough?
As I pointed out in the first signal, you want your organization to make cost cuts if your revenue and cash flow can’t support your current operating model. So 1 layoff round isn’t actually a bad sign.
To be honest, 3 rounds isn’t necessarily bad either. But it could be an indication that your leadership team isn’t doing a great job of anticipating its future performance.
It could be because of truly unforeseen circumstances (e.g. the pandemic), or it could be because there are underlying weaknesses to the business that are not being addressed (e.g. poor product-market fit, strengthening competition, sales issues, etc.) It’s also possible that the leadership team is not cutting enough in each round.
Regardless of why more layoffs are necessary, the signal here is that continued cost-cutting is necessary, which is a sign of underlying business risk that may be a reason to find your exit.
TAKING ACTION:
Track the layoffs your company does: how many people, rationale, frequency.
If you don’t feel bought in on why, ask questions.
If you anticipate another round being necessary, ask early.
If you’re interested in existing, consider negotiating for a spot.
If you want to stick around, ask more questions to see if this round can be deeper so as to avoid another round in the future.
6. Deteriorating culture
It’s not surprising that people are more agitated and on edge in a declining business. It becomes an issue when this is the default attitude people are bringing to work.
Everyone is allowed a bad day or a bad interaction from time to time. When it becomes a pattern and it starts to feel pervasive across the organization, that’s a signal that the wheels are coming off.
When it’s a one-off, people assume the best intent and can forgive easily. When it is a regular occurrence, people start to assume the worst and may even retaliate, further perpetuating a negative culture.
Culture is not a bunch of catch phrases. It’s the behaviors you practice and live by every day. The entire staff is responsible for the culture that your organization abides by, but the leadership sets the tone and leads the way.
TAKING ACTION:
Take the time to observe how people are showing up in meetings.
Ask your team how they are doing and check in on their interactions with other teams.
The most challenging part of seeing a deteriorating culture is if you are part of the deterioration. So try your best to evaluate when you are not feeling down or depleted.
7. You are no longer set up for success
Cost-cutting may be necessary and a responsible act, but there are times when your budget and staff have been cut so much that you no longer feel equipped to reach your goals.
In addition, when a business is struggling, departmental goals, including yours, may have been increased or accelerated.
The combination of reduced resourcing and harder goals may be OK, unless you don’t think you can deliver. If there isn’t any room to adjust, then it might be a signal for you to take a bow.
TAKING ACTION:
Assess your goals and what you think is possible with the resourcing you have.
Discuss this with your boss and relevant colleagues. Understand the implications of keeping (and missing) and changing your goals and what resourcing you might need to hit them.
Determine if the changes are worthwhile and likely to happen, and if you are open to sticking around to see them through.
If the changes aren’t something you and other leaders can agree to, decide if you want to stay on and try to hit the higher goals with less support.
8. Your function is no longer essential
Related to not being set up for success is whether your function is still essential to the business. Sometimes, when your function is being reduced significantly, it’s a sign that it no longer matters as much as it did.
This isn’t necessarily an indictment on you or your leadership. It is likely more connected to the overall shrinking or shifting of the business.
But it warrants a hard look.
If you or your function are no longer necessary, then you are, by default, a drain on the company’s cash. The question isn’t whether you will be exited, the question is when. You can either wait for it or proactively bring it on.
TAKING ACTION:
Do an assessment of whether your function is still essential and whether it should stand alone with an independent leader.
You can conduct your own review based on your understanding of the current operating needs of the organization.
Consider also talking with your colleagues and your boss. That might be showing your cards, but generally, the risks are low because all you are doing is uncovering what people are already thinking.
If you find that it still needs to exist, then consider holding your course.
If you find that it no longer should exist, consider exiting sooner.
9. You don’t believe in one or more of the leaders
When you are part of the leadership team, they are, as Patrick Lencioni wrote in the The Five Dysfunctions of a Team says, your first team.
These are the people you march into battle with daily, shoulder to shoulder, working towards the same ends.
If you don’t think one or more members of the team can do their job successfully, then you’re betting on a weak links.
I’m not talking about someone having a bad day or missing a one-off target. I’m talking about you no longer thinking that they are the right person for their job.
Unless you perceive they will be exiting soon, then your decision to stay on means that you are OK with a member of the leadership (and the function that they lead) not delivering on their responsibilities or targets.
TAKING ACTION:
Be wary of your read on another leader’s job unless you understand how their function drives the company's success overall and where their weaknesses might create risk.
If you truly feel concern about their ability to lead and deliver, consider talking with your boss, the CEO first, or to a trusted confidante. Be careful of gossip, you don’t want to spread your judgment widely. You want to seek out additional inputs to try to prove or disprove your take.
10. Your career goals are being significantly delayed or sidetracked
This one might be super obvious. When a job is no longer meeting your needs, it’s time to go, right?
Yes and no.
The reality is that even if your career goals are less likely to be met, your decision to leave depends on the market economy and your priorities.
When the economy is shaky, more companies are likely to be unsteady as well. Your career might be delayed or sidetracked regardless of the place you go.
In 2001 and in 2008, many people’s careers were slowed. Sure there were companies that grew in that period as well, and people ascended, but those were rare.
In addition, there are times when your career will take a backseat to other priorities — family, health, or other personal needs. That’s OK.
In fact, you should expect that the pace of your career growth will ebb and flow. No one’s career looks like a straight line up and to the right.
TAKING ACTION:
If growing your career is your top priority, then a review of the following questions will help you decide your next move:
Does the pace of your growth at your current company match your vision?
Are there enough senior posts that will be available for you to compete for?
Do you have sufficient sponsorship (support) from key decision-makers or influencers to advocate for you?
Have you planted the seeds of your desire to grow?
Are you continuing to develop new skills and hone existing ones?
Is your current role setting you up well for your next opportunity?
Only your interpretation of your organization’s signals matters
After talking through these options, Mirabelle realized that her best path forward, despite pressure from her husband was to stay the course and not leave.
Although the company was experiencing declines, the path to recovery and a return to growth was fairly well-understood. In addition, her role and her function were critical to the company’s future success. Last but not least, she believed in her fellow leadership team members and continued to feel motivated to stay on.
It wasn’t all sunshine and roses, though. She used the list above to prompt her to dig deeper into whether cost-cutting measures were adequate and to be more cognizant about how she and other leaders were showing up at work. Even if the pressure was high, she didn’t want to convey unnecessary or unproductive stress to her team.
Had Mirabelle concluded that she needed to leave, my recommendation would have been to consider the following options.
Proactively find a new job and exit
Wait for the next round of layoffs and negotiate a package
If you have decided it’s time to move on, it’s time to start reaching out to your network, searching the job boards, and applying to roles. Some resources below to help you consider your next steps:
“The Most Successful Leaders Do This Before Starting A Search for Their Next Job” — I share more about some reflections you might want to invest in before you go.
“The Single Most Important Way to Boost Your Career is to Build Your Network” — Some of my top networking tips to get you started.
“Make a Plan to Break Free from Your Golden Handcuffs Before It's Too Late” — Highlights how you prioritize your non-negotiables before you start your search.
Key Takeaways
Below is a summary of all 10 signals and the actions I recommend above. Would love to know if these resonate with you in the Comments section.
Feel free to share them with friends or colleagues who you think could benefit.
Consecutive quarters of missing revenue targets without commensurate cost-cutting
Understand the company’s cash position and the impact of revenue on cash flows.
Track company performance and review it monthly.
If you aren’t cost-cutting, don’t assume why not. Ask the CEO and CFO. Make your decision based on their answer and your level of confidence as a result.
Rapid shifts in strategy
Track if your company is making rapid strategy changes.
Don’t just look at your department, observe others as well.
When in doubt, ask other leaders what they are perceiving.
Deep misalignment at the top
If you’re on the executive team, pause to reflect every month or few weeks about how well-aligned you and your leaders are.
If you aren’t on the executive team, observe what is shared at town halls by each executive leader. Do you hear dissonance?
When you are not clear about the rationale for a change in direction, ask for clarification. Use information to inform your interpretation.
High and rapid executive turnover
Executive turnover isn’t something you might normally pay much attention to, now you want to. Just keep a log of when roles are open, when folks are hired and when folks leave.
If you start to see a pattern that is increasing in rate, it’s a good time to take a deeper look.
More than 3 rounds of layoffs
Track the layoffs your company does: how many people, rationale, frequency.
If you don’t feel bought in on why, ask questions.
If you anticipate another round being necessary, ask early.
If you’re interested in existing, consider negotiating for a spot.
If you want to stick around, ask more questions to see if this round can be deeper so as to avoid another round in the future.
Deteriorating culture
Take the time to observe how people are showing up in meetings.
Ask your team how they are doing and check in on their interactions with other teams.
The most challenging part of seeing a deteriorating culture is if you are part of the deterioration. So try your best to evaluate when you are not feeling down or depleted.
You are no longer set up for success
Assess your goals and what you think is possible with the resourcing you have.
Discuss this with your boss and relevant colleagues. Understand the implications of keeping (and missing) and changing your goals and what resourcing you might need to hit them.
Determine if the changes are worthwhile and likely to happen and if you are open to sticking around to see them through.
If the changes aren’t something you and other leaders can agree to, decide if you want to stay on and try to hit the higher goals with less support.
Your function is no longer essential
Do an assessment of whether your function is still essential and whether it should stand alone with an independent leader.
You can conduct your own review based on your understanding of the current operating needs of the organization.
Consider also talking with your colleagues and your boss. That might be showing your cards, but generally, the risks are low because all you are doing is uncovering what people are already thinking.
If you find that it still needs to exist, then consider holding your course.
If you find that it no longer should exist, consider exiting sooner.
You don’t believe in one or more of the leaders
Be wary of your read on another leader’s job unless you understand how their function drives the company's success overall and where their weaknesses might create risk.
If you truly feel concern about their ability to lead and deliver, consider talking with your boss, the CEO first, or to a trusted confidante. Be careful of gossip, you don’t want to spread your judgment widely. You want to seek out additional inputs to try to prove or disprove your take.
Your career goals are being significantly delayed or sidetracked
Does the pace of your growth at your current company match your vision?
Are there enough senior posts that will be available for you to compete for?
Do you have sufficient sponsorship (support) from key decision-makers or influencers to advocate for you?
Have you planted the seeds of your desire to grow?
Are you continuing to develop new skills and hone existing ones?
Is your current role setting you up well for your next opportunity?
Your Turn
What are some of the signals you use to determine if your company is struggling and that it might be time to go?
Take a minute and jot them down, and build your own assessment.
And if you have time, I’d love to hear from you in the Comments section. I try to reply to every comment. Your thoughts will also help others in the Lead without Limits community.
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May you lead without limits,
I am very glad I came across your substack. In fact a lot of what you write about overlaps with the themes I explore too: how professionals often stay stuck, not because they don’t see the signs, but because they’re overwhelmed, loyal, or quietly afraid of what’s next.
I found your take on cost-cutting very interesting. I’d literally never thought of it as a potential positive signal before, and always assumed it meant an organisation was in trouble.
And the line about “passive decisions being the worst kind” really stuck with me. I’ve written about the action fallacy — how we confuse movement with progress — but this feels like its quieter sibling: inertia dressed up as stability. Anyhow, great article. In case you are interested, check out my substack profile. Also leaving a link to my article on the action fallacy as it may interest you. Feel free to let me know your thoughts! Can't wait to read more of your articles.
https://fenixwrites.substack.com/p/why-dumbae-get-promoted
Great article, Kathy. As I was reading, I was thinking 'But most of the employees wouldn't be senior enough to know about missed quarterly targets' so your advice to start paying attention to how your employer is performing is spot on.
Re the rounds of redundancies, what I've notices is that once one department is restructured, others generally follow, but organizations don't always share that this will happen as they don't want a mass exodus. Sometimes they even tell employees that there won't be any further changes. Of course, 3 months later, another department is restructured.
My partner was made redundant during Covid in the third round of layoffs, despite employees being told a year before that everyone's jobs were safe. And like you say, that doesn't mean the people at the top are evil, it just means that we as employees need to pay more attention and take action when we sense that our jobs may be on the line.