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My current employer has been running in to financial difficulties and has fallen behind on salary for a month at times. We were not given a lot of information on what the cause of the financial troubles were, or how they would be solved, so I applied for a job with a more financially secured company and got it.

When I delivered my letter of resignation to the current employer, I was personally requested by the CEO to stay on and help them through this tough time. When I pushed for details I was only told, "We are planning very seriously to overcome this situation and will share the plan with you all once it will get finalized. But to execute the plan, we need your help."

Other than the financial issues, I like the company, my role, and my coworkers. If I were to consider staying with my current company, what sort of information/guarantee should I look for to protect myself?

For reference, I am in the software industry in India.

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    I am going to aggressively edit this question to prevent it from being closed. I will try to keep the spirit of the question alive, but after I'm done please feel free to edit it (it may help to take a look at the FAQ and this post as well!) – jmac Apr 24 '13 at 8:17
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    Whatever choice you make, please know that making a smart career move is more important than immediate money. – maple_shaft Apr 24 '13 at 11:19
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    @maple_shaft not to everyone. And the smart career move is normally working for people who actually pay. – NimChimpsky Apr 24 '13 at 14:29
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    I'm not sure why anyone would consider staying for a company that doesn't do the most basic part of your contract with you, which is to pay you. – Andy Apr 24 '13 at 15:55
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    The panhandler on the street also assures me that he has a plan to overcome the situation that he will reveal soon, but for now he needs spare change. – Kaz Apr 24 '13 at 19:44
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Something important to keep in mind about this situation is that you have the understand the role of the person you are talking to.

CEO's are always optimistic

This isn't a fault of your CEO, as a figure head of the company it is their responsibility to be optimistic because they are supposed to lead the company to future profits for the investors. If a CEO acted or talked pessimistically then morale would fall, employees would leave and investors would pull out. What is the point of leading a business that you don't believe will be successful?

It is their job to be optimistic about the future success of the company but you will be better off to act more realistically.

Have they proven to you to be trustworthy?

They are unable to make salary payments on time and they have kept everybody in the dark. Even after talking to the CEO about your concern, they still keep you in the dark.

Promises are empty, actions speak and they haven't demonstrated any action to you that they can be trusted.

Making smart bets in your career

Knowing the above information, it is important to weigh the facts and look at things realistically. Your first choice is to a guarantee for a better job, better career growth, better pay and more interesting work. Your second choice is an emotional based argument, and a promise from people who have proven not to be trustworthy in the past.

I think your choice is clear.

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I love maple_shaft's answer, but had one alternate path. If you really want a viable reason to stay, ask them to make it clear with their actions, not their words.

Behind on months of salary is a serious breach of trust. If they want you to stay, they need to actively change that. Now. Not months from now. Now. Really, you need a buffer - so I'd not only ask for the pay that is already owed, but a retainer for the future. I'd suggest making the retainer equal to the level to which they have previously fallen behind, with the caveat that should pay continue fall behind, you will tender your resignation when your retainer has been expended as salary.

So if they give you 6 months of salary as the retainer and then don't pay you for 6 months, you will leave at the end of the 6 months, and you and the company will be even.

An unwillingess to share the plan points very strongly to a deal that has not yet been finalized, which means that they don't have a way to pay you. So don't be surprised if they can't meet this demand, and try to talk you out of it. Sadly, that's their problem, not yours. Depletion of funding isn't all that hard to figure out, and it's a sign of very poor planning if they've reached this type of financial situation.

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    I have found the phrase "I have talked to my landlord and, for some reason, he won't take vague promises as payment," to be useful in these conversations. – pdr Apr 24 '13 at 13:45
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    :) Fair enough!! – bethlakshmi Apr 24 '13 at 13:46
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    I like this idea, but I'd suggest just asking for two week's advance pay. The next time they miss a paycheck, you give your two week's notice. If they don't make it up by the end of the two weeks, you're done, and you were paid for that time. If they do, you withdraw the notice. – Bobson Apr 24 '13 at 14:59
  • Not a bad idea... or change the buffer so that your personal life is not severely impacted - for example, if common courtesy is 4 weeks, ask for a 4 week buffer... given that localities vary. – bethlakshmi Apr 24 '13 at 17:34
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    This is an EXCELLENT plan. Additionally, I personally would ask what these "plans" being mentioned are. If they tell you again that you'll be told when they're ready (but only you will be able to help make it happen) I would laugh, and keep laughing out the door, pursue whatever option you have to get any pay that is owed to you, and move on to the new company. – acolyte Apr 25 '13 at 20:03
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I've been told similar things twice in the past. One time, I stayed on the promise of shares and the company collapsed eventually -- I got about 1/20 of a week's wages for the shares when they sold it as a shell company. The previous time, I was even more naive and first gave up my regular bonus, then took a 10% pay cut, because I liked the company so much. The result was that the company got rid of all it's creative staff and started providing related services.

Maybe I've been unlucky, but I'm telling you straight, these "plans" are never as good as they make out.

I don't think you can ever ask for guarantees, but I do think you can insist on more information on "the plan," so you can make a rational decision rather than an emotional one. They are asking for a lot of faith on your part and you're under no obligation to give it.

Agree to sign an NDA, if you haven't already, to protect them; then they really have no good reason not to tell you, unless they don't think the plan is good enough to convince you.

Of course, if you do buy into their plan and stick around, you've also nothing to lose by asking for some kind of payback on your faith. You might not get it but shares are often a good option for CEOs in this kind of situation. They know that, if they fail, it costs them very little and, if they succeed, then they'll no longer care that they gave you 0.5% of the company.

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    Not sure if a Non-Disclosure Agreement holds the same legal weight in India as compared to the US. BTW, you were not unlucky, when executives are leading a sinking ship then more base and primal instincts lead them to the penchant of lying and manipulating others for survival. Anything else is an exception rather than the rule. – maple_shaft Apr 24 '13 at 11:15
  • @maple_shaft: I believe it does, but I'm not an Indian lawyer. I'm sure that, if not, there is an equivalent way for a business to protect its plans from employee exposure. Employer protection is one of the first tenets of industrialisation; it's employee protection that takes time. :) – pdr Apr 24 '13 at 11:20
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    @pdr I have to agree with maple_shaft. While NDAs are commonplace in the technology & services industry in India, it's hard to enforce contracts and agreements. Courts move way too slowly because of the massive backlog. A failing company has bigger concerns than hiring lawyers and spending months or years in court, so NDA-ing an employee doesn't provide as much security as you may think. – Jay Apr 24 '13 at 17:21
  • @Jayraj: Fair enough, thanks for the info. I'll remember that. This said, in the asker's boss's position, would you not take that chance, assuming the "plan" was solid, to keep an employee who's on the critical path? I mean, if he reveals your plan and costs you the company, even a slow court process leads to a big win. I think I would trust that this (and the potential success of the company) was enough incentive to keep his mouth shut. – pdr Apr 24 '13 at 18:00
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You were concerned enough to look for a new job, apply for new jobs, go to interviews, and negotiate for a salary and a starting date. You may have started this process with the rationalization that it is better to start looking early than to start looking after it is too late.

There are many questions on this site regarding what to do if my company make a counter offer. The difference is that some are leaving because they feel they are underpaid, or over worked, or they have issues with coworkers; but you are concerned about the company collapsing. You found a new job that you were willing to take, so take it.

If somebody hates their current job and is talked into staying by empty promises, they may regret it later but it doesn't limit their ability to eat. If you listen to the promises from the CEO you might not have any warning when the company closes its doors.

Jumping to a new job still allows to to keep looking, with a plan to switch in a year or two. The difference is that your search for the perfect job won't have a financial worry hanging over it.

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It's pretty hard to extract a meaningful guarantee from a company in financial trouble.

The fact that they were willing to skip paying your salary for months tells you that you can't get any sort of financial guarantee. And they aren't even willing to share their plans with you yet, so you don't know how they plan to get out of trouble.

You could ask for something contingent on their ability to overcome their current situation. For example, if you stick around, and the company settles itself, you get X in cash or stocks. Or you could ask for a promotion and title change so that at least your resume looks better.

But ultimately it comes down to trust. Do you trust this company (which has already fallen behind on salary for a month at times) to survive? Do you trust them to follow through on any sort of guarantee, when they already haven't followed through on their basic obligation to pay for your work?

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One useful piece of information would be: who gets paid first if it all folds?

Say that at shutdown time, the operation has a million dollars' worth of assets. However, when the claims by various parties are added up, they exceed a million (of course).

So this means, not everyone can get all the money they are asking for. Which parties do get their money? Do the remaining employees get full severance, or are various creditors paid off, leaving nothing for the workers?

When a leader promises that a plan is in the works that will be finalized and then revealed, there should be a date attached with that. E.g. "I will meet with the investors and creditors on Thursday morning, and if the plan is accepted, I will present in the afternoon."

If there is no concrete date, you have estimate one for yourself: if the plan does not emerge by that date, then exercise your "Plan B".

  • I'd like to point out that "who gets the money first" might be a matter of law, in the OP's jurisdiction, not of internal policies or personal commitments from the CEO. – ZJR Apr 25 '13 at 1:48
  • @Kaz Generally speaking, when a company dies then the order of asset distribution is 1) Taxes/Government 2) Debt/Creditors 3) Investors and Preferred Shareholders 4) Common shareholders. It almost never gets to step 3. – maple_shaft Apr 25 '13 at 11:14
  • @maple_shaft Do you know that to be true in India? – Kaz Apr 25 '13 at 14:44
3

Just leave. If they can't give you, an internal resource, a clear plan ahead, or a reason for the momentary rut, they won't be able to give it to the bank, that lent them money, when they phone in; nor to secure further investments from possibly interested third parties.

They are probably only hoping to land some big client that just happens to pass by with hands full of cash.

Which is anyway hard to do, right now, even if the client actually exists.

They will have to push the price down, they will hit the lower reasonable price, and then pass it.

The first cost that gets a cut in this circumstances are the workers' paychecks. Why? External suppliers usually have a lawyer handy and are ready to fight in court. Internal workers usually don't. (and can also be tricked into competing one against the other in a suicidal dance)

1

Some thoughts I didn't see addressed in the original answers, for someone in a similar situation in the future:

Evaluate how much you are actually needed. If you're 1 developer out of 30 or 80, or you're a project manager, accounting guy, etc (any role not directly related to getting a product shipped or sold) you probably aren't really essential and the CEO was just trying to make you feel good. If you are 1 of 2 developers, then the CEO probably really is depending on you (which also means you have leverage to demand some immediate payment, or shares in the company). It's important to be honest with yourself here. The fact that you haven't been included as part of the turnaround plan probably means you are not truly essential, and you're very vulnerable to further downturns.

If, after this conversation with the CEO, you are expected to simply return to your desk and continue doing the exact same thing you were doing, then I would question the viability of the turnaround plan. If the company is really expecting to change things, then the people within the organization shouldn't just be doing the same old same old... it didn't work before.

Combine the previous two points, and you should be asking the CEO what you can do to participate in the turnaround. If the CEO actually thinks you are valuable, he'll assign you some additional role/responsibility. Even if he didn't prior, maybe he'll now see you as being a go-getter, and someone invested in the future of the company. If you're told to just return to your desk, that means a) you aren't viewed as a core asset, b) there is no real turnaround plan, c) both a and b.

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