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Posting from a throwaway for obvious reasons.

I have a feeling the web consultancy I work for is going down, but I'm not sure whether I'm overreacting. Let me give a basic timeline:

We began as 30 people. In the middle of last year, an organizational psychologist was hired to establish a set of core values.

One person was promptly fired for violating those core values, despite being one of the best developers on the team. Two people then left, both to work at much larger companies.

Near the end of the year, a business consultant was called in to try to restructure the company to be more hierarchical and focused on quarterly performance (presumably to obtain a higher sell value). Then, another senior person was fired, leaving a few projects with loose ends. Several people were promoted to "lead" status, one of whom having no idea what she's doing.

Then, the real fun began: around the beginning of January, all employees were transitioned from salaried to hourly and given equivalent pay + a small raise.

Just when I thought it couldn't get worse, just a few weeks ago, we were told that we wouldn't be able to receive our normal payroll on the normal day due to some delays in client payment. The company was literally unable to pay the remaining 24 or so (hourly, so no overhead) employees.

The company, however, is undergoing rapid growth in terms of client quality and project scope, and some people I've spoken to have told me that this is just a part of the normal growing process. Before all of this began, my experience with the company was wonderful. The same management is still in place, so I'm unsure who's to blame in this situation. The founders have always seemed inexperienced but I'm not entirely sure what caused this collapse (if it's a collapse).

How many of you have encountered something similar? Should I abandon ship and find a new job? If so, any advice on how to part amicably without saying "I feel like I'm on a sinking ship"?

  • "Rapid growth" according to who? Seems like the people steering the ship either don't know how to navigate or are trying to go every direction at the same time - and the only way to do that is tear it apart. – user53718 Mar 25 '17 at 21:48
  • After I submitted this question, I noticed this. I think I am under the impression the company is undergoing rapid growth because that's what I've been told, but it's actually experiencing the opposite of growth, now that I think about it. – Geoff Faulkner Mar 25 '17 at 21:53
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In the middle of last year, an organizational psychologist was hired to establish a set of core values.

Ugh. A company that has to hire an outsider to establish "values" means they never had any to begin with. Always a bad sign.

Near the end of the year, a business consultant was called in to try to restructure the company to be more hierarchical and focused on quarterly performance

Typical floundering. When you don't know what to do, restructure.

we were told that we wouldn't be able to receive our normal payroll on the normal day due to some delays in client payment

Living paycheck to paycheck isn't good for individuals. It's even worse for companies.

some people I've spoken to have told me that this is just a part of the normal growing process.

If that's "normal" then they must have suffered through some terrible companies. In my experience, none of this is normal for healthy companies.

How many of you have encountered something similar?

Certainly not with exactly the same details, but I've been part of several failed startups. It sort of goes with the territory - many burn brightly for a short period of time but flame out quickly. A few survive and come out the other side in good shape. But in my experience, that usually doesn't happen.

Should I abandon ship and find a new job?

Only you can decide what you should do.

Some choose to hang on to the bitter end in hopes that there are some spoils to be had before the bottom completely drops out.

Others (like me) see enough red flags, have enough of a family they need to support, or just don't want to go through the drama, and choose to get out while the getting is still good and leave on their own terms.

If so, any advice on how to part amicably without saying "I feel like I'm on a sinking ship"?

Find a new job, give the standard notice, and leave.

Wish those you leave behind good luck, tell everyone you enjoyed working with them, thank them for the experience, and tell them how they can contact you in the future. Don't be surprised when you get calls and emails asking if there are positions available in your new company.

Simply don't say "I feel like I'm on a sinking ship". Everyone who has a clue will know what is going on.

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    Thank you for this advice. It feels really good to have somebody confirm that this is strange. Just sent out a bunch of job apps! – Geoff Faulkner Mar 26 '17 at 22:55
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    @GeoffFaulkner For emphasis, take the steps in the order Joe mentions! Don't hand in your notice before you have a signed offer in hand from your new employer unless you're prepared to potentially eat several months of unemployment. – Cronax Mar 27 '17 at 12:08
  • +1 for the overall advice, i mean, who ever heard of a company growing so much it had no money? but -1 for the initial statement. there's nothing wrong with creating "core values", nor for a company not having them - the problem is if the core values are misaligned (or if not having them is a problem). eh, i'll plus one it bc you're on the money with the restructuring. – bharal Mar 27 '17 at 16:32
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    Wasting money on consultants when you are so close to the edge that you will shortly not be able to make payroll is a clear sign your management is incompetent. They should have had enough money in the bank to cover a good number of payrolls before hiring consultants to fix their organization. If clients were late in paying, they should have been able to get a bank loan for payroll, it indicates they have poor credit that they could not. Part of why they have poor credit is they have been wasting the money they did get. – HLGEM Mar 27 '17 at 18:56
  • @Cronax will do! I've already begun sending out resumes and I think I'll be good! :) – Geoff Faulkner Mar 28 '17 at 23:14
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Run for the exits and start looking for a new job immediately.

A company that can't make payroll is in very serious trouble, partly because it's a self-fulfilling prophecy: even if that client payment they're promising does come through, so many people will lose faith, start looking for new jobs and quit that it's exceedingly unlikely that they can pull out from the death spiral.

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They may pull through if they are adding clients.

Typically a company with good financials can get a loan against receivables to pay payroll so not a good sign.

Time to polish your resume and start interviewing. They cannot blame you for leaving if payroll is delayed.

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    Exactly what I was thinking: If the story of rapid client growth held water, banks would be falling over themselves to cover payroll/expenses until the checks came in. – Wesley Long Mar 25 '17 at 22:20
  • Adding clients only helps if those clients pay and it sounds like that's been an issue. – alroc Mar 27 '17 at 12:38
  • Rapid client growth isn't that hard. Getting profitable clients, now that is hard. Lots of work and no money is what happens when you ignore that rule. – MSalters Mar 27 '17 at 22:53
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You are really asking the wrong question. You shouldn't ask "is this unusual", but "what does this mean to me".

You should certainly look for a new position. If you find something that is better than your current job and looks safer, you leave (always mentioned: The correct order is sign new contract, then give notice). Don't feel bad about leaving. They fired several good people, for weird reasons.

If you find something that isn't quite right you decide how safe you feel your current job is. A job that isn't perfect is better than no job. If you find nothing, keep on searching.

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No payroll? RUN. Here in California, employers are on the hook with legal penalties for missing scheduled payrolls. I'd say that you've received a warning shot.

Like the other comments, I'd suggest that you find stable employment elsewhere. Be only a spectator of imminent crash-and-burn about to happen, instead of a victim of it.

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