What is a "struggling company"? 1

[jmw]

In the "Career in Focus" thread, the TICK points out that it is no fun working for a strugging company.

The problem is, how do we recognise a struggling company?

What are the key indicators we need to identify if we are to stay in control of our careers?

Many companies appear to be struggling because they have lost the plot. Some companies are strugggling simply because of the prevailing economic climate. In the short term this may amount to the same thing but as economic conditions change, how do we know we are with a good company?

I'm sure there are many clues in how the management are behaving e.g. watching the profitability and cash flow very carefully they may make more short-term decisions.

So does anyone have some good pointers?

JMW

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[quark]

I have few points based on my experience.

1. If the company is becoming more open about its policies and continuously prompting its employees about how good it is doing.

2. If it is recruiting people left and right.

3. If it depends on persons rather than systems.

4. If it is going for very long(above 5 years) term plans continuously.

Regards,

 

[MadMango]

To expand on #3 above, if they circumvent procedures like ISO9001.

5. If purchasing is switching vendors often.

6. If overtime is reduced.

7. If they are unwilling to adopt new processes.

8. If your co-workers are complaining.

Ray Reynolds
"Computers in the future may weigh no more than 1.5 tons."
Popular Mechanics, forecasting the relentless march of science, 1949
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[eric1037]

quark and MadMango:

I'm a bit confused. It seems like points 1 through 4 are signs of a good company and points 5 through 8 are signs of a struggling company.

Another question:

Does anybody think rapid expansion is the sign of a bad company? I had someone tell me that it's dangerous.

 

[MadMango]

Sorry to add confusion. I was giving indicators of a struggling company, [blue]quark[/blue] was giving indicators of a good company.

That's what I get for posting so early in the AM.

Ray Reynolds
"Computers in the future may weigh no more than 1.5 tons."
Popular Mechanics, forecasting the relentless march of science, 1949
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[corus]

A good sign of a struggling company is when they change the toilet paper to some cheap stuff. It shows that the non-productive personnel department are number one on the hit list and are frantically trying to show they are saving the company money.
If one day you notice that there is only newspaper in the toilets then the company has probably closed already and you're sharing your office with some squatters.

corus

 

[TheTick]

Excessive busywork is the particular bad sign I am concerned about. Stickler is stuck with a lot of menial work, while no new engineering work comes in the door. If the company is not generating enough work for him, they are likely also sucking wind in sales and revenue.

Due to illness, the part of The Tick will be played by... The Tick.

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[quark]

I thought I was talking about struggling company:-(. Where is the confusion?

 

[Beggar]

Quark: How is becoming more open about policies and soliciting feedback from employees symptomatic of a struggling company? Same thing for developing long-term plans. Those both seem like positive things to me.

Signs of struggle:

+ No attempt to identify nor solve recurring problems.
+ A "rework" approach to quality
+ A reactive safety program rather than a proactive one



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[jmw]

I can see Quarks point.

Managers try to pursuade the investors that all is well.

The sudden obsession with long term plans (investor happiness)is often complimented by an even greater obsession with "end of the month" figures (cash flow).

Something else is the increase in the number of meetings and their duration and the fact that they never achieve anything.

At the same time, some of those with better antenna for a bad company are leaving. This causes an increase in recruitment.
Take a look. When good people start leaving and they start promoting lesser people note that they are recruiting to fill the lower levels at low pay and you can be sure that those promoted are not getting the increase comensurate with the new job.

Expenses get especially ggod focus, I've seen the toilet paper dodge before and one company I know has told its sales team not to use toll roads.

JMW

http://www.viscoanalyser.com

Eng-Tips: Pro bono publico, by engineers, for engineers.

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[CarlPugh]

My definition of struggling company:
A company who doesn't pay their vendors on time.
This limits vendors who will accept orders from the company.
The company is then unable to get products from the lowest cost vendor and has to raise their prices.
Vendors refusing to accept orders and the company raising prices continues until the last vendor decides he has had enough and refuses to sell on credit.
The company then closes.

The abover is a much simplified analysis. However it is usually correct. (I do not and have never worked in purchasing or sales)

In my experience, the most successful companies are those companies where the manager or owner knows what is going on. It is amazing that in some large companies the managers or owners don't have the faintest idea what is happening.

Is it true that we learn more by our mistakes than by our successes? Working for a struggling company may not be that bad if you don't get hurt by their going out of business. And there is always the possibility that the company won't go out of business.

Good Luck

 

[patdaly]

Well, at least in my case, you know your company is struggling when the CEO, CFO, and President got a big old bonus, and then we were told the company did not make enough to give us a raise.........

 

[automatic2]

Very appropriate question and comments. I am one of those that had committed my career, not to a specific failing company, but to a failing industry. In fact, my longest stay was at one of the best companies, and as the industry lost value, smaller companies where closing around us. When the big day came, there was no place to go. I've since retrained in a different field, but can see many in the same situation.

I promote travelling around from employer to employer. It's a trade off, they feel they might loose, but you are always gaining from exposures. It will provide you with mobility skills which are extremely important if you venture out on your own. It will also give you the skills to quickly evaluate the value of any given circumstance, be it an employment or contract opportunity.

A troubled company?, sold several times in succession, managment members without purpose.

 

[MintJulep]

Rapid expansion may be bad because it is often justified on short-term recent success.

"We just got a big job, so we are now likely to get more big jobs."

Suggests management inability to realistically forecast workload.

Other sure signs of a failing company:

Ship it now, worry about fixing it later.

Purchasing agent starts asking, do you really need....?

Instead of a quarterly statement for the 401(k) plan, you get an IOU from the company.

As several others have pointed out, vendors are often the first to see the signs (not getting paid). Make friends with your vendors. They have a good feel for who is busy and who is hurting.

 

[MadMango]

Also, Purchasing approval of a $500 requisition for springs, but rejecting a $50 office supply requisition.

This happened to me once. The company was in such bad shape (later recovered) we actually had to turn in non-working pens and pencil stubs in order to get a replacement. If you lost your old stub or pen, you had to have your supervisor get the item to give to you.

Ray Reynolds
"Computers in the future may weigh no more than 1.5 tons."
Popular Mechanics, forecasting the relentless march of science, 1949
Have you read faq731-376 to make the best use of Eng-Tips Forums?

 

[flamby]

A few more symptoms of a struggling company:-

1. It accepts work at ridiculously low prices and impossible schedules and then asks you to meet those.

2. Every hour the phone bell rings and someone from top wants to know status of the work. Or wants to call a meeting.

3. "Quality of work" are the words you haven't heard since your before last birthday.

4. "Office-Politics" goes high and people start complaining how bad others are doing instead of speaking about their own work.

5. In general, majority of the workers feel their current responsibilities are not at par with their calibre.

6. Everything and everybody looks extremely busy and hurried, most of the time without any reason.

Bye.

 

[profengmen]

If you really want to know if your company is struggling, take a fact based approach and ask for a copy of your company’s annual report. Understand that this report may have been designed to attract investors, but there may be a chance that you can see through the puffery and analyze some key points. Otherwise, ask to see the 10-K financial disclosure document; which must be prepared according to law, and filed with the securities exchange commission.

Then learn how decipher ratio analysis, and things such as:
1. The income Statement
2. The Balance Sheet
3. Cash VS other assets
4. Liabilities
5. stock(s)
6. Equity account
7. Inventory accounting
8. Depreciation Methods
9. Cash Flow


In other words, take some business courses and make an attempt to understand businesses as well as you understand Engineering; then you won’t waste your time making assumptions based on toilette paper and the water cooler.

 

[jmw]

You don't have to be a doctor to know when you're ill.
This is about symptoms.
They should be as visible to management as to the workers and the interpretations obvious.
If management don't recognise a morale problem and step in and explain things then maybe that's a symptom as well.
Understanding how corporate statements are put together is advisable, but not the answer. Corporate accountants are among the best there are at obscuration. Let's face it, how many corporate accounts, annual statements did Enron publish before it hit the wall.
I'm afraid the creative accountants are mre than familiar with the old saw about statistics and liars.
Also, a once a year statement doesn't help when some things start to go pear shaped in a hurry. Many of the things discussed here describe what management do to try and keep the cash flow and profit and loss accounts looking good, if only for a short time, e.g. long enpough to sell or hope for a miracle.

JMW

http://www.viscoanalyser.com

Eng-Tips: Pro bono publico, by engineers, for engineers.

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[TheTick]

Let's face it, how many corporate accounts, annual statements did Enron publish before it hit the wall.

Actually, there were many investors (individual and institutional) that had steered clear of Enron. These were all people who read the statements and could see through the whitewash. Some of these people were quoted as saying it wasn't even that hard to spot Enron's weakness.

Due to illness, the part of The Tick will be played by... The Tick.

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[jmw]

Equally, how many people were not smart enough to spot the problem via the accounts and how many companies totter on seemingly forever with quite unexciting accounts published but ultimatey fold.

I am not surprised by many of the comments noted here as i have worked for some companies that have doen all these things and more yet one would be hard pressed to say exactly what the problem is from the accounts. There is always an excuse for a poor cash flow or dividend.... economic circumstances, global recession, writing off bad debt, acquisitions etc. If one could take the time to compare accounts it might be better.

But why?
The best place to be to know when a company is failing is on your way out of it to pastures new. There is no doubt in my mind that the indicators given above are symptomatic of either a failing company or bad management or both.

The biggest heartache is to work for a company with an excellent workforce, excellent products and excellent potential and to see it reduced to sch straights by bad management, circumstances (?) etc and ultimately to see it sold off and broken up, to see good people let go and to see the potential wasted.

There is nothing sadder than to visit such a company and recognise its plight. I once visited a company where the machines were silent and all anyone could say was they hoped someone would buy them soon. They did. They closed them down and consolidated operations two hundred miles away. About 5 people kept their jobs, but had to move.

It may sound bad, it may sound negative, but to know the signs and not to ignore them is important. When push comes to shove the only one looking out for your interests is you. You can't ignore the signs. The response here may seem negative but just think, the question posed is about struggling companies and only those with real experience of struggling companies are equipped to respond. To balance it up, I'll start another thread.

JMW

http://www.viscoanalyser.com

Eng-Tips: Pro bono publico, by engineers, for engineers.

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.