No, it's not necessarily a red flag. The company might cut back on unprofitable businesses and reinforcing their profit making arms.
It is important to consider your own preferences, don't listen too much on others :) For example, some people thrive in companies that are doing extremely well, have lots of money for experimentation, there's not much financial pressure, etc. Some others (e.g. myself) like being dropped into crisis situations because they're interesting, you can learn a lot about people and every decision matters. Also, being a contrarian can help you to opportunities that you'd not get during 'peacetime'.
You can ask about job security during an interview. Many interviewers will be honest, and if they're not, you can still guess based on their reaction.
I’m curious about your perspective on being in a “crisis situation” (because I see what you mean about it being interesting) and what that requires. Can that be a 40 hour a week job? Or are you signing up for a job that’s the primary focus of your life? What has your experience been?
It it probably not a 40 hour a week job in the sense that it's on your mind all the time. But it's also not a 40 week job because you don't need to be around from 9-5 as what matters is that you make good decisions, therefore you need to prioritise your mental health a lot. In my case this meant stuff like going for a 2 hour long run in the middle of the day, because clearing my head was the best I could do for my work.
The problem with this attitude is that it is hard to transition to peacetime, normal stuff doesn't seem important (e.g. it is very hard to take a normal product decision that seriously if you've seen deep existential crises before).
A company I worked for went through a rather large crisis/reorganization shortly after I joined - similar to OP, I found it a very good opportunity to learn about both the field and the company. Fewer people, wider scope of responsibility/agency, and greater freedom to act. I was able to have conversations and do projects I wouldn’t have before, since the scope of the crisis led to a strong bias towards action and a willingness to take risk that didn’t exist before.
In terms of work/life balance, the stress was definitely higher afterwards, but we were very clear that reduced headcount meant that we simply could not do the same amount of work we were doing before and that working long hours would have no meaningful impact on what we could realistically get done. Leadership handled this well, and it helped that we had a sharp enough break that it was clear that we couldn’t just “buckle down” and continue as before. Can’t say working hours didn’t increase at the margins, and it definitely took more head space than before, but both the freedom to operate and the ability to make an impact made the work more enjoyable for me. It also helped that I worked from home, though - some colleagues worked from the office, and having to be in the room with the kinds of negativity that come with crisis would’ve made my experience much worse.
I’d definitely ask during the interview and get a sense of the company, but I wouldn’t necessarily write them off. Some depends on you as well - I was 3 months in at the company and did not get laid off, while others on my team/in my vicinity did.
One other thing to consider is your own personal risk tolerance - one reason I stuck around was because I was new to the field and considered it an opportunity to learn, and I could take the risk of finding myself unemployed again. If you’ve got a visa situation or a health situation or low savings and a family, that’s a different situation, but I’m a healthy single guy with savings, so I could take the risk for the right opportunity.
It'll be hard to get the courage to do this, but you should ask them directly about it. "Your company lid off 20% of the workforce last week, how will that affect potential new hires like me?"
At the very least, this will expose companies that are wasting your time.
In my experience changes to hiring posture come from a very small group at the top and are passed down with immediate effect without much if any foreknowledge. One day it's full steam ahead, next day it's offers getting cancelled.
I suspect it's more like asking a PR rep for the tobacco industry about lung cancer. They've been asked so many times that they can give their spiel to you without even engaging their brain. Because that's the job.
Not completely a red flag... I've only been through layoffs twice but both times the cuts the company made were pretty logical in terms of investing more in the existing profitable parts of the company and cutting things that were bets but would have take awhile to even prove if they were the right bets to make.
The one thing I would be concerned about is the ~2 months after layoffs are pretty rough morale wise.
- People lost their friends and are upset about it
- Systems start breaking and the knowledge of them was lost
- Team restructuring means learning how to work with new people
- Adjusting expectations for the new velocity of the remaining engineers takes time
I personally would not join a company that recently did layoffs because socially its going to be awkward for awhile.
Personally, I would avoid taking a position at a company that has plans to, or has recently done, a substantial layoff. But YMMV. It all depends on what your risk tolerance is.
Beyond risk tolerance, companies post-layoffs are miserable places to work. Emotions are high, moral is low, and work piles up. Whatever "company culture" is boasted during interviewing is not going to exist if you take the job.
I had this happen to me once. Between when I accepted the offer and my start date the company had a 10% layoff. I pretty much got the cold shoulder the moment I walked in the door and it was a pretty miserable experience. I only stayed at that company about 4 months before I had enough and moved on.
It will be a good idea to check out the previous/ongoing layoff reasons, and decide accordingly.
Are they closing one of the products and those people can't be reassigned? They decided to get rid of sales team because they weren't as effective?
There is a huge bubble of layoffs nowadays BUT they all are not equivalent in nature. An example: layoffs have been a normal thing in financial companies for over few decades (performance based).
Its definitely worth considering, but it's also entirely possible (especially at a very large company) that you are being hired into a different part of the business which is in some way isolated from the layoffs. E.g. joining a core business team while R and D / exploratory new stuff is getting cut might still be fine.
I'd also just ask them, although of course it's hard to trust any answer you get completely.
Say you're a manager who just lost 20% work force and want a hedge against the next round, what do you do? - hire someone, anyone, to throw under the bus when the time comes
My company desperately needs people but also instituted a hiring freeze. We're not canceling any existing interviews and will treat those candidates like normal. I would suspect they have a much higher chance of acceptance given that it will be the last opportunity for teams to increase headcount for a while.
Not necessarily. (a) They could be laying off low performers and still looking for backfill some of them. (b) they could be laying off in certain skill areas and hiring in others. (c) One division could be laying off while another is hiring.
I know at least one such example where around 50% of the folks across the whole organization were let go, even a substantial part of R&D, and the organization just continued with the hiring process for pretty much the same positions.
This to me reads as "it's you not me" type of mentality and I personally wouldn't join such an organization.
A 20% layoff is absolutely a red flag. Morale will be impacted and there is a likelihood of further layoffs. If you are out of work it's worth considering but a 20% layoff is as likely to mean more trouble ahead as not.
I'm in final interviews, so no signed offer yet, but travelling for a multi day interview at a red flag company is a waste of time when there's other options to prioritize.
Yes, I know they are going through large layoffs, and know the % in two cases.
I didn't vote on your answer, just saw it now and replied.
It is important to consider your own preferences, don't listen too much on others :) For example, some people thrive in companies that are doing extremely well, have lots of money for experimentation, there's not much financial pressure, etc. Some others (e.g. myself) like being dropped into crisis situations because they're interesting, you can learn a lot about people and every decision matters. Also, being a contrarian can help you to opportunities that you'd not get during 'peacetime'.
You can ask about job security during an interview. Many interviewers will be honest, and if they're not, you can still guess based on their reaction.