A framework to navigate recession as a developer
When’s the right time to look for another job? You’ll have to consider various factors specific to your context, but I’ll provide a framework to break down all the factors to consider in a recession.
Am I still employed?
On January 22, 2009, a colleague and I tried to enter the Microsoft building and noticed his badge didn’t work. This wasn’t unusual, considering badges stopped working now and then, and we would go and grab a temporary badge, but the circumstances were different.
A few hours earlier, Microsoft had announced its first-ever layoffs, and managers were planning to communicate with employees impacted by the layoff. Even though Microsoft wouldn’t have revoked employee access so quickly, the experience was highly unnerving for my colleague.
He rushed to the reception, anxiously told them his badge wasn’t working, and only calmed down once a temporary badge was issued (Like they usually do).
As of late, lots of engineers face some similar form of anxiety. In scenarios where their Google work account suddenly logs them out, or Slack takes too long to load, the thought of layoffs does cross one’s mind.
These are uncertain times.
Sadly, there are valid reasons to be anxious. A recent survey on Blind showed that 53% of laid-off engineers hadn’t found a new job in 6 months. For many engineers in the US with a working visa, the stakes are even higher.
Living through that era of uncertainty as a developer in 2009 (while on a work visa), I can empathize with engineers worried about layoffs. There are a lot of questions developers probably ask themselves, e.g., Should I switch jobs? How should I prepare to mitigate the impact if I’m laid off? How do I know I’m at risk?
Today, I want to provide a guide on approaching these problems and preparing for various scenarios from an engineer’s perspective. I’ll later give another edition from an engineering leader’s perspective.
Should I stay or switch jobs?
When’s the right time to look for another job? What factors can I control, and what factors can I observe?
Here’s the short answer:
If you’re reasonably happy with your current job, then stay at your job. This answer is overly simplified to solve any personal preferences that are in your control. As for factors not in your control, the reality is much more complicated.
The longer answer:
You’ll have to consider various factors specific to your context, but I’ll provide a framework to break down all the factors you should consider.
Here are the questions you should seek to answer when navigating a recession job market:
What are the signs of looking for other positions?
What are the signs to stay in my current role?
What are signs of job stability?
How do I weigh stability and opportunity?
How do I decide to leave or stay?
How can I best prepare myself for any scenario?
In the following sections, I’ll cover how to answer these questions based on personal experience navigating a recession and conversations with current developers.
Public vs. Private Company: financial standings & job security
Whether your company is public or private will determine how you’ll discern if your company is doing well, shaping your next move.
For this first step, you’ll answer the question, “What is my company’s financial standing?”. As for the second step, you’ll answer the question, “How does this affect my job security?”
For public companies, it is somewhat easier to answer than for private companies.
You can look at your company’s Annual Report and SEC Filings to determine if your company’s financial standings are at risk. A strong indicator would be a significant decline in revenue.
I will also add that even as a senior engineer, it’s difficult to predict what will happen. Even managers are not aware until a few hours before layoffs are announced. It’s difficult to track something from their behavior. While there are internal or public leaks, it’s more reliable to look for patterns that every developer has some insight into (Which I will cover in the next section).
Discerning job security:
Once you notice that your company’s financial standings are at risk, the two best predictors for job security include your most recent performance evaluations and if you’re working on a critical project.
Are you working on a critical project?
When laying off people or teams, the first projects that are cut are the ones that are not important or critical for the growth of the core business. For example, Google Keep is less vital than Google Cloud. The more critical a project you’re working on at the company, the more secure your position is.
How good or bad was your last performance review?
Some companies start aggressive performance management programs to lead into layoffs. Meta & Amazon is placing the lower 10% (based on performance) on PIP based on managerial nominations. Then there’s a 50% chance that you’ll be let go.
If you’re not working on a critical project, and your manager wasn’t happy with your last review cycle, then you should probably start looking for a new job right away. It’s better to interview while you are employed than try to convince the hiring manager that your performance wasn’t the reason you got laid off.
As for private companies, it’s a bit more complicated, but you can still see some signs.
Here are a couple of signs you can look for:
1. Hiring freezes.
2. Significant user or revenue decline.
Something to note is that there’s a difference between slower user or revenue growth and declining users or revenue.
Slower growth is probably not the best indicator for well-funded start-ups. Why?
As the economy slows down, many companies (even well-funded startups) will see a slight decline or a flat trajectory in their growth or revenue. In those cases, you might not find a better opportunity or option in today’s economic and hiring climate, so your best option will likely involve staying put.
Now, if the decline is significant enough and your company starts to lose money, it might be time to jump ship.
Deciding to leave or stay
Deciding to leave
If you have to jump ship, the best option is to find a company with broad hiring freezes but still backfilling for critical roles. If you can land one of these positions, you should consider yourself relatively safe.
Deciding to stay
If you decide to stay, work towards increasing the visibility of your contributions or speak with a hiring manager that’s backfilling for a critical role.
Weighing opportunity vs. security
There’s a significant risk in entering a new job during today’s climate. In your new role, you would be at a disadvantage with a lack of tribal knowledge and lack of time to prove your worth. My recommendation would be that unless you’re moving from one unstable position to another more stable position, it’s best to stay in a stable position for the next 6-9 months.
Garry Tan - President of YCombinator puts it best:
Ideally, you want both, but you should be at a place with at least one.
It’s nuanced, but there are inherent risks in leaving a job where you’re well-established. There is an opportunity cost if you’re not learning and can earn more elsewhere, but if you’re not learning and still earning, then the opportunity cost can be weighed differently.
Take a calculated risk and start by insulating yourself using the framework defined above and evaluate your new potential company — considering differences between a public or private company.
There have been cases where people join large public companies a day before they got laid off. Lay-off plans could’ve been in progress but not communicated until the last second. If your opportunity cost is too high, take a risk. But if the opportunity cost is not too high, then it’s recommended to stay in your current job.
Here’s a helpful decision tree to get you started:
Weathering the storm and interview prep
Whether or not you decide to jump ship at a public or private company, everyone should ask how they should get ready to weather the storm ahead.
For many, that involves getting better at your job by:
Keeping your skills sharp
Learning new technologies and languages to increase your value
And staying vigilant for any signs of weakening job security by:
Dusting off your resume
Starting interview preparations.
Sometimes the best move to weather the storm is to be prepared for all scenarios, but you can lean into specific actions over others based on your findings from the framework I provided.
I also want to finish by saying it’s not all doom and gloom. I’ve walked through a recession once, and while it was difficult, things eventually improved.
Even if you’re laid off, the total number of engineers worldwide is still much less than the demand. You’ll have an easier time finding a job than in other roles. If you’re prepared for all seasons, you’ll land on your feet no matter which way the wind blows.
If you’re looking for places to start with interview prep, you can start here:
https://learn.educative.io/interview
or for more company-specific content, you can also start here:
Thank you