What to Do When Your Business Is Going Under?

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A business in danger of closing can be as stressful for managers and employees as it is for owners and shareholders. Even so, this isn’t the time for panic, anger or frustration. Instead, managers should focus on open communications and maintaining morale, while employees should remain productive for as long as the business remains open while also gathering information necessary for understanding their rights.

Do Not Give Up

In an article for Inc., Steve Tobak, a management consultant and executive coach, writes that working for a floundering company provides opportunities that both managers and employees may never see with a more stable company. For example, a business in trouble may be more willing to listen to innovative ideas, such as repositioning a product in a niche the business can dominate, or enhancing its online capabilities.

Maintain Open Communications

Managers are often stuck in the middle of a difficult situation when a business is going under. Without open, honest communication, uncertainty and fear can erode morale and productivity to the point where it hastens the business’s demise. To beat the grapevine and increase credibility, the Employer’s Association recommends that managers provide timely and accurate information about current developments. To the extent that a business owner allows, a manager can discuss the reasons the business is failing to employees as a group. She can also discuss layoff or termination procedures as a group. One-on-one meetings can then focus on listening to and addressing individual concerns.

Be a Good Employee

Protect your right to collect unemployment by remaining productive for as long as you still work for the company. Although laws in each state determine eligibility for unemployment benefits, the typical rule is that you must lose your job through no fault of your own. Most importantly, this means that no matter how frustrated or angry you might be, do not leave your job before being laid off and do not act intentionally or recklessly against your employer's best interests, such as by violating safety rules or stealing office supplies. If you are fired for something you did wrong, you might not qualify for unemployment benefits.

Understand Your Rights

Employees at all levels have certain legal rights when a business fails, so you should research these rights before the company goes under. If your company has 100 or more employees, for example, the Worker Adjustment and Retraining Notification Act says your employer must provide at least a 60-day notice before a mass layoff or closure. If you don’t get this, your employer might be liable for paying you for every day of notice that you didn’t receive. In regards to pay, contact your state labor department to get information about the time in which an employer must issue your final paycheck and whether it must include accrued vacation time. If you have health insurance benefits, the Consolidated Omnibus Budget Reconciliation Act says you have the right to continue those benefits at your own expense for at least 18 months.

Prepare to Move On

Continue working to the best of your abilities while you are still employed with the struggling company. In your spare time, however, prepare to transition in the event your company does go under. If your company announces its intention to close on a certain date, it might offer outplacement services such as a resume building or job search workshop. If so, take advantage of these resources. Also, get letters of reference before the company closes and everyone scatters. Finally, start networking with others in the same industry or take a few classes to strengthen current skills or learn new ones. This will improve your employability once you are on the job hunt again.