Thinking of changing jobs in today’s volatile labor market? Here are 5 questions you should ask

Originally published on Geektime.

It’s great that you’re open to change and growth, instead of being frozen in fear by uncertainty and volatility. But before you make things official, ask yourself — and the new company that you're interested in — a few questions.

During the pandemic, many people had the opportunity to rethink their priorities and realize that they needed a professional change — or perhaps even a complete break from the world of work. This global phenomenon was dubbed "The Great Resignation," and included people who left their jobs in order to understand what their next step would be, and how they could improve their personal well-being.

The idea of revisiting, recalibrating, or re-inventing one’s career path so that it is more fulfilling — not just financially, but personally — is healthy. Indeed, we have been advised for years to “find our purpose” and “do what we love.” However, the current picture is not completely inspiring. We are seeing sharp stock market fluctuations and feeling the impact of a rapidly rising interest rate, which makes it more expensive for companies to borrow money for hiring and other expansion plans. As a result, many companies of all sizes — startups, large technology companies, and international companies — are announcing hiring freezes and mass layoffs. For many people in career transition, the idea of switching jobs no longer seems exciting. Instead, it feels frightening.

There might be some uncertainty and cutbacks in a potential next workplace. But this may also happen in one’s current workplace. In other words: for employees who are interested in (or at least open to) change, staying put and “waiting for the storm to end” may not make things better for them. On the contrary, it could make things worse.

Yet as we are seeing (and have seen throughout the past) the vast majority of laid off high-tech workers find new jobs rather quickly — a reassuring fact that indicates that the market is still hot and there is a shortage of workers

And so, now we turn the spotlight onto you: if the idea of changing your job has already crossed your mind, then don’t push it into the corner because of the current uncertainty and volatility. As noted earlier, not moving could be riskier and more stressful than the alternative.

Instead, you should gather information to make the best decision possible. To help you determine this, here are five questions to ask a potential employer and yourself that will help you assess a new role’s stability and suitability: 

1. What is the company's runway going forward?

Runway refers to knowing how much time is left until the next fundraise, and whether it is possible to survive a long period without it. This is the most important parameter in terms of budget planning for startups.

The vast majority of high-tech companies spend a lot of money on growth and are not profitable. Consequently, in order to continue growing every month they spend (a.k.a. burn) money that comes from investor fundraising rounds. Runway is the number of months that the company can survive without additional investor funding, while it burns through funds it has left.

What you are trying to understand with this question is how much money the company has and how stable it is. I sometimes encounter candidates who ask me directly: "How much money do you have in your bank account?" Although I have no problem answering this, frankly it does not provide relevant insights. If a company has $100 million, yet burns $200 million a year, it will probably have to make cuts before long because it only has six months of runway. 

A much more relevant and important question to ask is: “What is the company’s runway going forward?” If the answer is less than 12 months, then the company will have to raise money soon. And if the answer is six months or less, then it means the company will be forced to raise right now.

By the way, many companies prefer not to answer this question, and that is perfectly fine. This is especially the case with smaller startups, who go from one raise to another, and understandably want to keep financial details discreet. 

If you are looking at large, established companies, then this is a legitimate question to ask. But if you are looking at small startups in the initial stages, then you should know that joining them involves accepting slightly higher risk. However, this is a risk that is often worth taking, because startups in the initial stages get more and more diverse financing options in the current market. Just remember to match the risk level of a potential company with the risk level that you are willing to accept. If you are looking to join a more stable organization, then focus your search on companies that have a long runway, regardless of the stage they might be in.  

2. What is the company's economic model?

How does the company make money? If the business model makes sense to you and the company manages to generate a significant revenue stream that increases year after year, then that is great.  

Many companies that worked in a loss-making business model (or with no revenue at all) and preferred to focus only on growth are now unable to raise money and closing down. The financing market has changed, and business models with the ability to reach profitability in the future have become the main factor that investors use to evaluate new investments. 

Many business models that focused on growth over profitability (for example, models that were based on a collaborative economy) lived for years on investors' money without significant revenues — something that is impossible to do in the current fundraising climate. The strongest companies now are either those that are already profitable (very rare) or companies that are still loss-making because they invest in growth but their business model is healthy and allows (once they stop investing mainly in growth) them to quickly become profitable without changing the business model. In the language of investors, this is called a strong path to profitability.

3. What is the sales forecast for the coming year, and has it been adjusted after the recent changes in the market?

If the answer is that the company has not changed anything and continues with the program as it is, then this is a red flag.

It is important to ensure that the organization’s leadership has responded in a timely manner to the market and adjusted the revenue forecast and, if necessary, the expense forecast as well. A mismatch between the revenue and expense forecast indicates a lack of orderly budget planning that has the capacity to effectively respond to market changes. This may lead to a spiral in the future and cause the company to run into problems. In other words, if the forecast remains as it was set last year, then it can indicate that the leadership is not always connected to reality.

On the other hand, if after an in-depth examination of the changed market, the forecast remained the same — or even increased — and leadership has explained to its team the reasons for this level, then this is a good sign and means that leadership is on top of things. 

For example, at Hello Heart we examined a number of sales scenarios when the COVID-19 crisis started and shared with our team that such an examination process was carried out. The scenario that we are building on today is our baseline plan for this year's sales, which is not an optimistic plan. However, this still leaves us in a place of high growth, and we have not been convinced to lower our sales forecast further. Why not? Because we have identified that most of the deals that our sales team is working on are in stable sectors, which continue to buy our product even in more difficult economic times (such as the government). As such, we did not change our forecast.

On the other hand, at the start of the pandemic, we lowered our sales forecast because we saw that deals were not progressing. This was directly due to the fact that we had customers in sectors that were deeply impacted by lockdowns and restrictions (for example, airlines). Our revised forecast turned out to be correct: in the first few months of the pandemic, our sales fell.  

Planning for various scenarios is one of the most important roles of leadership and the board. It is important for you to ensure that the company's leadership acts responsibly and responds to changes in the market vs. “burying its head in the sand” and hoping that things will somehow work out for the better. 

4. Has the startup announced changes in expenses or a new spending policy in recent months?

These days, every board meeting begins with questions from members about budget adjustments to the new reality. This is happening even in companies that have raised a significant amount of money. Companies that have not already adjusted their expenses will have to do so in the future, because as mentioned, even companies with a lot of cash have had to adjust their approach and guidelines.

For example, Hello Heart raised 70 million dollars only a few months ago. We have explained to our team that we will continue to recruit employees according to our original plan and invest more money to add more staff to our data and product teams. However, we have also asked everyone to “think twice” before spending money on systems and be even more careful and responsible with expenses. 

In general, keep in mind that startups and companies that have not yet undergone budget changes will likely have to undergo them in the future.

5. Is this change good for me?

Ignore for a moment the issue of economic stability or instability, and ask yourself the most important question of all: "Is this change good for me?” As mentioned, against the background of the Great Resignation, many people change jobs out of a desire for a new experience with a new meaning — but it turns out that many of the people who changed jobs in the last year feel dissatisfied.

And so, how will you know if you are making a positive or negative change? I recommend that you focus on three things:  

• Does the corporate culture suit you? Talk to other people who work in the company, and not just to the recruiters. Understand how it feels and if it fits your character. Are you looking for a place with high cooperation and no ego? Are you looking for parties and work around the clock? Ask yourself and the employees of the company you are interviewing with similar questions, and understand which vibe is going to suit you best. 

• Not everyone is searching for a place with meaning, but if you are, look for companies that do good for the world or save lives. Most of the people who join Hello Heart are inspired by our vision and mission.

• And the most important advice: talk to the manager with whom you would be working. Your direct manager has a major impact on your work experience — for better or for worse (bad managers are the main reason people leave jobs). Try to get to know them better in order to understand if there is a connection, and try to assess if you will work well together. Remember: you may join a company because of the company, the mission, and the culture, but you will stay or leave because of your manager.

We’re hiring at Hello Heart! Visit https://www.helloheart.com/careers to learn what it’s like to work here and see our open positions.