Ask HN: As an employee of a company, how do you assess its health?

My company's CEO says he looks at the survey answers to "Would you recommend Company X as a good place to work" as a health indicator of how the company's doing. Which makes sense to me, since if the employees overall would recommend it as a place to work, it's probably reasonably stable and rewarding, has reasonably trusted managers, etc.

I've never delved deep into actual statistics on this, though, so consider this just an anecdote.

- Employee turnover: a large layoff - Retention: some many know something you don't, especially at the high levels. - Restructuring/reorging: there are companies that view this method as a panacea for all ailments (rather than treating the underlying issue(s)). - Projects funded: a concentrated focus on projects that "reduce cost" or "introduce efficiencies" rather than on growth and R&D may be indicative of either a contraction to make a company more palatable for a buy-out, or a simple general state of the money in the bank.

"Company" is a broad word, and can include a wide variety of different types of organizations - but if you're talking specifically about startups, look at the following:

Cash in the Bank / Burn Rate - How much cash does the company have? How much of that cash is it spending each month? How long until the company reaches profitability? Could the company be profitable now if it wanted to be?

Headcount - LinkedIn actually tracks this now. How has the total headcount of the company changed over time, particularly recently? Headcount is certainly not a measure of success, but a significant decrease in headcount may be a red flag.

Growth Rate - How fast is the company growing? Ideally you're looking at this in terms of revenue.

Unit Economics - Even if the company is growing, is it making money from every sale? Or is it "spending $1 to earn $0.95" ? Getting a handle on the bottoms-up unit economics of whatever the company is selling is important to really getting a picture of its overall health.

Grit of the Founders - This may be more important than everything else on the list! Every startup is going to feel - frequently - like it's in "bad health." Founders with determination, grit, and the ability to fight through the tough times will overcome a lot of the problems presented by other items on this list.

I guess it would depend on the size and status of the company. What I mean by that, you would judge a startup 1-10 people that is privately held substantially differently than 1000+ employee publicly traded company. These indicators that you are looking for are going to be vastly different along the size spectrum of companies.

It's all about the money. Cost cutting such as layoffs, no annual bonus, no more free snacks, shutting down promising projects.

When a company is doing well, it's usually the opposite.

One company I was at shipped a hardware product. The hardware would come in from the manufacturer, the techs on site would flash the firmware, apply stickers, and ship to customers. When I started they were shipping 10-15 boxes a day (this was easy to judge, they sat by the entrance and the UPS guy would come in and get them). Then a few month later, the senior sales guy left, and a new vp of sales was brought in. Over the course of a year, outgoing devices went to near zero. That's when I started looking. A year later the company was still alive, but limping with a skeleton crew of devs and techs. Most who stayed were fired.

Executive engagement, number of open job reqs, revenue goals (not necessarily growth or metrics of past)

Availability of information to analyze will depend on whether it's a public vs private company.

If it's a public company, an employee can look at the health in many of the same ways that Warren Buffet would look at it. Look at it's profit & loss statements for the last few years. If it took on debt, try to find out what the debt was used for. Look at the credit agencies' bond rating for the company. If it's not AAA, research why. Look at the company's major customers. Is it a growing marketplace?

If it's a private company, intelligence gathering is going to be harder and you often won't have good info until you actually work there. You can try to synthesize information from glassdoor, Google News (e.g. lawsuits, settlements, etc), and other sources.

>I mainly meant "startup" (i.e. not Fortune 500)

In this case, I would ask the hiring manager (often the founder) if the company is cash-flow positive. If not, ask how much "runway" is left before the company runs out of money. Some founders may push back with "I can't disclose financials, yada yada" ... maybe because of his paranoia about competitor espionage. You then have to ask yourself if you're willing to join a company with limited information. You can join a not-yet-profitable company because sometimes, it all works out. That said, the idea of concrete financial dialogue is to make the risks transparent to the employee.

The easist method is by trend in employee count. If headcount is rising, that's a good indicator, if it's falling, that's generally bad. Stable can be perfectly fine, or bad, depending on the company. You may have concerns about the magnitude of growth, or claim lay-offs were justified or turnover is natural, but the trend generally holds.

You should also pay attention to other employees; ask yourself why folks who leave are leaving. This seems easy, but I know one start-up well where a small trickle of occasional high-level departures turned into an eventual flood and bankruptcy.

Beyond that, it's the usual. Anything you can tell about sales growth, competitive intensity, leadership, etc. are all helpful and good data points.

it does not directly state the health but it indicates if it is a good employer: number of interns : if the ratio is roughly 1:1 I would quickly look for another company

They suddenly decide to inventory equipment (determine company value or collateral). Cutting back on benefits like 401k matching. Delays buying new equipment. People quitting and not being replaced. Senior management having all-day private meetings. They request your background information as if to determine if you are qualified for current or new positions (if company is discussing being acquired). Hackathons with a theme completely off target from current products. Multiple sets of men in suits touring the office. Managers stop downloading latest version of the beta-test app. Managers stop showing up for meetings. Managers stop caring about product quality. You look up from your desk and realize the office is empty when it should be busy - either those people are being terminated or you are being terminated.

Quality of snacks

It's a bit subjective, and the more general the statement, the less meaning it would have.

Say a company is becoming corporate and dull, but at the same time becoming more profitable. Are they in good or bad health? As a short-term shareholder you might see them in good health, but as an employee you might see them in bad health.

That said, my experience is to look at team meetings. If they are full of conflict that is resolved respectfully by the end of the meeting, that's usually a good sign. If the same person is dominating and everyone else is quiet, that's a bad sign. If the same arguments keep repeating themselves, that's a bad sign. If there is no conflict at all, and people just stare out of the window while others are talking, that's a bad sign.

At bad companies, everyone knows the real story, but nobody says it out loud. Good people leave, bad people stay, and the problem gets worse.

Cutting of catered lunches is a strong signal that the company is in a cash crunch. You can try to propose a weekly catered lunch at your company to "encourage communication" and watch it is a signal. In the past I instituted weekly catered lunches at a company, which were halved from weekly to bi-weekly the moment finance knew there was trouble.

Other indicators: delayed salary reviews, senior staff leaving (and not being replaced, because money) or minority shareholders trying to sell their stakes.

I look at a few things. Company structure is quite telling. The relationship between teams, how teams work together. I usually get a good feel for any potential dysfunction in an organisation by this. The more splitting up and dividing there is going on, the more unhealthy it usually is. If the company is small enough, it should be self organising to some degree of success.

Other questions to consider:

- Are staff able to be honest?

- Is the company able to be honest with itself?

- Does the company have a vision that actually sells itself?

- Is the company actually pursuing that vision with it's actions?

- Does the company leverage the intelligence of it's employees, or does it just hand them work to perform?

The usually open CEO suddenly starts having closed door meetings.

Also relevant should be the question how to act in different phases. An unhealthy company is not necessarily dying. And even a dying company is not necessarily bad for you. It's like with real people. When someone dies some others start to check out the valuables to get the best for themselves. If you are working in a brilliant team inside a dying company, you may all get picked up, get a raise, and be welcomed into new arms. That's one way to get into Google for instance.

For figuring out the current health status, I'd check:

the product line - is it understandable? is it modern? is it efficient?

the customer base - do they have customers that wouldn't easily change to alternative options?

the management team - do they have visions? are they cooperating? are they lying psychopaths, ambitious inventors, calm survivors (thinking Merkel here), idiotic burocrats?

HR - HR is managements comm channel to the employees. Does the promo material look good? How close is the promo material to the actual day-to-day work?

People - are there smart people you like to work with? How many of them are currently joining? How many of them are currently leaving?

Hiring - you are either new and just got hired or there for a long time and probably at least hear things about the hiring process at the water cooler. how reasonable does it sound? does it filter out idiots? does it assess quality attributes like culture? Does the feedback from the interviewers have influence on the hiring decision (more often than you think they actually just hire anybody, if they are hiring at all).

I generally work for smaller companies, < 50 total staff. Most of my variables and data pieces others have said. My main "rats, sinking ship" is in regards to others working there;

Health note: Employee churn when churn is not the norm.

Health warning: Certain people leaving with enough business knowledge it's noticeable they're gone

Health crisis: Multiple health warnings in quick succession (within 2 years).

At warning level I make sure my CV is updated and start setting up job alerts. At crisis I'm actively applying for jobs to keep my options wide open.

Edit: Ooh reading another comment - I watch the public docs of the company I'm working for. It's a year or so out financials-wise but you can get some info from it.

In my case:

  * Stock price
  * Attitude of employees
  * Attitude of management
  * Statements and sometimes rumors heard around the office

This is a handy pocket guide. Quite seriously, start looking around if your gut is telling you to.

http://wiki.c2.com/?WarningSignsOfCorporateDoom

A key indicator I've seen in past companies was when "top skill" or "top manager" level people suddenly submit their resignation and then spend two weeks calmly walking around the office with an ear-to-ear grin. Not too long after that, whisperings of "Why?" start circulating. And shortly after that, I got an upbeat email from HR about "Exciting new company direction" and "Rethinking our core strategies for better customer alignment." In all seriousness, shake-ups and re-alignments are frightening and kill everyone's morale with fears of uncertainty.

I've read that a good way to get an early indicator of future health is to pay attention to the spending on the small things.

Does your company have paid lunches?

Does it have a snack vending machine or something similar?

A coffee machine with k-cups?

Other little perks that seem insignificant but are nice to have.

If these things start to go away, the company is experiencing financial stress.

Status of accounts payable - is the company stretching out payments to vendors? Are vendors getting angry or lawyering up?

Treat it as a learning opportunity. Three buckets to triage employees into: (o) the oblivious employees, (i) employees who step up and show initiative, and (ii) employees who decide to goof off and do nothing since some of the management chain is likely missing and not being replaced.

Companies that are successful are often unwilling to risk any element of their success and can be rigid/inflexible.