strategic consultant to:  

~ serial CEOs & CTOs in software, Internet, technology & digital media
~ experienced consultants in all fields to maximize their practices

Employees and consultants face the tough decision of continuing to work with a company that is struggling or failing, or returning to a highly troubled job market in this jobless so-called recovery.

Employees face reduced pay and increased work load. One V.P. of Marketing I know lost his staff of four more than a year ago, and has continued on doing the entire team’s work.

At another company, the team worked six months last year with no salary or consulting fees, then was restored to full salary but because they were “off-payroll” they had to pay their Cobra and other benefits out of pocket.

Consultants in such a situation can fare less well. When payroll is restored for employees, consultants are often paid much less than their previous retainer, even when functioning as a full team member and carrying the earlier responsibilities (or more). Employees have certain State and Federal legal protections which employers do not want to strain.

Consultants have only the protection of their contracts. In a failing company, a consultant’s options are often limited to stopping work once the pay stops. (Can you rub the fingers of one hand together and repeat “no tickee/no washee”? This may be more difficult than you think.) Or they can continue working with little or no pay to see if the company will survive and restore the full consulting contract. Consultants can track their arrears, but a failing company is not likely to pay them, regardless of the contractual language. Consultants do not have preferred standing in the debt hierarchy and lawsuits are expensive (and there may no be assets to win). Consultants must view their continuing to work for no pay or reduced pay as “keeping an eye on developments” in the company.

If the company is looking for a capital infusion, the new investors rarely honor these arrears, considering this work as “sweat equity” that was contributed to keep the company alive. At best, a consultant may negotiate partial payment for these arrears, usually less than 50% of what is due. Worse still, if the investors are looking to turn the company around, consultants are usually the first to go, with no settlement at all.

The blessing for consultants, unlike employees, is that they are skilled at always looking for more work, so they can sustain their perpetual hunt for gigs while working for less than full retainer. Consultants have multiple clients, so their revenue can be sustained by some clients while others are struggling. For consultants, the decision to stop work with a non-paying client is about assuring that your paying clients are being fully satisfied, about balancing the time available for finding and closing new business, and about not exhausting yourself with the pressure of work for no pay.

Employees are more disrupted by this situation, as they are not used to continuous job-seeking, and are accustomed to having their benefits covered (consultants always pay their own benefits, and this cost is built into their business model). Also, job hunting can be considered disloyal to the employer and by the employer, despite all rational reasoning.

This is the economic reality. There is an emotional reality as well. Employees, and many retained consultants, have built a part of their identity on their work, their company, their team and their employer/client. Emotions are irrational, and in face of all obvious economic need, emotions can interfere with rational self-interest.

Difficult as it may be, we must stay calm and focused on what is sensible to do. Folks have told me, “I can’t quit now – I’m the only one who can do this part of the work, and the company can’t keep going if I’m not there.” This may or may not be true, and it sounds loyal, but a good part of it (if you look closely) is ego and fear. Each of us is replaceable. It is astounding how a company can continue as “dead man walking” without any single team member. The other members of the team fill in the gap – perhaps not well, perhaps not happily, but they do it. Would that VP of Marketing ever have believed he could do the work of his entire team before he had to? Yes, he might be doing it less well, but he has continued in this way for more than a year. So, we must each remember how dispensable we are, and turn our focus to the realities of our own survival.

One person said to me, “My boss understands my value. She will protect me.” You may believe your employer and manager will protect you, and they may want to, but you may find that they do not have the power to protect you.

And you likely do not have the whole story. What top management knows and what it tells the troops are often far apart. Most management is not “open book.” Conditions are usually far worse than you understand, and decisions often come down very quickly.

So, continue your emotional loyalty, and then protect yourself. Finding the next gig or the next job will take longer than you think. Certainly, if you can support your team, and still protect yourself, that is best. And of course it is often easier to find your next role while you have a current role.

Your judgment is in the timing of it. You must look while you work, you must balance your energy and commitment with your compensation and your cold rational assessment of the likelihood that you will ever be paid again. Then you must generate the energy, positive self-confidence and cheerfulness to go out into the market projecting your true value. This may be the most difficult part of all, after months or years of dread every day at work. But clear your mind and actively look for your next new opportunity. It won’t find you if you stay in your cave.