For embattled employees of RadioShack, Wet Seal and other companies facing possible bankruptcy, the time to find a new job is long before the company goes under.
Shares of RadioShack Corp. plunged 36% over the last 24 hours after The Wall Street Journal reported that the electronics retailer was preparing for bankruptcy. (RadioShack did not respond to requests for comment.) RadioShack employs around 24,000 people and operates 4,300 stores in North America. Teen clothing retailer Wet Seal filed for bankruptcy protection late Thursday, just one week after it closed two-thirds of its stores and laid off 3,700 employees. “After careful consideration, the Board of Directors unanimously concluded that filing for Chapter 11 was the appropriate course of action for the company,” Chief Executive Ed Thomas said.
“The best time to find a job, is when you have a job,” says Tim Sackett, president of HRU Technical Resources, an information technology and engineering staffing firm in Lansing, Mich. “If you aren’t going to wait around, it’s best to leave early. Outside companies know the best talent leaves, or gets recruited the quickest, so if you’re the last one to jump ship, most people will believe you’re mediocre talent.” Steve Langerud, a workplace consultant based in Grinnell, Iowa, agrees. “These public announcements are just tip of a large iceberg that has been moving this direction for years,” he says. “Those considering jumping ship now are well behind in the process.”
For employees with emergency savings, or who are confident they’ll get rehired by a rival or simply want a career break, it could be better to stay put until the 11th hour. “There is one major caveat to staying — if you know for sure you will be getting some major severance,” Sackett says. “Some organizations make it known what the severance plan will be, so people have to weigh those options. If you have 15 years and a company is going to pay you six months of severance, and you know it won’t take you long to find a job — you probably wait around for the cash.” If the company is likely to exist in another form, Langerud says the most loyal employees — for better or for worse — may wish to stick around.
While it’s obviously likely to be difficult for thousands of workers to find another job in the same place, the same field and at the same time, the overall job prospects in the U.S. are improving. There were 4.9 million job openings on the last business day of November, up from 4.1 million for the same period a year earlier. That’s equivalent to 3.4% of total employment on the last day of November and up from 2.9% for the same day last year, according to the Bureau of Labor Statistics, and it represents the highest level of job openings since before the 2001 recession. Indeed, American workers typically last around 4.6 years in a job, up from 3.5 years two decades ago.
Being first out the door may also give a job-hunter bargaining power at the next company, especially if there isn’t a long line of other laid-off workers, says Piera Palazzolo, senior vice president for marketing at Dale Carnegie Training. But there are other factors to consider, too. “Is your company going anywhere? Is your job going anywhere? If the answer to both those questions are no, now is the time to jump ship,” she says. “At the same time, some people might be in the right company, but the wrong job.”
As a general rule of thumb, employees should stay at least 1 to 2 years so it doesn’t look like they’re unreliable. “My father worked at a company for 45 years,” Palazzolo says, “but those days are over.”
This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, ©2014 Dow Jones & Co. Inc. All rights reserved.