There are plenty of red flags that a company will soon go belly up: late paychecks, increases in HR funding, secret meetings among top managers, denials of layoff rumors (no rumor is true until denied), and so forth.

It's important to know these signals because you don't want to be caught unawares and end up job-hunting with your officemates as competitors

One of the best (and least understood) early-warning signals is a short email that contains what seems to be a reasonable request: an appeal to spend less money on office supplies--specifically paper clips--with a request to recycle them if possible.

There are two reasons this seemingly innocent email is so ominous.

## 1. It's stupid.

Let's do the math!

Purchased retail from Amazon, paperclips cost \$5.39 per thousand, so a single paper clip costs \$.005. Purchased in bulk, the cost is around half that, approximately \$.0025

An average white-collar employee makes \$50,000 a year and therefore, with overhead, costs about twice that: around \$100,000 a year. Such an employee working 50 50-hour weeks costs the company about a penny per second.

Therefore, asking an employee to spend a single second thinking about recycling a paper clip has an annual Return on Investment of -98.47 percent--a slightly better ROI than flushing money down the toilet.

Since the math is so ridiculous, it's not hard to reconstruct how the decision to send the email was made. Top management looked at a PowerPoint roll-up of the company's office supply spending, thought the number seemed too large, and decided to economize.

In other words, your company's top management cannot do simple math. This bodes ill for the company's survival.

## 2. It's desperate.

But let's suppose, for the sake of argument, that top management can and did do the math and then concluded that sending the email made financial sense.

This means they're willing to put the company's long-term future (presumably what the high-cost employees are working upon) on hold to save a small amount of money in the short term.

They would only do that if they felt the company's long-term future was meaningless unless the company solves a short-term problem with cash flow.

Again, this bodes ill for a company's survival.

As it happened, I received a version of this deadly email twice. In both cases it preceded, by about six months, a series of massive and debilitating layoffs, from which neither company recovered.

So be forewarned.

Published on: Nov 12, 2018