The term “bucket shop” was originally applied to indigent saloons in the early 1800s that sold booze in buckets; a century later, the term was commonly used to characterize brokerage firms bilking people through fake trades. In relation to tech work today, an IT bucket shop is a churn-and-burn operation focused less on quality work than on maximizing output and employee hours while minimizing employee wages, well being, and career opportunities.
Following are three tips to help you identify an IT bucket shop in advance. Although digging beyond the obvious (see Tip 1) might require a bit more time, the investment is minimal compared to extricating yourself from a shady organization once you’re on staff.
Tip 1: Check Job Postings and Employee Reviews
Nothing says “run for your life” as loud as companies with looping job postings and scathing employee reviews. Regularly searching listings on LinkedIn and Indeed by their posting date and company can give you an idea of just how often and how many posts a company is pushing over time.
As for review sites, scouring ratings on sites like Glassdoor, FairyGodBoss, and Comparably can give you a general sense of how a company operates. It also helps to consider both the five-star reviews and the ones that are gripe-forward; and check the dates. A bunch of five stars posted on the same day? Not a good sign, unless you’re into whitewashing.
If this research leaves you uncertain, dig deeper by searching company names on boards like Reddit, Quora, and Blind. You can also track down former employees on LinkedIn and message them for insights. It might mean contacting a few people before you get a response, but having an actual previous employee’s view of company culture can deliver invaluable perspectives.
Tip 2: Study the Company’s Reputation
For larger organizations, you can start checking their reputation in the wider world on awards and honors (and dishonors) listings. In addition to well-known lists such as Best Places to Work and Worst Places to Work, numerous other lists have emerged, including the Fairygodboss Best Companies for Women Awards, Inspiring Places to Work, Fast Company Awards, and The Disability Quality Index.
You can gain further insights by searching company names to find media coverage, representation at industry conferences, and interviews of and blog postings by company leaders. What you read in these sources can tell you a lot about a company’s culture and focus.
An organization with little to no online presence requires effort these days, and it can be a red flag. Although it might just be a new venture, it could also be a company rebrand due to negative press or a conscious effort to fly under the radar. In such cases, you’d be wise to search the names of organization leaders for connections to legal actions or lawsuits related to discrimination or labor practices.
Tip 3: Examine the Finances
Still not sure if it’s a good company or a bucket shop? Check the finances. The best place to get a sense of an organization’s financial grounding is in press releases and annual reports. Most public, private, and nonprofit organizations post both on their websites. If you can’t find them there, try a search on the U.S. Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system, which includes public filings and press releases for publicly traded U.S. companies.
Once you find the annual report, pay attention to three sections:
- The balance sheet lists the organization’s assets and liabilities, including inventory, property and equipment, accounts receivables/payables, and tax information. Ideally, an organization’s assets are higher than its liabilities. Bucket shop red flags here include few long-term assets such as real estate or equipment, and high payroll coupled with low cash reserves.
- The income statement details incoming revenue; expenses for research and development, marketing, sales, and so on; and the resulting profit. Taken together, it provides a snapshot of financial health. Red flags here include low profit margins and sizable revenue swings due to inconsistent contracts and a lack of long-term relationships with clients.
- Cash flow summarizes the annual flow of cash into and out of the organization in relation to operations, financing, inventory, and investments. Steady cash flows typically signal health, while sizable fluctuations can indicate a troubled organization. Red flags here include marginal or negative cash flow and little long-term investment.
The situation is slightly different for start-ups, which initially tend to focus on growth over profitability and might have higher liabilities. Bucket shop red flags for start-ups include low investments and profit margins, and a high cash burn rate with minimal to no external funding.
Regardless of the type of company you’re investigating, poor financial health–whether because of intentional disregard or bad decisions–can lead to diminished opportunities and layoffs.
To get information on company layoffs over time, you can check warntracker.com, which uses data from the U.S. Worker Adjustment and Retraining Notification (WARN) Act. The federal WARN Act mandates a 60-day advance layoff notice for employers of 100 people or more. Some states, including California and New York, also have miniWARN systems for organizations with fewer employees.
Learn More
What makes a good company? How to decipher team health or toxicity during the interview process? The following articles offer insights into understanding team and organizational culture before you onboard:
Disclaimer: The author is completely responsible for the content of this article. The opinions expressed are their own and do not represent IEEE’s position nor that of the Computer Society nor its Leadership.
