Why We All Need To Be 60 Percenters To Survive
If our industry is to make it through this crisis, and if we’re to keep our jobs, we need to swallow bitter medicine.
This is what it tastes like: we need to volunteer NOW to take a 40% pay cut. Awful tasting medicine!
Maybe in your business it’s 15%. 20%. Whatever. The message: be open to taking a reduced salary for a few months.
If you’re in a job today, someone is doing something right.
If you want to be in a job in four months time, and you work in the marketing communications and creative agency world, then please, pay attention to my idea.
And if you work for an independent agency, owned and run by entrepreneurs who carry all the stress, pressure and financial risk and burden, then read this with extra positive intent.
First, though, have hope and optimism. I mean that. From the heart.
This crisis WILL end. It will start with an easing, and then accelerate to a ‘new normal’, even if some of us more mature of age types need to stay inside our homes a bit longer.
We have to assume now we’re in for at least FOUR MONTHS of massive disruption. Best case.
Here’s the brutal truth.
Client spend will retract by 40%, minimum
We can expect at least 40% contraction – most probably more- in client spending across media, agencies and marketing, and we’ll get to that reduced level within four weeks. That’s what the experts are predicting.
The cash flow pressure on your employer, a small business like an independent communications agency (or indeed even if owned by a multi-national), is going to be massive. Not for all, but for most.
Many will struggle to survive. At the same time, your bosses (if they are facing reality and any good) will be looking now, tonight and first thing tomorrow morning, at every way they can to SAVE JOBS and to ride this crisis out so their talented teams can stay protected, and ready to thrive as we motor into a new world of opportunity.
They don’t have many cost-cutting options. Staff compensation is usually 60-70 percent of many agency’s costs.
Saving Jobs Is A Two Way Street
Employees have to come to the party and be prepared to compromise and adapt. Or significant retrenchments are inevitable. They’ve started already. We need to collaborate to minimise more.
There will be a rare few agencies who are strong, and feeling little impact – yet. But I don’t know of any that are not taking revenue body-blows, and the punches will be more and harder- very soon.
If we want to be part of that inevitable recovery for business and agencies that are still in the game, and maximise your chances of staying employed through this first ‘four month’ crisis phase, we have to be prepared to reset expectations with our employers. We need to be rethinking job descriptions, our employment contracts, our remuneration.
If I had a magic wand, I’d wave it so all were prepared and agreed to immediately take a 40% pay cut for the next four months. The leaders take a 50% cut. Maybe the juniors take 25%.
Now, I know those are big numbers, with real impacts on us all.
I use 40% to grab attention. For some agencies, it’s the right number. For sure.
Maybe in your agency the number is 10%, and leaders take a 15% cut. Or perhaps it needs 20%. My point is – be open to taking a cut, now, to help the business survive, and to help preserve your job, and those of others. No guarantees, but a really good contributor to survival.
Creating A Cash Reserve Pool
Here’s another idea, though maybe too clunky. Perhaps that money goes into a ‘cash reserve pool’ which the agency manages, and only dips into it if required. For many, they’ll need to dip into this pool heavily, and soon.
After three months, the agency reports back to staff on what has happened and where that ‘pool’ stands. Maybe at that stage (or rather, when it can) the salary cut gets reduced to 20% of the pre-crisis normal. And creeps back as the business can afford it. And if things recover, and anything is left in the pool (unlikely) it gets re-distributed.
Again, if I had that magic wand, all of us would NOT ask for any time off as a result of the salary cut. Most likely there is an opportunity for more time offf, but what will you do with it when confined to barracks?
Rather, let’s all put our hands up to lean in as hard as we can to super-please existing clients, come up with ideas to help clients in the ‘recovery’ phase, develop ideas for new products and services for our business, develop marketing materials, sharpend the agency creds, think of new business ideas, etc, and do whatever we can to help our employer business survive and thrive through this tsunami of pain.
And if our business does not have enough work, we’d ask our agencies to nominate charities and other good causes to support with our time. They are suffering now too as all the focus understandably goes on the corona war.
Employers Need To Play Fair
Employers have to accept that budgeted profits for this year and next are now lala land, and need to dramatically reduce expectations. My view is ‘break-even/making a small profit’ month by month for the next 12 months, and preserving as much as we can in that ’40% salary saving pool’, is the goal.
There are many softer versions of my ‘let’s go to 60% and keep fully, five-days-a-week engaged in delivering value to clients’ approach.
Four day weeks. Nine day fortnights. Other part-time working arrangement calibrations. Taking annual leave, long service leave, unpaid leave. A combination of the above. And with a smaller salary reduction.
There are also specific contracts and awards and various other arrangements, all of which need to be respected.
Surviving The Marketing ‘Twilight Zone’ Needs Collaboration
Make no mistake, this is a CRISIS. It’s going to get brutally tougher for the independent agencies, all agencies, as clients pull back marketing spend, and work out how to recalibrate in a ‘Twilight Zone’ period for many months before we enter a new normal.
Yes – there is and will be BIG opportunity for agencies who tackle the next few months in the right way, adding value to clients in new and energetic ways.
For staff, if we want to maximise our chances to be protected during this period, we have to come to the party. I heard a story only today of an agency staff member asking for a large pay increase. Really?
Our agency bosses simply can’t do this alone.
We all are going to take some real pain. We all need to take that bitter medicine. There is no escaping it. For any of us.
Let’s be flexible and open minded.
Short-term pain, and (fingers crossed but no guarantees) long term gain.
Yes, there are some agencies out there who’ll think I’m over-reacting and smoking the good stuff. There might well be very few agency bosses and owners ready to support my view publicly (though privately most will be yelling: ‘Hurray!”).
Some of you will feel: “Easy for you to propose a 40% pay cut when you’re in a solid position given you’ve had 35 years in business.”
I get that. But here’s the thing. It’s YOU I am thinking of. My goal is to see as many as possible in our industry come through this safely. Physically safe. Job safe.
We can only minimise the job casualties if we are prepared to compromise, to be flexible, and join forces with our employers for a fricken tough few months.
It does not need to be 40%. It sure as heck needs to be something. Now is the time.
Take the medicine. Ask to take it. Run towards the fire. Don’t wait for your bosses to make hard decisions.
Engage in this conversation now – openly, pragmatically, courageously – if we are to come out of this with a heartbeat.
Let’s get this done!