Adland: To survive COVID-19, we need to take 40% pay cuts, now
Client spending could drop by 40%, minimum, within four weeks. So to survive this pandemic, and its impact on our businesses, adland employees – of all levels – need to be willing to take a 40% pay cut, argues Chris Savage.
If our industry is to make it through this crisis, and 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, indeed.
Maybe in your business, it’s 15%. 20%. Whatever. The message: Be open to taking a reduced salary for a few months.
Yeah, let’s have juniors work more for less — that’ll solve it.
Maybe read the article again, Chris is recommending everyone takes a paycut, managers/leaders double compared to their junior staff.
Multi millionaire looking for coords to take a 40% pay cut (below minimum pay) to preserve their margins…. NO THANK YOU, better off being made redundant and waiting for the bounce back!
If I take a 40% pay cut I will have to move because I won’t be able to pay my rent anymore. I will also not be able to afford my repayments. I’ll have to pay to move my things, pay to break my lease, pay a new bond upfront, and try to find somewhere that will let me move in without any house inspections or into a share house, where I would likely have to immediately self isolate within my room given a new environment and having no way to prove I don’t have it. No one’s going to want that. I’ll have to get a second job at nights or on weekends, which will obviously leave me exhausted for my actual job. I’ll probably need to travel to get to that second job which entirely defeats the purpose of social distancing.
Could you maybe try to have a bit of compassion and empathy for the people you’re telling to take massive pay cuts? Consider that maybe they don’t have investments and savings and multiple properties to fall back on.
Let’s take a minute to remember that just because yours is the only opinion you’re hearing, given you’re working from home and can’t rely on people in the office to tell you to shut up, doesn’t mean that it’s an opinion worth sharing.
Hey Chris, can you just let my landlord, utilities providers, and bank know that I’ll be paying 40% less on any bills too? Thanks so much!
I think you will be pleasantly surprised by how flexible landlords, utility providers and banks are being right now. They know that you are getting a pay cut (and a million people have had the biggest pay cut – losing their jobs) and they are deferring repayments or reducing bills without the usual rigmarole. If you or someone you know is experiencing hardship now or in the future, you/they should reach out to those companies. This is serious TIA.
Certainly not in Sydney where I was told (this week) we can’t have a monthly rolling contract (despite being at the end of the fixed term) or 6 months without a rental increase. So it’s sign up for a year and if you break the lease pay 6 weeks rent and good luck finding somewhere else while viewings are banned.
Love how socialism is only ever deemed acceptable when it comes to sharing the pain, not the profits.
100% this, if you’ve been generous to your employees when the money was coming in they maybe they will support this.
Yeah exactly. When business conditions are good it’s share buybacks, dividends and bonuses aplenty. When things get tight it’s the workers who are suddenly overcome with corporate moral burden.
This article can give me a break – labor and skills will subsist this disaster, and I couldn’t give two s$&#s about corporate brand. If WPP and Omnicom fail it will be because of corporate mismanagement and an unviable business structure which isn’t even that profitable in economic upswings – there will still be a need for skills on the other side of this. Hang in there comrades.
@Alex Word!
Weird opportunist behaviour from this guy. Can’t wait for next weeks instalment where we are told to donate our super back to our employers
Lol, imagine how many other people up top are this insanely out of touch but market themselves as ‘understanding consumers’ to board rooms.
Chris makes a great point and solid argument and few of comments appear to be from people who read the full piece.
I’m at a client and I’ve worked agencies so I’ve seen both sides. Let me tell you:
Cuts are coming, hard.
Recovery will be slow, and hard.
Advertising will be a part of that recovery, but as many of us are looking to effectively hibernate our businesses there will be other priorities. In danger of repeating myself, it will be real hard for all of our suppliers, especially the marketing ones.
We are looking at the precise measures being proposed by Chris right now. Because we all want to get through together, and because unlike the commenters so far, we’re adults. Our leadership are leading the way taking the biggest cuts. We’re sharing the load as evenly as we can.
Take a redundancy and ride a new wave on the bounce back? What a child. No, what a toddler. Check your nappy, get mummy to get your toys back. Only read the headline, did a brief bit of googling and drew conclusions to suit your own craven selfishness? No wonder you don’t know what a recession is. More fool you.
I’d say Chris probably saw the early 90s that many of you didn’t. Your me, me, me, now, now, now attitude is wrong, and it will wreck your short term future. Wake up and smell the coffee, and by that I mean the International Roast and not your indulgent daily fake milk latte you think God bestowed upon you. Learn to tighten your belt, not your jeans. Brats!
Make better choices, and I don’t mean Bali or Bangkok for your annual overseas break you feel entitled to.
That you didn’t save for a rainy day could well be a big problem for you, but one of your own making if only you have the fortitude and maturity to accept it. Stay home longer, say no more often and maintain at least a few months of cash based on your expected lifestyle.
I look forward to being told to shut up, be called a Boomer, but that’s ok. I’m not, but it doesn’t matter. I’m young, I’ve saved, I’ve not led the cliched lifestyle and as a result I will willingly take a pay cut for as long as it takes and I can survive without the petulant tears.
Snowflakes, milk alternatives, skinny jeans, eat less avocado toast—I can’t decide if this is a wry satire of a boomer, or if the Daily Telegraph came creaking to life, donned a Tommy Bahamas Hawaiian shirt, and took up residence in Pelican Waters. You might not be a boomer by age, but you’re certainly a boomer by attitude.
Unfortunately what you share in common with this post is a total lack of empathy. Many financially literate young people have 6-12 months expenses saved, but would still face hardship at the prospect of losing 40% of their income. We’ve all seen friends and families where both partners have lost their jobs, but still have to look after a family or loved ones. 40% would staying alive exceptionally difficult. I can understand that might not be the case when you’re on a 6 figure salary, but it’s the reality when you step outside of your insular wealth bubble.
This reads like a post from the Beetoota Advocate about boomers thoughts on Millennials.
Completely unaware of the hardship 40% pay cuts mean for a co-ordinator on $45k as opposed to Mr Savage on $500k. Mr Savage can still buy an investment property a year on $300k whilst a junior may struggle to even pay basic bills, regardless of utilities and other essential services helping out and delaying or reducing payments.
Anyway, I better head back to Bangkok or Bali as apparently that’s all us millennials spend our money on!
Truly a comment written by one lacking in compassion and over flowing in self righteousness.
Chris, spot on. Don’t listen to the negativity on here. Everyone needs to do their bit. If it wasn’t for people like Chris people wouldn’t have a job to go to. Everyone needs to do their bit, including your landlords to help you with rent holidays / reduction.
There is so much entitlement in the under 30’s – They are the worst staff to hire. Work harder, Smarter, find a solution – There is a way you can make something of every situation!
As an Agency Owner – We are slashing fees by 50% to just hang in there and support our clients. As agencies how can we continue to charge full rates when their clients are reducing pay by up to 50%. We are all in this together, people need to recognise there are a lot more worse people in the world right now than themselves!
I am really looking forward to your perspective on this in 12 months. Remember when you’re in the Centrelink queue – Hey, just find a solution – work hard, better, smarter!
Literally not what Chris was saying (above comments).
He was quite clearly pointing out that cuts will be needed for most. And he’s right. For most this will be a really tough period.
It will be different for everyone, and leaders should be first in line. All of which Chris said.
Thank you again Savage for sharing and your thoughts during this time.
Go back to the 80s
Chris in 2009 in you made $500k plus $100k bonus plus share incentives according to the company’s Annual Report.
Pull your head in.
This is really unhelpful, and comes from a massive position of privilege. Why don’t you take a 40% pay cut, Chris, or better yet offer your consultancy pro-bono to help agencies, so they don’t have to do this, will you commit to this? Didn’t think so.
Reading this, at this awful time, and knowing i’ll be up til after midnight working to ensure my agency retains work, I feel disheartened, and can only thank the heavens you’re not as influential these days as you might think you are.
I can hand on my heart tell you that Chris has barely slept in the past two weeks as he has been Zooming in to a huge number of independent agencies helping them to navigate this situation. And not just from a cost cutting perspective, but from a growth and opportunity mindset. Brainstorming ways to help clients and help find revenue. And he has not been sending invoices out for his consults. Chris is one of the most generous people in this industry.
You’ve made some big judgement calls there, maybe it’s the lack of sleep. I know for a fact that Chris has been working around the clock helping many agencies as they attempt to navigate their way through this shit storm. Consultancy fees, yeah well he’d be worth it if he sent out invoices. Chris is as influential as ever, and for a reason. He is one of the best leaders to have at hand in times of crisis and flux.
For someone who is meant to be a professional communicator this is incredibly tone deaf. Particularly at a time when the industry are digging in to deliver as much value as they possibly can.
This message would have at least been a little less insensitive and destructive if Chris stopped evangelising and started demonstrating this impact through his own actions. Is Chris going to take a 40% pay cut for the betterment of the industry? Or is Chris going to show true leadership like Alan Joyce and abstain from a wage altogether?
Leadership starts at the top, I hope the next time we see you advising and consulting agencies that you’re there at a 40% reduced rate.
I think we can all agree that having a job is better than none right now, but a 40% pay cut is not sustainable for the vast majority of people, Chris. When you’re a multimillionaire it doesn’t seem all that bad only getting by on a few million, but staff on average incomes are being pushed to below the poverty line.
Chris’ msg isn’t about taking a 40% pay cut, it’s just about being ready to take a pay cut. Being unemployed and ‘waiting for a bounce back’ is far more miserable position to be in than taking a pay cut. Sure you will have a months notice or more but gawd you’ll b in total misery as soon as that ends. However, if that’s a dice you want to roll then you are entitled to do it and may the force be with you.
Also work is not just about the money. In the current environment, you don’t want to be doing nothing. It is profoundly depressing.
So, if/when the agency starts turning a profit again, do we get paid back?
Lead by example Chris, what exactly will you be sacrificing? And perhaps others will be inspired to follow.
Staggered by the people that are calling out Chris here. Agency is a client service business – and if you’re not servicing clients, what would you propose? Being able to retain 60% of your salary in the current environment – given people at varying ends of the economy (from waiters to AFL players) are taking a cut, what do you expect? Chris’s idea of going down a couple of days a week is logical too. the work just isn’t there right now – and if some hard choices aren’t made it will be a bloodbath. And for those who are calling out agency leaders/owners, I guarantee you they’ll be the first to take the heat. Seriously, for everyone saying this isn’t a logical approach, what’s the alternative?
Can you really see the leadership of Group M proactively offering up their salaries to help their juniors? You live in a bubble.
Umm, absolutely. yes.
I don’t actually. I’ve worked at an independent agency where directors took most of the cut salary weight in the GFC. I agree Chris’s 40% is a big number, but what’s the alternative to some kind of reduction?
It’s sad that there are so many people still living in a bubble.
Things are about to get very tough for everyone.
The luckiest in the industry are about to face some form of reduction in salary.
Being stood-down is a nightmare, but you should have a job to return to.
Those on contracts, redundancies, probations, that’s where it’s going to really hurt.
Whilst 40% might be a bit of a click bait-y heading, I suspect pay cuts are definitely on the table for most. Either that or redundancies and then ask yourself, which would you prefer?
I too am staggered by the responses here – sums up exactly what’s wrong with our industry and the self entitled attitudes plenty have.
Give me half pay over no pay any day of the week! Can I afford it? No, definitely not! It’s much more appealing than the alternative!!!
Another case of an out of touch executive who lives in their own media bubble. 40% pay cut in an industry where employees are already grossly underpaid, especially juniors. What a ridiculous comment.
Ask your coords to work more for less, while forcing them into homelessness.
I realise that this article may be confronting but this is an unprecedented situation and the money is going to run out for the government, businesses and individuals very soon, so there is going to be significant pain. Like all other industries, agency revenues are going to plummet and there are going to need to be mass layoffs unless people cut their salaries.
So in reality the question you need to ask is…..what would I prefer….to cut my salary by 50% or to have a 50% chance of losing my job?
this conversation is being had and the decision is being made across the world right now – today’s papers have the AFL players being offered a 78% pay cut and the NRL players about to be given a 70% cut. etc etc
I understand it is unprecedented times – the difference between the example of NRL and AFL players and normal people like us is, that they currently dont work (and please dont give me they have to train at home on their fitness).
Halfing your pay on a media industry salary is seriously impactful for people paying rent – there is no rent freeze yet, the bills will keep coming just like they are for the business we work for.
No one knows what to do – yes half your money is more than no money – but the end result may be the same (people cant afford to live).
Are you going to tell the coords on $45k that they can have roughly $1.5k after super and tax PER MONTH to live off?
Maybe you’re paid well enough that a 40% cut is reasonable but for most of us, who you’re all happy to overwork and under pay, losing 40% of our income is unreasonable. Don’t you dare think it’s okay to ask me to continue to work the unpaid overtime I give every week already, take on new challenges WFH and managing a team in isolation, work without the standard requirements like quick access to files & systems because the VPNs are all overloaded, and do it for 40% less. I can’t take on a second job if you’re still expecting full time work from me.
Of course AFL & NRL players are being asked to take those cuts. For the junior players it will suck. For the rest they’ll survive comfortably with their existing lifestyles providing secure accommodation and luxuries that most of us don’t have access to. They can take a few months off that full wage, stay home and catch up on Netflix they’ve missed, and come out with savings still in their banks.
You lack perspective. To use your example, a 50% pay cut is going to have the same effects as losing my job. Only I’ll have to work through finding a new place to live (not an option while open houses are closed), paying for the associated costs of moving and breaking a lease, and try to find extra money to pay my bills while working full time (plus the free overtime!).
actually I’m self employed and so I don’t get ‘paid’ anything. I fully expect to be working at least the same hours as before (while also home schooling my children) and if I could escape the next 6 months with 50% of my normal income I will be absolutely delighted.
it’s you that lacks perspective. you are being myopic and entitled. 50% of a salary is far better than none. two of my family members lost their jobs this week already – both have children to support and both have no chance to find another role. I hope you don’t get to find out
as an aside, can I suggest you reach out to your landlord and negotiate a reduction in your rent? this is happening around the world and is very often being agreed to.
As above, it bloody well is not happening in Sydney.
You clearly did not read the article which seems odd to then put all that effort into your comment.
How nice to be sitting in an ivory tower to able to propose a 40% pay cut thinking that would still provide staff with a liveable wage. Completely out of touch.
You’re better off making people redundant – at least they can then be assisted by the government. Asking employees to cut pay by 40% is essentially holding their heads underwater so you, your business and your multiple mortgages can make it through.
Unbelievable – I suggest you ask Mumbrella to take this piece down because you have your name and picture attached to it – which will follow you far beyond today.
If I am taking a pay cut to do the same work, I might as well go on centrelink as I’ll be paid more…
Glad our young people aren’t being called to arms after viewing these immature selfish comments. Sadly we are being conditioned to avoid contemplation of an idea and rationalise a cogent response that might provide room for debate. But instead we quickly take a stand at either far end of the continuum and refuse to budge or listen to other points of view. Tragic.
Maybe this crisis is the one that the selfish need to force them to contemplate community and that we are all in this together.
Many will have to make the choice. To keep wages where they are and see your company buckle under the cashflow burden in a matter of weeks/months, or implement pay cuts and potentially see your company trade out of this crisis. Nobody is immune. The size of the pay cuts is dependent on each company’s current cash reserves. Sticking our heads in the sand and pretending this won’t happen, that wages remain the same whist income falls is not how to handle the biggest crisis to befall the world in 75 years. Chris is making a valid but painful point.
As a freelancer, I have already taken massive pay cuts over the years, and now I have unfortunately taken a 100% pay cut. Seriously, take a cut yourself, big cheese.
Ok for those of you criticizing Chris’s words, don’t take a pay cut, you will be the ones with no job because we will be having plenty of people stood down ( the ones entitled to big redundancies) and many made redundant ( the cheap ones to pay out)So easy, don’t work together and you can happily join that line down at center link ( have you seen it today!). In the next six months, any job that pays you something will be a good job
And you know what, when that recovery does start, you will be the last one getting a job back at your old employer!
I’m with Chris.
In a crisis like this you either help manage it as best you can or become roadkill.
We should all be grateful to Chris for writing such an honest, frank and considered article on a critical matter. This is genuine leadership which has sparked many emotional responses, however prepares people for what is coming. Those lucky enough to still have a job will be extremely grateful with a 40% pay cut.
The disparity of pay is not to be underplayed as it is a genuine concern. Every post war economic downturn has resulted in ever greater wealth divides. Whilst a separate topic, it somewhat justifies the angry response to Chris’ comments. Execs will easily be able to soak up the forthcoming recession and, unfortunately, will be financially rewarded for forcing pay cuts and making redundancies amongst those who can least afford it.
This is the problem with reading headlines only. He actually suggested the below which makes more sense than the headline.
“prepared, and agreed to immediately take a 40% pay cut for the next four months. Leaders take a 50% cut. Maybe juniors take 25%.”
Predictions are easy if you accept what you see around you.
40% pay cut is an incorrect suggestion because it does not.
Many agency staff will shortly be taking a 100% cut as client spend will contract significantly more than 40% and over a longer period than suggested above.
Good luck everyone.
And when profits start rolling back in we’ll be told that wages will be frozen at the reduced rate for another 18+ months
As Che said above – we’re expected to share the pain, but not the profit.
You see the trick is to make it seem like it’s all the employees’ fault – that will save the business profits!
So, it would appear that the people currently writing the ‘We’re all in this together’ crisis comms campaigns throw their toys out of the pram when someone suggests they might be in it too.
Disappointing and unimaginative solution by a creative industry leader. Y’all could have got an accountant to write that. Cut costs. Genius! Job done. For an industry that prides itself on tangential solutions and work ethic – maybe using the considerable brains at our disposable to structurally overhaul the business models and explore new revenue streams would have been something, anything to provide an alternative that could give hope to the people working in the business. So much of the COVID-19 situation is beyond our control and skills but right now the commercial creative industry can help play our part by using our skills to help communicate, inspire and secure jobs across industries. That should be our industry leader’s focus.
Don’t forget, the people you’re earmarking for paycuts have been running your business, building relationships with your clients and have their finger more firmly on the pulse than you do when it comes to consumerism in this century. Bump us below the poverty line, we may just go an live below it on our own accord while we… build for the future.
Might even give up my avo on toast and my single origin macchiato for a few months just to secure our own future.
Maybe agencies need to use this time look at who actually contributes and who doesn’t – and trim some fat.
How many GAD’s, Creative Directors or Planning Directors does an agency actually need to service clients?
Does one office need an CEO and an MD plus a GM, plus a Head of account management?
I reckon 90% of the work in agencies is done by 60% of the staff.
The juniors and ‘mid-weights’ and the support staff are doing all the grunt work, keeping the work moving and only being paid $45-70k, while those staff on $160k+ do very little apart the occasional client meeting, and give unreasonable demands.
There’s your 40%
So maybe agencies can do an audit, lose some fat and then you can afford to keep the companies working. (Though this will probably not happen as the ones who are on the big money are the ones who will be tasked with this audit and want to justify their roles).
you seen the lay offs of MDs and CCO’s in the last few days at some of the bigger, more successful agencies? It is already happening and in smart agencies it happened a long while ago. Flatter, smarter structures, with the seniors on the tools is the future. The Multi-National dinosaurs that have been slow to change to this might well be staring at the meteorite shower that will lead to extinction
The industry and agencies ask for employees to bear the brunt of a hard downturn – yet the same sentiment wasn’t reversed when there was a decade long increase in profits.
Wage growth was stagnant when business was going well and work output was kept the same.
Perhaps it’s not the employees who are selfish, but the industry and businesses that chase neverending profits and growth.
only if the company takes an equal 40% drop in profit for the year
do you honestly think agencies won’t? the whole point of cutting costs is because revenues are falling through the floor
As an agency owner I am doing more than that. Shareholders are forgoing 100% of profit to ensure there are no redundancies or paycuts between now and June 30.
From there we will start cutting back days worked per week and jobs if there is nothing to do.
I started work in the early 90’s, worked through 2001 and the GFC. This is the worst I have seen.
This isn’t going to be pretty. Get ready for it and hope for a big bounce back but prepare for years of rebuilding.
This is a savage thread in more ways than one.
It’s truly fascinating how little trust junior agency people have in their leaders.
Why is that?
Our industry’s leadership (often on large salaries) might like to reflect on their role in creating this situation – overworked, oversold staffers, who surprisingly seem to resent the idea that someone on $40,000, $50,000 or $60,000 might be asked to then take a pay cut.
It obviously better to have a job then not but what does it say that the people who do the actual work feel they have so little left to give?
Nailed it.
Yes, 40% is a ‘Savage’ cut.
So to those wailing and lamenting, hold out for your current salary and see how that goes. A salary is not an entitlement.
Being a Boomer I’ve been through this before, worked for an amount that meant I at least had work, got my chin a bit roughed up, and came our wiser and better.
I run a small agency. We’re about to adopt this strategy for our staff to ensure they have money coming in. We won’t make enough money from our clients to cover this which means we are dipping into the business savings (which we’ve worked 6 years to accumulate). For anyone saying it’s a bad idea, the only other option is unemployment. Look around…. Everything is closing down. People are getting laid off. If I worked for a company that offered this, I would be happy to have a job.
You can afford to pay 60% of what you’re currently paying? Which would mean there’s about 60% of workload coming in. Cut down to a three to four day week, and let your employees stack Woolies shelves the other days to help cover their rent.
Your employees will work harder those days knowing they’re getting paid what they are worth in order to bring the workload back to full time.
Yeah so a 40% pay cut is fine as long as you do 40% less work, but Savage is proposing that we take a 40% pay cut yet continue working 60 hr weeks because we’re “all in this together”. Sorry Savage, your stuff has been good to date but this is garbage.
It’s already been mentioned, but business loves capitalism when the cash is rolling in, but off they march quick-step to socialism when shit get bad. Lowly workers are not responsible for propping up failing business for free – when things are good have you been profit-sharing with employees? Of course you haven’t.
Hit up Scomo, not the punters.
I will happily take a temporary pay cut to remain employed.
Newstart with the stimulus is $2000 p/m.
If you are happy to live on $500 a week, and not have the security of a job at the end of this, let your employer know – I am sure they would appreciate you jumping and taking some pressure off so those that are happy to do what it takes have more chance of surviving this crisis!
‘Newstart with the stimulus is $2000 p/m’
You’re telling me I can get a pay RISE?!
This is unbelievable.
Agency workers have to live in commutable distance to the inner city metro hubs i.e. Surry Hills & South Yarra. For many on $50k that means they already live at home and rely on public transport to make it there within 90 mins.
That doesn’t mean they live rent free. As a bare minimum rent on 1 bed flat in those areas is $500 so if they give half of that to their parents they would be living on $250 a week.
Oh, but they don’t have to pay $5 a day for public transport anymore! No, but they need a decent wifi connection and most likely a smartphone with data capabilities. There goes $100.
They also need to eat. Woolies & Coles aren’t exactly cutting prices. So again minimum weekly food cost of $100. That means cooking from scratch, probably with no luxuries like alcohol or snacks. So they have $50 for everything else.
They might not be allowed to go to the gym anymore but they probably still have to pay a break fee and a Netflix or Spotify subscription they can’t get out of for another 3 weeks. There’s the remaining $50.
Oh and for those who aren’t lucky enough to live at home, they’re looking at a 6 week break clause so let’s hope you have $3,000 lying around. And all the bills.
So, the challenge for me is that, whilst Chris does refer at one point to a 4 day week/9 day fortnight, the overarching take out is that he expects people to take a cut in pay but not a cut in days worked. So rather than saying a percentage cut, to me the more reasonable approach would be to pay at the value that someone is worth, but cut days. At least then there’s an opportunity to pick up work on those other days and replace at least some of the money.
Did Savage take a pay cut during the GFC?
Sure, we can take various percentage of cuts. I’d like to stay in a job.
But who will guarantee agencies will let us return to our original pay?
Which by the way, unless you’re the people in management, isn’t actually that good compared to most normal industries now anyway.
Who’s gonna want to do this job when the hours are mental, and the pay is below par?
As someone who used to work in the industry, and having the blessing of suffering Newstart for about a year-and-a-half… if some kind of pay cut is offered (not saying 40%) instead of being axed – it’s probably worth taking the pay cut.
Newstart has been $540 per fortnight forever, changing to about $1000 per fortnight (temporarily) from April 27th. It’s no kind of life to live on welfare. The money aspect, but also the social aspects. Life becomes very, very dull.
Perhaps, if you have to take a pay cut you can access Super early under the scheme affected by Covid-19? Worth looking into.
It’s a thought time, I already know friends in the industry who have taken a pay cut,
Good luck all.
Everyone has choices in life, including in these times. Which choice will people like to make?
Path 1 is a 10-30% pay cut and I get to keep my job in an Economic Crisis not seen since the Great Depression. Is the after tax amount about half of the actual amount or are there any tax breaks?
Path 2 is to join the one to two million others that just took a 100% paycut and might not get re-employed for 6-12 months like Qantas, AFL club staff, Virgin, Flight Centre, Village, News Limited, every travel and tourism company in the Australia, restaurant owners and staff, every pub, every theatre performer, every muso, every major stadium casual staff for NRL and AFL and AFLW, airport cafe staff, retail shop staff, Smiggle staff, Peter Alexander staff, Just Jeans staff. We could go on but I am sure there is a character limit on posts.
What happens when the revenue stops and the losses mount and the cash runs out? Because it just has.
I am in a senior position. I worked many years (from an AE who earned $20k a year) to get to this position. I am taking a 50% pay cut. This has significant impacts on my personal finances and family.
I will work my standard hours because its the only way to get my whole agency back. A jnr on $45k can’t lead our recovery.
With great power comes great responsibility
It’s people like Chris who should be taking the pay cuts, not the overworked and underpaid
Pay Cut spot on
My company just announced paycuts – CEO 50%, managers 10-30% depending on seniority, and people earning less than 80k do not face any paycut at all.
It’s possible to do this fairly, and I’m for one proud to work for a company that has the foresight to do this now, and cares enough to keep people in the jobs.
I was made redundant in the 90’s when Australia was deep in a recession. And no, I’m not a boomer. I was a junior writer then, making not much money and working long hours. Sound familiar?
So I suffered a 100% pay cut and it was a crap experience which led to a crap period of time where I couldn’t afford rent and had to move back with my folks. IF someone had offered me a 40% cut instead of being made redundant I would have taken it every day of the week. It’s crap having to take that kind of cut. It’s downright sh** house having to lose it all. If the money isn’t there there’s nothing anyone can do. The well is dry. Trust me when I tell you there’s a million people out there who have completely lost their income – and who know they aren’t going to get another one any time soon. I’ve been there – It’s sh** but that’s what recessions and uncontrollable events are. No amount of yelling and fist pumping will make tough times go away. I’m not trying to sound like a smart arse. I’m speaking from experience.
Onya, Pay Cut. This is real leadership. Sadly, I feel you will be an exception.
To those who are stood down, or asked to take a cut they can’t afford, my advice is to go out on your own. Seriously.
What do you have to lose?
Of course you won’t be able to compete for large accounts straight away, but focus on projects that work to your strengths and demonstrate your value (and that you can complete yourself, or with limited outsourcing).
As a sole trader you can price in a way agencies can’t dream of, and you can still make a good profit on each project. Moving forwards, clients will NOT pay the grossly exaggerated prices agencies have been charging. Use that to your advantage, and leverage your existing relationships.
Working remotely is the new black. Working smarter and cheaper is the new black. You can pivot, draw on your experience, and thrive. It’s a terrifying time for all businesses, but now is the time to back yourself, and prioritise work/life balance. Good luck, all.
Thanks all for your comments. Thanks Mumbrella for running the article. Thanks too for the few who were prepared to put their names to their comments. And thanks to those who voiced support! Some of the comments appear to have been made by people who did not read the whole article. Many in our industry ( tens of thousands) face this reality – redundancy, and one very hard and long, very tough road back to employment. Or be prepared now to embrace shared ‘bitter medicine’ to ride through this storm. No-one owes us a living. FACE REALITY please. Please. Read the headlines. Look around you. I don’t want anyone to be hurt. I’m simply proposing maybe, maybe there is less hurt in bunkering down for a few months on lower salary than joining very long queues. And still there will be no guarantees. I want to wish all of you, with a special shout-out and embrace (virtual) to those who did not like my suggestions, the very best over the next few months. I hope you come through it well, and thriving. Thanks again for taking the time to share a view. More importantly, talk now to your companies about how YOU can help them help YOU. Take care! Chris
It’s a highly unsettling (to put it mildly) time, and I understand why emotions are running high. And as an ex agency suit, I can certainly relate to the negative feelings around “sharing the pain but not the profits”.
I too started as a junior on $30K a year; now a senior exec on the client side. I have just taken a 40% pay cut – to save some jobs and help ensure the survival of our business.
And before the inevitable “multimillionaire living off investment property income” comments, I am anything but. Comfortably off sure, and I will still be able to pay my mortgage on the reduced salary, but there is not much else to fall back on if things get worse. Which they inevitably will.
I’d just started my career when jobs were slashed after 9/11. I was made redundant, and it took 5 months to secure my next permanent role. I thought that was the worst this industry could go through in my working lifetime (notwithstanding the dot.com crash around the same time), however I can assure you this current situation is far, far worse.
I’m not trying to lecture or fearmonger– I’d just like to offer a different perspective for the employees who think it’s a preferable option to be made redundant rather than work for a reduced salary. You won’t nab that great job when the economy picks up again in a few months – because it won’t. Clearly if you’re earning a lower salary, you won’t be able to survive a 40% pay cut – please re-read the article if you think this is what Chris is suggesting. However, if you are offered a smaller pay cut (or reduced hours) to keep your job, please reconsider your options – there are so many financial relief options (rent, bills etc) available right now to help you through this unprecedented fucked up time.
Talk about tone deaf. A lot of the companies that we work for posted multi million or even billion dollar revenues in Q4. You’re telling me that people who can barely make ends meet at 100% of their salary should take a pay cut? Nah, that’s going to be a no from me.
it seems like the best bet will be to get to Centrelink by 5pm
I have known Chris personally for many years.
I am not a senior manager in an agency, but today I make an OK living. Not enough to buy a house, but things have generally been comfortable.
Many seem to be stuck on the 40% headline… read the rest of the article.
That’s not to say there aren’t major challenges in this suggestion.
The criticism some have raised about shared success / shared risk is fair. Many agencies have been making more and more money and grimace when expected to reward the hard work of high performing staff. How can such staff possibly consider taking the cuts in hard times without sharing the success of the good times?
Furthermore, the suggestion that the “work isn’t there” does suggest if we’re going to take pay cuts we should also expect to do less hours… perhaps significantly.
There simply isn’t a single solution that’s right for every employee and every business. Some might just be better taking a redundancy and hitting up Centrelink.
I guess the key takeaway here is success / risk is a two-way street. You can’t expect your staff to take a huge cut if you don’t share the rewards. As for employees? Consider investing in the risk – be prepared to take lower base pay in the long term (ie: beyond this crisis) but only if your employer considers profit share or bonus.
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PS: To the guy that said “It’s your fault you didn’t save for a rainy day”… you’re an absolute joke. This isn’t just a rainy day – this is carnage. How are our juniors on $40K going to potentially save enough to survive 12 to 18 months of no work / huge cuts? Show some empathy.
Be realistic. This is the simple oxygen mask for the parent on the crashing aircraft scenario. There is no point in all dying together on our soap boxes.
Love this perspective. It’s honest and simply good advice delivered from the perspective of someone who understands the nature of keeping a business afloat and your people fed.
I think it provokes precisely the right conversation.
Better we all talk about this with our business leaders – and be creative in the solution – then wait like helpless fools to be told someone else’s.
If we don’t talk early and contribute to the possible solutions then we are just passengers, and relinquish the right to guide the outcome.
Every business right now is taking stock of their situation and planning how they’ll get through this, for them, their people, and their clients. A business that goes under benefits no one.
Everyone has a choice to make right now on how they handle this… you are a valuable part of your business, now more than ever.
Great article as always Chris.
Do you really think that businesses like this that are “put into hibernation” are going to be paying retainers to agencies to keep staff on for when they come back (hopefully) in 6 months?
Come on… If there is no income, then there is no money to pay staff
We are facing the biggest economic (and health) crisis to hit the world in generations. If you think agencies are going to survive keeping staff on at full pay during this time when clients’ are cutting budgets, you are kidding yourselves.
Those of you that work in multinational agency groups, I suggest you jump on the phone to your colleagues in the US and see how things are going… this is all coming to Australia, and it is going to get a hell of a lot worse before things get better.
Cris I just read your messg and you are so so right. Your idea is something my husband said should have and could have happened with the Holden factory when they got into trouble especially when most staff there were on a high wage. Unfortunately people of today have become Greedy in their lives. Good luck I hope people listen to you.
Perhaps the agencies should’ve saved some money during the boom times so they can weather this financial storm without having to make huge cuts. Or does that advice only apply for the juniors and mids who can no longer afford their rent let alone food?
That advice when you are told to not read the comments? This is why!
Seriously saddens me that this is some people in the industries response to the article.
– Focussed on a headline
– So many anonymous comments
– So out of touch with the reality of the situation EVERY single business is faced with right now
I hope you remember your comments if you end up in the unemployment queue.
BTW this is a health crisis first that instantly resulted in a financial crisis. Comparing it to the GFC is just ridiculous.
I wish you all the best but I’m not sure some of you will have a job at the end of this.
Wow!
Amazing how most comments have focused on 40%!
It may be 10%, or 25%, but a pay cut will be better than losing your job, and having to find another one, in 5,6, or12 months time.
Management need to bear the same, or more pain, and most will.
The aim must be to keep open and trading, servicing client’s needs, and getting ready for when we all emerge from this crisis.
I have been thru 2 recessions, and they are not pretty. The unemployed suffer the most, and you need to avoid that at all costs, even if you end up working 6 or 7 day fortnights.
I am looking forward to when some of these agency folk finally reach senior management; clearly bonuses and perks will become a thing of the past, like rotary phones and facsimile machines. Hah!
My advice, do great work, be as positive as you can be in the (virtual) workplace…but keep in work.
BTW, I was made redundant from my Ad Sales role last week. I’m in my 60s, and was crushed by the GFC…I think I have more to worry about than many, but there are literally millions in way more strife than me…or YOU!
So, let’s use this opportunity to reduce all men’s salaries by 18%…..
and bring them in line with women’s.
Close the gap.
Across the board.