Clemenger Group post healthy profits in 2020 amidst staff complaints
A group of “disheartened and angry” employees at Clemenger Group have reached out to Mumbrella to share their frustration at the management of the Omnicom subsidiary.
According to Clemenger Group’s financial report for 2020, which Mumbrella has seen, the group made a net profit of $50.506 million in 2020, only a slight drop on the 2019 result of $50.786 million. This is despite the business reporting a drop in revenues of $50.8 million from $371.7 million in 2019 down to $320.8 million for the year.
The financial results show that the business slashed staff costs by $24.5 million in 2020, in addition to receiving government subsidies in Australia and New Zealand. The cost savings are attributed to job cuts and wage reductions according to Clemenger Group executive chairman, Robert Morgan.
In an email to Mumbrella, the group of employees wrote, “pay cuts were applied across the group, with the structure varying across agencies. Our pay was first cut by 15% for some months, and didn’t return to full pay until seven months later”.
“Despite these cuts, most of us ended up working longer hours to keep things moving in the midst of mass redundancies. In fact, our agency brought in a substantial amount of new business over the following months, that we were questioning why the pay cuts still applied.”
The email then queried Clemenger Group’s use of JobKeeper. “So why does a company so cash rich and profitable as Clemenger Group have to steal $25.4 million from the pockets of its staff, and take further amounts in JobKeeper from the Australian and New Zealand governments, when its profit and cash on hand is increasing?
“We’d like to call on Clemenger Group to make things right with its employees; not to take advantage of them, like they’re only a number, to chase year-on-year growth at all costs.”
The employee group told Mumbrella there was no indication from management that salary cuts would be paid back.
When Mumbrella asked Morgan about the above claims, he said: “We asked our management to take a salary cut. We did not direct beyond that.
Robert Morgan speaking at a Mumbrella conference
“We cut our costs according to what we saw was going on. We had some businesses that did reasonably well. Some companies were adversely affected, others were relatively unscathed.”
He added: “I’m proud of the way the company performed last year, I’m proud of the people and proud of the management that we were able to get through the year under extraordinary difficult circumstances as well as we did.”
Additionally, Morgan pointed out that Clemenger Group is 26.33% owned by directors and staff, which equates to approximately 450 local shareholders, or 1-in-3 from the group’s 1,200 staff across Australia and New Zealand.
“We are very proud of the fact that all of our staff are able to buy shares in the company. We want our staff to own shares in the company,” Morgan said.
It is not known what percentage of the 26% is directors versus staff. The remainder of the group is owned by BBDO Worldwide, part of the Omnicom Group.
Clemenger Group’s Sydney offices
For those that are shareholders, a fully franked dividend of 14 cents per share, totalling $24.57 million was proposed at the group’s board meeting held on 24 February 2021, and will be recommended at the annual general meeting on 19 May 2021. This amount has not been provided for in the 31 December 2020 financial statement.
When asked if Clemenger Group would consider repaying some of the government subsidies that it received as other companies have in light of better-than-expected financial results, Morgan indicated that the Group would not, and said most of the subsidies received were sent directly to staff.
“JobKeeper was there to protect jobs, and protect the viability of companies and it did a fantastic job of that,” he said. “There are companies in our group that may not have survived without that assistance.”
The group of employees that contacted Mumbrella also suggested that staff had been instructed to return to the office five days per week. “What’s more, Clemenger Group has instated … a mandatory five-day in the office policy, despite acknowledging only recently that the agencies proved how well flexible arrangements worked – in fact, hours worked from home had increased.”
According to documents seen by Mumbrella, staff at CHE Proximity have been asked to return on a minimum four day week, with Monday and Friday in the office, so that staff can “start and end the week together”.
Morgan, however, was quick to deny this, saying that there had been no such group-wide instruction and that it was down to the individual business unit leaders.
Clemenger Group includes agencies such as CHE Proximity, Clemenger BBDO, Clemenger BBDO Wellington, Colenso BBDO, Foundation, Marketforce and more.
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Olivia Kruimel is the managing editor at Mumbrella. She has more than 15 years of experience in journalism, communications and marketing. Her journalism career began at Fairfax Media (now part of Nine) and includes various B2B publications such as B&T, Travel Today and ALB. As a marketer Olivia has worked for Standard Chartered and various global law firms.
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