IPG Mediabrands reduces staff hours and pay as industry faces ‘triple crisis’ of health, social and economic factors
IPG Mediabrands – the holding group for agencies including Initiative, UM, Reprise and Ensemble – has implemented a ‘resilience’ strategy in a bid to get through the COVID-19 crisis.
Local CEO Mark Coad said in an email to staff, leaked to Mumbrella, that this will involve moving to nine-day fortnights, a hiring freeze, no pay rises and a pause on discretionary spending. There will also be a small number of redundancies.
IPG Mediabrands has seen a reduction in workload from clients
“This is a very small number, and they will be done respectfully, correctly and as quickly as possible to avoid stress,” Coad said in his note to staff seen by Mumbrella. “We simply cannot avoid that. The fact is – we do have reductions in client workload.”
The guiding principals of the changes are to protect roles and to continue to deliver for clients, the email said.
“We are seeing a triple-crisis of health, social and economic factors – and this is having an impact on our business. It is affecting many of the categories our clients operate within, it is affecting broader consumer sentiment and ultimately it is affecting the revenue of our company,” he said.
“This is forcing us to act. We cannot continue with status quo on salary and operating costs with revenue reductions. Our businesses will suffer if we do.”
Coad acknowledged some steps, such as salaries remaining stagnant for the year, would be tough.
“This will be a tough one for some people, but it is based on one simple premise. Is individual gain more important than collective security? According to our guiding principle – no, not until we get through this.”
The 10% reduction in hours will come with a corresponding pay cut. It will run from 1 May until 31 December, 2020. Those in the lowest salary band will not be asked to take the cut, but will be asked to take all of their annual leave throughout the calendar year.
Coad wants his staff to share the load to get through the crisis
Coad stressed that the best way through this crisis is to share the load.
“This is our best way ahead rather than going straight to significant role redundancies, which is our only other alternative. We will come out together on the other side of this, knowing we’ve done our parts to preserve our business, our client relationships, our teams and our roles,” he said.
“I appreciate your support, I really hope we can all agree to the ask, and get through this crisis. Together.”
In a Q&A circulated to staff, also seen by Mumbrella, IPG noted it cannot force staff to sign the agreement, however this would have implications beyond the individual.
“The less opt-in we get, the harder the task is overall,” the document explained. “If we are unable to achieve a majority of agreements returned, then we will be required to review further role redundancies, to compensate for the financial impact.”
In a statement to Mumbrella after the email was leaked, an IPG Mediabrands spokesperson said: “There is no mistaking the defining nature of this time. In response to the COVID-19 pandemic, the IPG Mediabrands network has acted swiftly and decisively over the past months to implement measures that first and foremost aim to safeguard the health and wellbeing of our people and our client partnerships.”
Various agencies and media owners have implemented similar measures including WPP AUNZ, Australian Radio Network (ARN), Southern Cross Austereo (SCA), Seven West Media, News Corp and Ten.
If clients have paid for a 100% FTE resource, will they get a 10% refund in fees for the staff not working? I’m sure many clients will be asking
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Surely this group of companies made a reasonable profit last year? Is there really nothing in the local kitty of a global agency to push on through this?
With these proposed changes are they looking to break even, minimise their loss or attempt a marginal profit to satisfy IPG HQ?
Are senior executives forgoing performance bonuses or other benefits? Are they taking larger salary cuts?
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Always shit to see the losses socialised, when the profits are so rarely treated the same.
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Gee someone’s clearly never worked at an agency. We work alot of unpaid hours going over and above for clients, pal, and these people will now be working more of them.
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