WPP team restored to full pay and capacity, marking the end of its voluntary pay cut program

WPP has ended a program which saw its workforce opt in to a ‘menu’ of pay cut options, including absorbing a salary hit while continuing to work full time, or working reduced hours with a resulting pay cut.

The program, unlike many others in the industry, was never compulsory; chief executive Jens Monsees acknowledged that “everybody is in a different situation” and encouraged the team to make a decision in the context of “what is best for themselves, their family and their personal situation”. But since June and July were profitable months, the CEO told staff at the end of July that WPP was in a position to restore them to full pay and capacity.

WPP restored staff to full pay at the end of July

“I think it’s very important. We have now June and July [that are] actually more profitable than the year before, even [when 2019 was] without COVID,” Monsees told Mumbrella, a few hours after the business’ half year results were announced.

“That gives us good flexibility in now taking these voluntary measures away and say that we are back in business and that [the voluntary pay cuts scheme] is not needed.

“I have to also mention that the few small businesses like our events businesses – and events are not happening at the moment – so they are maybe still in a different model. So broadly, everybody’s back and I announced that the voluntary measures are over at the end of July.”

In the first half of 2020, WPP recorded a 68.5% drop in headline profit before tax, and net sales were down 14.3%. But this was much better than the potential $10m loss flagged in May, and chief financial officer Chris Rollinson said net sales were “higher and better than anticipated”. The company received $6m in government subsidies to assist in coping with COVID-19, and achieved $28m of cost savings.

And, as Monsees mentioned, June and July were profitable months.

In an investor briefing, Rollinson mentioned that the cost savings – projected to total $70m this year, and grow to $80-100m in 2021 when compared to 2019 – included a permanent headcount reduction. But Monsees wouldn’t be drawn on how many job cuts his CFO was referring to.

“I don’t have it [the number] on [the] top of my head,” he said. “What we can say is we are working smarter and more collaborative.”

Not even an approximation? A ballpark figure?

“We are, in the moment, rolling out that program. In the moment, I cannot tell you an exact number.”

On the cost savings program, Monsees said a leadership restructure – which sees WPP have one finance team, one IT team, and one HR team, rather than one for each agency – “enabled us to also have a totally different cost base”. Those permanent measures mean the $80-100m savings next year are achievable, he said.

“And I don’t want to be more precise because if work comes back or if we have an external impact… we have to be agile. So I cannot [for example] give you a robust three year plan because we are monitoring our work and our deliverables week by week and reacting to the demand of the market.”

Monsees stressed that his focus is on creating “COVID-19 safe” office spaces – aided by an app which allows employees to register their proposed attendance at the office, and enables contact tracing for the purposes of COVID-19 – and ensuring his people are mentally healthy.

“For me personally, [what’s] very important is how we look after all our employees. And we make sure that they are safe and they are having a good wellbeing and not being mentally distressed in the current circumstances,” he said.

“For example, in Melbourne, now we are rolling out like a buddy system that every person has one other person, that they are looking after each other. And that is a very nice way of collaborating more.”

Each segment’s net sales performance, as announced this morning. Click to enlarge

Monsees has been in the chair for the better part of a year now, arriving from Germany to lead the regional arm of the world’s biggest advertising company, having never worked at an agency before. But now, it’s set to be a long time before he can return home.

He was quick to point out that Australia is “very fortunate compared to almost every other part of the world” when it comes to the pandemic, but acknowledged being apart from family members is difficult.

“Sometimes Australians that are here for [a] long [time], they seem to forget, but it’s a really fantastic country. My whole family is very happy in the moment to be here,” he said.

“And then there’s the other part … It’s difficult. My parents are in Germany. My wife is Italian, her father lives in Northern Italy.

“It makes us more interested in the family, obviously. And there’s a special situation because we’re on a temporary visa, so we cannot even go out and come back again.

“That is one part that can only be bridged with a lot of Zoom meetings and VCs in the evening when it’s morning for my parents to talk to them and check in how they are, and how they feel.”

But professionally, Monsees feels confident. Nobody would have believed him if he had correctly predicted what August 2020 would look like at the start of the year but, according to him, WPP is in a strong position to guide itself and its clients through the pandemic.

“We are focusing on what we can control and then how we are driving our business and how we partner with our clients,” he said.

“I think that’s the most important [focus]. Actually, if we would sit now here, I think in Feb or Jan this year, and I would tell you, we are able [for] 96% of our staff is working remotely, then you would laugh at me. You would say ‘you are crazy’, and now it’s reality.”


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