If ad agencies were stressed then, as I wrote in The Australian, what is it like in 2005?
ADVERTISING has always been an insecure place to work. But with
gruelling office hours and job insecurity driven by a constant
shuffling of accounts between a few of the bigger agencies, staff
turnover is often four times the average for business in general.
Even in current hard times when many agencies are cutting jobs, it is a
problem to retain the right executives. The only winners in this game
are the recruitment agencies, which charge 15 to 20 per cent of salary
for placing a candidate.
The problem became so great last year that in March this year the Advertising Federation of Australia issued a code of conduct for recruitment agencies to stamp out what executive director Lesley Brydon describes as “very unethical practices”. These included poaching staff they had already placed at agencies.
Richard Whitington, an associate at human resources consultancy Kris de Jager & Associates, a supporter of the AFA guidelines, says: “There’s no doubt that staff turnover in the ad industry is well above what would be regarded as healthy. A turnover of 5 per cent would be regarded as healthy in other industries. In advertising it is over 10 per cent and often above 20 per cent.”
In media buying agencies, some executives say staff turnover, commonly known as “the churn”, can be as high as 40 per cent. The cost of recruitment is an unnecessarily large slice of the total salary bill.
Chairmen and chief executives tend to stay with their companies for 10 years or more, according to figures from the AFA. Half of the executives surveyed by the AFA in 1999 had worked for their agency for three years or less. By 2000 the figure had climbed to 62 per cent.
DDB, one of the top five agencies in Australia, with 250 employees, has managed to halve its undisclosed staff turnover rate. Chief executive Nick Cleaver says: “The headhunters were on to people each week finding out what they earned, finding them jobs and offering them $10,000 to $15,000 more. We wanted to turn the churn down.” He says part of the problem was that they were working their staff fairly hard, and “a lot of people were exhausted and wanted to get out of it [advertising] for a while”.
Gary Hardwick, partner of boutique media buying shop Ikon, says: “People get loaded up with work, stressed out, and either decide they need a lot more money for this shit or leave the business altogether.”
Whitington says: “… I don’t think ad agencies do a great job of engendering staff loyalty … when taken with a general lack of security in the industry executives say, `I bet they are not going to thank me for this and will sack me in the end, anyway’.”
DDB looked at what kind of people it recruited and why, in addition to a number of other initiatives. This year its graduate recruitment program took on six people from more than 200 applicants. Cleaver dedicated 2 per cent of DDB’s total salary bill to training. Performance was reviewed twice a year, focusing on achievements and career direction.
And in a great corporate oxymoron, he says: “We became more serious about having fun.” Each month $1500 is dedicated to themed staff parties with organisation committees grouped by star sign.
Cleaver says the agency recognises interests and responsibilities outside work. “You can’t expect people to work 60 hours a week constantly. We’ve made sure that we have people in the right place at the right time.”
Ikon, which was established by Hardwick and partner Simon White in 1999, claims to have lost one of its 22 executives so far. Hardwick says: “We probably have one of the best retention rates in the industry. We are talking of less than 5 per cent turnover in a two-year period. I don’t think another media agency could match that rate. When we set up we went back and asked what pissed us off about management where we had worked.”
Ikon aims to build performance-related bonuses into every contract. The cash is shared by each client team. Other practices include introducing yoga into the workplace and bi-monthly massages. Inevitably, there is “serious” fun with quarterly themed lunches. Hardwick says: “Advertising is still fun. It’s not what it was. The times that we went out to lunch all the time and all night are gone. We work a lot harder.”
Since most global ad agencies have become public companies, the pressures of meeting the expectations of investors and stock market analysts have kept most at their desks late into the evenings.
Ikon, a privately owned company, appears immune from these pressures. As for DDB, Cleaver says: “We put people before profit now.”