IPG Mediabrands in Australia is cutting staff pay by 10%, reducing working hours by one day a fortnight, freezing hiring and slashing costs as clients reduce spend during the coronavirus crisis, according to an internal memo.
The local arm of the global media agency group is trying to limit job losses but the memo says there will be a "small number" of redundancies.
The moves puts the company at the lower end of cuts to pay and working hours in the advertising industry in Australia to ride out the economic downturn and be positioned for an upturn when the pandemic restrictions are lifted. Others have cut by 20%.
The company says the crisis is affecting many of the categories "our clients operate within" and ultimately the revenue of the company.
“We cannot continue with status quo on salary and operating costs with revenue reductions,” writes Mark Coad, CEO of IPG Mediabrands Australia, in a memo to staff. “Our business will suffer if we do.
“In planning those actions, we have two guiding principles: to do everything possible to protect our people’s roles and to continue to deliver for clients.”
Staff are being asked to take a 10% pay cut and to work a nine-day fortnight from May 1 to the end of December. There will be no pay rises in 2020 for anyone.
"This is critically important," writes Coad, who was appointed to the local head of IPG Mediabrands in November, in his memo.
"By working one less day in ten we can all contribute to the objectives I raised at the start ... to protect our people's roles and to continue to deliver to clients ... and to reduce staffing costs in line with revenue reductions to protect the business."
The plan to meet the threat of the pandemic is called IPG Mediabrands Resilience2020.
Asked to comment on the memo, IPG Mediabrands 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."
The global IPG business last week told the market that “significant” cost cutting and “regrettable” jobs losses are needed to prepare for the coronavirus downturn.
“There is no question that the impact of crisis is having on the global economy will be reflected in the revenue of our industry,” CEO Michael Roth told analysts in a briefing.
“The second quarter is not going to be pretty.”
Roth says staff reductions will be unavoidable in the face of the pressures almost every business is facing.
Salaries have already been shaved by up to 25%
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