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Judith Cushman & Associates Retained Executive Search in Communications
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The Cushman Report To subscribe to the email version of The Cushman Report, please send a note to info@jc-a.com with "subscribe" in the Subject line. Click here to view past editions. The Cushman Report Breaking News, Trends and Information about the Communications Marketplace February/March 2002
This
is the newsletter I promised discussing market conditions. I describe
how the slump has impacted attitudes and what that means for both to-be
re-employed professionals and employers as we move into a recovery
phase. This is also a quick reminder about registering for Tech 2002, the conference I am chairing in Seattle on March 3rd and 4th at the Sheraton. Web site for the Conference is: http://tech.prsapugetsound.org. The program is so strong that many companies are sending employees using their Professional Development budget.
As this down market has
affected the recruiting business, I am thinking about this newsletter, a
variety of other services I have developed and turning them into
separate profit centers. You are invited to brainstorm with me. Please feel free to forward this newsletter to friends and colleagues. They may subscribe at no charge by sending an email to info@jc-a.com with "Subscribe" in the subject line. If you would prefer to unsubscribe, please send an email to info@jc-a.com with “remove” in the subject line and your name in the body of the message. Judy, Chair Tech 2002 and President, Judith Cushman & Associates, jcushman@jc-a.com (425)392-8660, Issaquah WA, 98027 IMPACT OF THE DOWNTURN ON CHOICES JOB SEEKERS MAKE A CHANGE IN VALUES, A BOON FOR MATURE ORGANIZATION HIGH RISK OPPORTUNITIES FOR ANOTHER MARKET SEGMENT WHAT WILL HIRING ORGANIZATIONS REQUIRE? AGENCIES ARE RESPONDING TO NEW CHALLENGES
The general consensus among corporate and agency executives alike is that we will see the economy and business start to pick up in the second half of this year. No one is quantifying what that means, yet. My sense is that we are in for a gradual and moderate upturn in the business climate. Clients (large corporations) that have imposed hiring freezes are forecasting that they will be lifted in the second half. I am not hearing that jobs will go unfilled or that they are unimportant. It is more a matter of timing and when the organization sees that its business is moving forward. This does not mean we can count on this timetable across the board, but I do believe we will start to see definite signs of improvement. In discussions with clients on both the agency and corporate side, it is very clear that necessary cutbacks were made months ago. Lean, “minimalist” communications department both on the corporate or agency side, are the current reality. It is not where most agencies want to be. The same can be said for corporate communications managers who find themselves in a “holding pattern” trying to meet demanding business goals that remain unchanged while resources have been cut. No one is enjoying this business climate, except perhaps those communications specialists who are expert in crisis and corporate restructuring. I have seen a siege mentality take over as the stress of too much work and financial uncertainty impact the ability of managers to think clearly and to focus on longer term growth and development issues.
Even for those companies
who are experiencing some success in this environment, it is as a result
of great discipline and extreme attention to every bottom line decision.
It is more with a sense of relief than exuberance that goals are
achieved. Locally, I can think of Starbucks, REI and several biotech
companies that fit this description and I am aware of
others who are doing reasonably well. The downturn has had a profound impact on the work force particularly those stars who saw no end to the prosperity of the dot com economy. The depth and the length of the recession has had it greatest impact on professionals reaching mid-levels in their careers, generally with 10-years + experience married with young families. These were the very people employers were overpaying and wooing just over a year ago; they were in demand and scooped up as quickly as they said they were open to new opportunities. For this group, a recession was not part of their experience. Self-assurance born of success and being sought after during the last several years, left them unprepared to cope with months of unemployment or underemployment. Their financial situation, which could have sustained a few months with no income, has now impacted life style and family living decisions. It has created stress and a reassessment of what values are important. Add the impact of the September 11th tragedy and you have a complete refocus on the value of the family over work life. As these talented professionals pick up their careers, I expect we will see a “black hole” in their resumes where for the past 2-years their value in the marketplace has not increased. As they seek a “home,” initially the need for a paycheck will lead to taking positions that serve as a good interim step. Companies that are leading edge in the recovery will have an excellent selection of overqualified executives to bring on board. Difficult financial circumstances will drive the first wave of hires. However, the recession has left its mark on the value system of these excellent performers. Their first job post-recession may be short term until they are on their feet and can make more selective decisions. A CHANGE IN VALUES, A BOON FOR MATURE ORGANIZATIONS As the recovery gathers steam (and this may take another 6-months), these talented individuals will have an opportunity to make a second career choice that should provide the stability and balance they have now determined matter more than the lure of wealth. Organizations with a reward system based on longer term achievements and with a mature sense of work life fitting family demands will become most desirable. For this newly “grounded” middle-to-senior manager we are back to the basics and will continue to see an emphasis on “real” rewards—salaries that are adequate for paying the mortgage, health plans that include substantial benefits for children and elder parent care and savings programs with generous company contributions. In short, mature organizations, most likely mid to large corporations will benefit most from this change. Nor, do I see this as a temporary shift in worker values. The issue for talented professionals will be adjusting expectations and connecting those with their values. The challenge will be to develop far more patience around what they can reasonably achieve in a corporate setting. Sitting still and understanding corporate lag time will be a hard lesson to learn for hard driving achievers, once they start to recover financially and emotionally. Organizations with intensely work focused high reward business models, e.g. more stock, more bonus potential will find this group of workers simply not interested in what was once for them a very attractive option. This shift away from an intense work ethic to more balance, will also have a severe impact on agencies as they rebuild, driving them to consider new directions in their recruiting efforts. (See below for a discussion of the impact of the job market on agencies.) HIGH RISK OPPORTUNITIES FOR ANOTHER MARKET SEGMENT For the group just below the level of those with family and young children, i.e. professionals early in their careers with 3-7 to years of experience (perhaps recently married with no children), their circumstance is different. They have had less at risk. This group has been more able to absorb the consequences of high stakes employment and not been as shaken or as stressed at their more mature colleagues.
With less overhead and fewer responsibilities, they
can more easily absorb economic hardship without jeopardizing their
economic future. This group is more able and willing to take risk, but
offers less strength either to a start-up company or an agency. For
agencies struggling to compete in these difficult economic times, this
is one of several factors that will become stumbling blocks as they
attempt to rebuild. Traditionally agencies have NOT hired seasoned
executives (with 20+ years of experience) for mid-level jobs with
mid-level salaries but this may become the direction they ultimately
take in order to support younger, less seasoned account representatives. WHAT WILL HIRING ORGANIZATIONS REQUIRE GOING FORWARD? The single most important lesson that I think has been learned is that you cannot hire narrowly focused market-support PR professionals and then expect that they will be prepared to handle PR during a recession. The creative, highly energized (but not necessarily highly focused or strategic) PR representative who launches new products isn’t what is needed when the priority shifts toward longer-term goals. Branding, reputation building and media relations when the news is about issues (not products) require a level of sophistication and understanding of corporate politics rarely found in product PR Managers. These are capabilities of far more seasoned practitioners. As we rebuild, hiring managers, at the higher (Director and above) levels will be seeking a broader mix of experience to tackle assignments. I expect they will hope (if the talent is are available) to hire candidates with a more rounded skill set that includes managing thoughtful, longer-term projects, with strong writing skills (moving beyond product press releases.) In certain market locations that will create a challenge since the priority has, until recently, been in executing product PR campaigns and that is the experience to be found. I have seen market shifts occur in previous cycles impacting corporate communications strategies. This is turn requires major changes in staff capabilities which force hiring managers to look beyond traditional talent sources. This can mean looking in different locations or in organizations where candidates have developed those skill sets but are not in the same industry category as the hiring company. One example is health care when years ago, the focus shifted from traditional dissemination of news to attracting patients. The goal of the communications department became market outreach. Priorities shifted again more recently to public affairs and winning community support for legislative initiatives around issues such as regulation of fees. At each swing job descriptions changed for communications positions and departments were reorganized. As the market strengthens over the next year, I anticipate a gradual deepening of staff and refocus on more narrow specialties. This is when the more typical demand for creative media relations and marcom professionals at solid mid-levels will occur. Despite the market slump and overall hiring freezes, there continue to be hiring exceptions at the most senior levels. It is encouraging to me that when a CEO realizes he or she needs high-level counsel, a search is initiated. On the agency side, several firms have indicated they are just beginning to add junior professional staff to support overworked senior team members who have been tackling routine assignments they normally delegate. With a slump of this duration and job and salary freezes the norm, it is no surprise that compensation levels have dropped significantly over the highs of “boom” times. Informally, out-of-work upper middle managers have told me they would consider significant salary reductions. For example, a Marcom Director for a high tech company that was compensated at a base of $120,000 (and the usual, but worthless, stock options) would seriously consider a job at the $90,000 level. An entertainment focused PR Director with over 15 years of experience and a solid track record is open to dropping back to a salary that is almost 25% lower than what his previous job paid him and a salary level he was at about three years ago. Being out of work and knowing how little is available after looking for several months has taken its toll not only in salary expectation but in attitude. These are people who love to work and enjoy the challenge of representing a company that is aggressive and eager to support communications. It is hard for this unemployed group to think positively knowing how keen competition is for positions. It will be tempting for hiring organizations to offer these experienced but dispirited professionals salaries that are significantly lower than what is a “normal” figure for the range. But there are consequences, the most likely being turnover within one year. Reasonable guidelines for positions indicate a drop in range of 20%. For example, a Marcom Director should be paid a minimum of $100K and more realistically $110K. A Senior Manager should fall somewhere between $75-$100K. A PR Director should start in the $115-$135K range with reasonable benefits in addition to the base. An Investor Relations Director job in a mature company will not have been as impacted as some of the other functions and is less subject to downward pressure. A good figure is about $125K and in this case, the financial incentives should be layered with potential to achieve above the normal figures (in the range of 20%--if targets are met.) IR posts in start-ups are much fewer and have dropped down to about the same range (from highs in the $150+ category). Agency salaries are slipping well below the maximums previously offered. On the average, if a post were at the $130 level, it has dropped to $110 (not that there is much hiring happening now), which in my opinion was where it should have been anyway. At the VP levels we find there is a much wider fluctuation depending upon the size of the company, the industry and the reporting lines. (If the post reports to the CEO or President, salaries can range, for example, from under $200,000 to over $350,000.) AGENCY BUSINESSES ARE RESPONDING TO NEW CHALLENGES Agencies, particularly with a technology focus, have been hard hit by the recession.. Before the downturn, agencies decided which accounts to sign on and which to turn away. Retainers for strong regional and national firms were easily in the 30K per month range. The firms were hard pressed to find the talent to meet minimal client needs. Junior-level professionals with less than 5-years experience were often hired for mid-level roles and clients complained about the lack of quality service. As we recover and hiring resumes, corporations that were disappointed by agency service will be determining if it makes sense to hire quality staff (that is now available and realistic about compensation) versus putting an agency under contract. I sense there will be more corporate hiring as a result of the disappointing level of service received by corporations. How the world has turned since the boom! Clients of all sizes are calling the tune. Here are the key points from several thoughtful conversations with agency principals. Agencies of all sizes are competing for the same business. There are firms that would not normally compete for a 10K monthly retainer but are doing that now since they need the revenue. One of the major issues is that firms are overservicing accounts and that is not a sustainable business model. One firm offered free service for a quarter and said the client could name the price for the service. Only if the client were satisfied, would the agency bill for the service and the client could determine the amount. Another piece to that problem, is that senior staff puts in more time then the amount of work they actually bill to keep the client happy. Part of the reason for that is the fear that the revenue stream will dry up and force the office to shut down. Agencies are closing satellite or “spoke” offices and consolidating business in their primary locations. Agencies are being challenged to reinvent themselves and the services they offer clients. One firm with a PR expertise has taken an integrated approach to the solutions they provide by managing resources that encompass branding and other creative/marcom solutions. While there is a need to be thoughtful and service-oriented, a firm cannot veer away from key strengths. Billing is another key issue where flexibility is required. The retainer model is just one of several options; another is project fees. One agency, to combat the issue of putting top people on a new business presentation and then having another less senior group service the account, makes every effort to introduce the entire team of professionals assigned to the client—if not in the initial pitch, then in smaller follow-up meetings. Differentiation is an issue. Large firms offer services that are not significantly different in their basic approach to meeting client needs. One mid-sized firm completed all its rounds of layoffs last year which impacted 15% of the staff and was then able to make a profit. In reporting to the staff this year, concerns about values and future direction were laid to rest as the agency principal said its core values have been and continue to be treating staff with dignity. As a result, all benefits and employee-focused services are to continue uncut. A key comment was it is a bad management practice to focus on money (as the primary issue) because clients and employees will leave. If there are any financial sacrifices to be made, my sense is this owner would absorb them up to a reasonable level. For a mid-sized firm this flexibility is the key to retention of employees who will continue to remain loyal to the organization. From the perspective of a large national firm, my source said cutting prices in half is not a sustainable business model and will ultimately undermine the entire agency structure. As a result of cutbacks, very strong senior people are leaving firms and pitching for high level work that agencies are seeking. Agencies simply can’t compete financially with these free-lancers, if that is the key resource the client needs. Treat staff that is retained well. If they are feeling unhappy and overworked, when the market picks up, this group will be among the first to find a new home. Agencies can’t afford to lose this core talent pool and when there have been no raises, intangibles are critical to retention. Overall, a ballpark estimate is that tech revenues are down 30-50% and that staffs have been trimmed by 30%; some agency cuts have been deeper. When the time comes to rehire, many companies will fall into the pattern of repeating what they have done in the past, which is probably wrong. As a result of these challenges, many managers are not thinking ahead. Instead they are responding to near term issues when they should be considering what they need to do to build their career over the next several years. As agencies rehire they should be listening to what candidates need from employers: more investment in personal training and development, intangibles that support employee growth and a track record that demonstrates this commitment. Tech 2002 Conference -- I hope you are attending March 3rd and 4th at the Sheraton Seattle. There is time to register on-line until Feb. 25th. (The site is: http://tech.prsapugetsound.org.) The programming is strong for both tech and non tech managers. We have presenters from IBM, Intel, AT&T, HP, Xerox and a focus on biotech that is a first. The luncheon media panel includes The Wall Street Journal, CRN and Tech TV. Our moderator is Frank Catalano, an analyst, author and wit. The breakfast keynote is about Bioterrorism and the role of communications in combating the fear factor with the CEO of Genelex, Howard Colemen speaking (www.genelex.com). I am leading a career development session along with an HR Director and the VP of Communications for Boeing Commercial. There is also a meeting of a biotech task force on Sunday afternoon beginning about 3:45pm. I am looking at reinventing pieces of my business as recruiting has slumped. One idea is to turn the newsletter into a revenue source and create two versions, one a brief no-charge jobs-focused tool and the other a fee based monthly. The focus of the second would be in-depth stories about people at critical work decision points and twice yearly market analyses. I am just thinking about this concept and would welcome comments, ideas, etc. I am also chatting with a company that provides services to the communications industry about a profit model in creating trade show party lists for editors and the PR/communications community. As many of you know, I have been doing a COMDEX party list which is the definitive source for that information. This project naturally ties into the recruiting effort since the people on my email list would be potential clients and candidates. |
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Judith Cushman & Associates 15600 NE 8th St., Suite B1, PMB 178, Bellevue, WA 98008 s (425) 392-8660 Fax (425) 746-8629jcushman@jc-a.com s www.jc-a.com The Judith Cushman & Associates web team would appreciate feedback concerning this site. Please e-mail your comments, questions and suggestions to heathers@jc-a.com. |
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