Thursday, October 30, 2008

Why hire freezes don't really work

I've noticed a few agency groups talking about hire freezes in recent weeks. Some have even gone as far as saying that they've frozen all pay reviews and promotions. I completely understand why they've done this as I know how important it is to make sure your staff costs don't get ahead of revenue in what looks likely to be a tough market. But these blanket approaches have a flaw in my mind. They essentially penalize the good people in an agency and potentially protect the weak. As we learned when the dot com bubble burst the good people in a firm are still in demand, though typically from clients looking to hire internally. If they do walk because you can't reward them or hire good people to support them then that leaves you with the potential to have an agency full of OK people and you know what that is likely to do - mean clients start to walk. This in turn creates a vicious circle which sees the agency gradually starting to die.

I wouldn't want you to get the idea that in times like this agencies should ignore the financial realities of life. Instead I'd argue that they pay greater attention to their talent and make sure the stars are well managed and appropriately rewarded and supported. Of course this may result in weaker talent being forced out more rapidly than in good times. On this I would say that creating a really strong team is something that should really be done in any climate. It's just that in tougher times it's easier to see its importance and it's more obvious when you fail to run the business in this way.

So I guess my message to all the really the good PR people out there who are frustrated by the hiring freezes imposed upon you, then please feel free to talk to any of our businesses. We will always do our best to hire even when times are hard. Having great talent with fresh thinking is a great asset to agencies and is what keeps them competitive.

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