BrandArena: COVID-19 Impact: Edelman to Cut 390 Staff Globally

Wednesday, 3 June 2020

COVID-19 Impact: Edelman to Cut 390 Staff Globally

Edelman has announced that it will be laying off 390 staff of its global team and a pay cut of 5-20% for staff at VP level and above.

CEO Richard Edelman previously said there would be no layoffs, but the agency recently lost key Samsung business.

With revenue down by low double digits, however, Edelman said the cutbacks are critical for the company to sustain itself during the pandemic and what he expects to be a long and slow recovery.

"To maintain the financial security of our business, we will reduce our workforce by approximately 390 people, which is less than 7% of our global team, and will be asking for salary reductions from 5-20% scaled by employee compensation level", Edelman said.

“Our goal is to be a break-even business,” he said, adding that the goal at the moment is to support clients. “We are not trying to make money now.”

"As a business, we have suffered a succession of body blows. This is a truly global recession. No office, market or region escaped its impact. We expected the first wave of declines in March, from travel, hospitality, automotive and airline clients whose business faced historic declines in demand. Then, came massive cuts in our energy business as oil prices sank to 20-year lows, which have had a greater breadth and depth of impact on our business.

"We pulled on every available lever to stave off this decision by reducing our operating expenses. These actions included reducing compensation for executives on our global operating committee by 15-20%, ending the use of freelancers, temporarily pausing our internship program, hosting a virtual global strategy meeting, limiting external recruiting to only a handful of critical roles globally and slowing internal promotions. As a family business with zero debt and cash reserves, this swift reduction of operating expenses allowed us to maintain staff levels and salaries until this point.

'Now, in June, we must part ways with talented and wonderful colleagues across the network. This is not a reflection on them, they are our partners and friends, and parting ways with them has been the most difficult decision in my 23 years leading this firm.

"As from today, leaders across our firm will be setting up time to speak with each affected person. We will provide each person with the information they need as soon as possible, though the timing of these conversations will vary as we follow the local laws for each country in which we operate. We will do what is right for those who are leaving our company.

The news from Edelman reflects other actions agencies have had to take as companies scale back their marketing spends. Other top global agencies have also been scaling down as a result of the current global economic realities.

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