Per a June 2 2020, forecast from Forrester, the U.S. advertising industry will shed 52,000 jobs over the next two years—and as many as 50,000 layoffs will happen by the end of 2021. The impacts of the COVID-19 crisis have led us into a recession. Given the extra uncertainties of the U.S. response to the crisis, there is no accurate way to predict how long that recession will last or when a recovery could begin.
Globally, another 50,000 advertising industry jobs will be lost. That means there will be a substantial loss of creative talent. So far, those job losses are mostly happening at the big global holding companies and large urban ad agencies. Digital/interactive firms are seeing far lower impacts, thanks to clients shifting to digital tactics during the crisis. Smaller ad agencies are also less likely to shed large numbers of staff—many smaller firms are already lean and have been able to pivot more quickly while avoiding substantial cuts in personnel.
As the crisis rolls on, however, some smaller ad agencies may have to consider at least a few layoffs, based on cash flow and collection challenges. Here are some tips for figuring out which employees you should consider laying off first.
Five Factors in Layoff Decisions
Layoffs are unpleasant for everyone, and never a fun chore for smaller businesses with close-knit teams and strong cultures. But survival may demand these difficult decisions. In a less challenging downturn, layoffs could be decided solely by seniority. But small + smart agencies should carefully consider a number of factors in making layoff decisions.
Critical Skill Sets - Which employees have essential skills that you would be hard-pressed to replace, or that are key to serving existing clients or targeted new business prospects? Which employees may have lower tier skills or skills duplicated by other people? Your thoughts on who these people are may have changed since you began working remotely; some people who were not on your “keepers” list before may have really stepped up since the crisis and demonstrated skills you had overlooked when in working in the office.
Essential “Institutional” Knowledge - Some employees, as a New Orleans member colorfully put it, “know where the bodies are buried”; i.e., they have deep knowledge of culture, systems and processes that cannot be easily replaced. Which employees can you not imagine being without going forward?
Connections/Culture - Key employees may be closely bonded to clients, vendor partners, and other business connections. Look at the intimate connections that help your business stay on a sound footing or may be valuable for growth as the crisis wanes. Also consider how valuable individual employees are to their co-workers or team members. Try to retain your best culture advocates and people with high EQ.
Ready to Retire - Some older employees may decide this is a good time to retire. Talk with anyone who may be approaching retirement to see what they are thinking and how they feel about the possibility of leaving. Note: this is not to encourage age-ism, but in the current crisis, with so many of us working from home, older employees may already be shifting to an “I’m ready to wrap it up” mindset. Talking about it can help clarify their, and your thinking. Retirements can mean you’ll be able to retain younger employees.
Important Contract Workers - Who among your freelancers and independent contractors are important to ongoing client work? Strive to handle suspension of contracts or retainers with grace and compassion. Also consider whether laid-off employees may be interested in becoming independent contractors.
All lay-offs and altered employment arrangements should be carried out using good HR practices—full documentation, severance packages, etc. Also, use Compassion with a capital C. No one wants to lay people off right now, nor do employees want to be on the receiving end. Do all you can to give employees fair notice of pending cuts, and help where you can with advice, guidance and good recommendations. Finally, remember that anyone you lay off will be faced with possible loss of health coverage—a worst-case scenario during a pandemic. Make every effort to ensure departing employees know their health insurance options.
See also: The Payroll Payload