From the editor-in-chief: Some bosses asking staff to spend at least half the week in the office as they tackle key autumn phase

So, the summer is over and it’s back to school for the kids (fingers crossed) and back to work for the adults. Or is it? More on that in a moment.

From the editor-in-chief: Some bosses asking staff to spend at least half the week in the office as they tackle key autumn phase

And then there’s the big question as we start a new ‘term’ after a disrupted summer: are we seeing the return to some sort of certainty? I think the blunt answer is: not really, no.

Talking to many agency bosses – the perfect bellwethers of comms activity - over the summer has given me a sense of what’s really going on out there. But it’s a complex picture and one of decidedly mixed fortunes; something confirmed by PRWeek’s poll of consultancy heads during August and September.

The survey showed us that, unsurprisingly, most (56 per cent of) agency bosses now predict a worse 2020 in terms of revenues than they enjoyed 2019. The most common forecast for annual revenue decline was between 11 and 20 per cent, but a significant chunk predicted even worse than this, a few up to 60 per cent.

The businesses that have fared worst are those specialising in sectors such as travel, hospitality, retail property, sports sponsorship. And we should spend a moment sparing a kind thought for people working – or indeed who have sadly lost their jobs – in these devastated parts of the economy.

On the other hand, some sectors and types of activity are booming. Nearly 30 per cent of bosses forecast year-on-year growth in revenues, thanks to buoyant demand in the healthcare and fintech sectors, particularly. Many clients, regardless of sector, have been demanding crisis and issues management advice at an unforeseen level.

Two mid-sized agency chiefs I spoke to this week said they were already confident that 2020 would be a growth year, in terms of EBITDA, compared with 2019.

“We’ve saved nearly half a million pounds in travel costs and recruitment fees,” said one. The other agreed and said he had cut fixed costs early in the crisis, while a fair bit of new business over the summer had further boosted profits.

And another, larger UK agency chief reported yesterday, “B2B, corporate, healthcare, tech have all held up well, but anything that’s reliant on consumer expenditure has been pretty tough.”

All this means every agency director continues to look hard at their cost base. As reported here many businesses made redundancies in the early summer, many still have some staff on furlough, and more job cuts could follow later this autumn once the furlough scheme is phased out, and depending on how Q4 2020 and Q1 2021 are looking in terms of business activity.

A few agencies have been able to avoid job cuts altogether and there’s no doubt the PR sector has been generally reluctant to lay off staff, as good people are so difficult to find if/when business picks up.

Nevertheless PRWeek’s survey reveals that almost half of agencies either have decided to (26 per cent) or might (21 per cent) freeze pay and bonuses for staff throughout the whole of 2020.

Indeed, around a fifth of leaders are taking a wait-and-see approach, closely observing the likely second wave of the virus and a potentially worsening economy. Some may award a few well-deserved promotions to staff – the people who have shone during lockdown – but big company-wide pay adjustments are out of the question this year.

But what has surprised me most from talking to industry leaders as we go into autumn is a significant determination to get people back into the office.

Reading the business pages and online blogs one can get the impression that UK plc is happy for everyone to work from home until at least after Christmas. And yet the many comms agencies I speak to are quickly rebuilding buzzing HQs.

While the UK’s biggest consultancy offices remain deserted, mid-sized and boutique independents have taken a different approach.

“Myself and my senior team have been in the office every day for some time now,” reports one agency owner/chair. “Our other staff have now been told they must do a minimum of three days per week in the office and I’m considering dialling that up to four or five days soon. We’ve had to revamp our office to make it COVID-secure, taking out breakout areas and spacing out desks, and we’re looking at putting in pods to make Zoom calls, but it’s now feeling buzzy and great to be back.”

Another agency owner/CEO says: “We’ve made 50 per cent office attendance mandatory from September. People can do two days one week, three days the next. Of course we’ll be flexible. But everyone seems happy with this. We want people to be back in work mode.”

Some bosses are taking a more cautious approach – “We’re adopting a wait-and-see policy and people are not coming back in huge numbers” - but even among these leaders there’s a sense that moves by the aforementioned agencies will create their own momentum in the industry. PR consultancy in the UK is a highly dynamic and competitive sector and if some players appear to be gaining a creative and cultural edge by being predominantly back in the office, the pressure will grow to follow suit.

Even one of the more cautious agency chiefs admits: “While people have been adapting brilliantly to home working, there may be a difference between the extent to which they can do their job adequately from home, and how much they can really drive growth in our business from there.”

This explains why, at the moment, only a fifth of agency owners intend to downsize their offices, and only a tenth intend to scrap their offices altogether.

Interestingly, agency executives have noticed that clients have been much more cautious in returning to their offices, with many large corporations either closing their physical HQs until 2021 or not putting any pressure on staff to return to their desks for the meantime.

And perhaps it is client sentiment that is most concerning for agency bosses in the longer term. When we polled in-house comms directors during the late summer, more than half (55 per cent) said they would take more comms activity in-house and use agencies less.

Indeed, while agency bosses are surprisingly relieved about 2020’s business performance, there is growing concern about 2021.

“The big question is where is future growth going to come from?” says one. Another says, “I just worry that with the COVID-19 crisis 20 per cent of consumer spending has just gone out of the economy. And the real crunch may come right at the end of the year in November/December/January when the furlough scheme has finished and clients look at 2021.”

“We’ve done ok in 2020 despite everything," says another agency leader. “I’ve got no idea for next year, though! New business is already feeling harder and at the moment, unusually, I don’t have a feel for what size business we need to be next year.”

So, in conclusion, while perhaps working patterns are more familiar than we might have expected at this point, the return of any of the usual reassuring September normalities remain annoyingly elusive.

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