From the editor-in-chief: As we enter Q4, comms leaders agonise over the right size and shape for their businesses

We find ourselves in Q4 of this difficult year, which starts to bring some long-term perspective - both backward, and forward-looking.

[Spoiler alert: despite the weather and news agenda, it’s not all bad news so do read on…]

Early October kicks off a business quarter when companies are beginning to get a clearer view of how 2020 will end up in terms of revenues and profitability. And when bosses are drawing up forecasts for the much-longed-for 2021.

The British Government hasn’t held back in telling us all that these six months until the end of March – effectively ‘the winter months’ – will be a hard slog. That’s the period over which (gradually increasing) social restrictions are likely to endure. It’s a half-year when we will discover how well the authorities, particularly the health service, cope with the second wave of this pandemic.

So businesses are planning for a difficult six months ahead – but also for 2021, when things may well begin to improve significantly.

It’s not an easy calculation is it?

“I’ve run a business through several recessions and crises – 2008, 9/11, the dot.com crash and so on – but this one is even more difficult to call at this point,” the experienced head of one large PR consultancy tells me. “It’s certainly hard to sound terrifically upbeat going into this winter – particularly with Christmas looking decidedly subdued - and we really don’t know whether spring is going to bring genuine cheer or not.”

The boss of a sports marketing agency sounds a similar note: “We’re hunkering down for the winter. I suspect that things will pick up in the spring – and you don’t want to cut back too much in advance of that – but I am worried about Q1 2021. It’s a time when clients plan their year and you don’t want to be losing money as a business at that point. 

Since I last wrote, the chancellor Rishi Sunak has unveiled his Job Support Scheme (JSS), which will replace the Furlough scheme from the end of this month. This has created another crunch point for many business leaders. 

Some have had staff on furlough since the spring, but now need to work out whether the new scheme works as well for their requirements. Again, this requires perspective on their likely resourcing needs, both for the winter and for next year.

Business leaders I’ve spoken to broadly welcome the JSS, but that will depend on their size and specialism. Bigger brands and consultancies have probably already taken the decisions on major redundancy programmes. The scheme looks more useful for specialist companies and agencies in say, travel, hospitality and sports; that need immediate help getting through a period of acutely suppressed demand for a few months.

One such agency chief said this week: “When you look at the ongoing restrictions for the next six months, in November, December, January and February it is likely that there will be less workload from clients as briefs dry up. The percentage of the normal stuff people work on will be reduced and, as an employer, you can utilise that Job Support Scheme quite effectively to manage your resources and revenue in what will be a very tricky period for parts of this industry.”

And a restaurant agency boss told PRWeek that she did not think the Government scheme went far enough. “The new scheme relies on a sizeable wage contribution from the employer, plus non-wage costs like pension and National Insurance contributions. Agencies and clients whose trade has been strangled will simply not be able to pay staff 55 per cent of their wages for 33 per cent of their time.”

On the other hand, other parts of the economy are decidedly buoyant. You may have seen the reports of a booming home improvements market, for example. Similarly, home entertainment, personal fitness and the supermarket sector are on the up.

Therefore, some consultancy bosses are acutely aware that now is a time when they must avoid degrading their resources unnecessarily, and that a “fit for purpose” well-staffed business can actually give them a big advantage.

“I certainly don’t want our business to be under-resourced,” the head of a mid-sized generalist agency tells me. “We’re a service business and clients will soon get frustrated with that. They want service more than ever; and they want stuff done now. Yes, hospitality and travel are tough, but there are also solid parts of the economy that are crying out for our support. We are still winning new business from clients who want that service.”

The boss of another mid-sized consultancy takes a similar view: “We’ve won a significant amount of pitches recently where other agencies have just pulled out. I think clients want to see agencies demonstrating confidence and capability to solve their challenges at this time.” 

And despite a rather gloomy news agenda at times talking about mounting job losses, many agencies continue to hire graduates as an investment in the future and a clear indication of optimism.

“We’ve just hired some grads. Our existing team is maxed out on client work and gaining coverage, we need to provide our staff with some support,” reports the head of a large UK consultancy.

Another boss says: “It was such a nice thing to do to offer a couple of graduates proper jobs and hope. When you talk to them it’s really tough for young job-seekers at the moment.”

Indeed the PRCA’s most recent UK confidence tracker earlier this week revealed a net positivity score of +85, with nine out of ten PR agency heads and in-house leaders confident about the future of their organisations. This compares with a net positivity score of +71 points in June, when the survey was last undertaken, while the tracker on 31 March showed a net positivity rating of only +36.  

“September was a very strong month for new business,” reports the head of a UK consumer agency. “There was a deluge of RFPs from brands in, for example, alcohol and retail. I think some companies are desperate to drive sales pre-Christmas after a terrible 2020 generally. Or they need help because their own teams have been decimated for whatever reason.”

As I’ve said previously, well-run public relations businesses ultimately will do well out of the COVID-19 crisis, because they are inherently flexible and adaptable. And because clients are realising as never before the short- and long-term value of investing in professional communications.

The challenge then – as we stand on the cusp of the darker, colder half of the year – is to steer businesses through this tricky period and be in decent shape for brighter general economic times ahead.

Comms leaders both in-house and agencies have been working extremely hard over the past six months to adapt their operations to the hard realities of 2020 and beyond, from their office or WFH arrangements, to the types of people and skills that their businesses require in the longer-term.

Prime minister Boris Johnson’s central point of his party conference speech last week was using this crisis as a trigger for change for the better. Unsurprisingly this was met with a great deal of scepticism. But this really should be the case for the modern communications business – indeed it’s essential to keep innovating and adapting. 

As the CEO of a leading corporate and public affairs consultancy says: “We are now in Covid operation for the long haul. So, the question is whether businesses are radically reshaping their models, as opposed to simply muddling through.” 

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