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News Analysis 7 Oct 2020 - 4 min read

‘It’s the right thing to do’: Cummins & Partners takes seven figure hit to payback all staff in full for Covid cuts

By Josh McDonnell - Senior Writer

Some news is good news: The Cummins & Partners team (pictured pre-social distancing) is back to full pay, and reimbursed for Covid cuts.

After implementing Covid pay cuts, Cummins & Partners has now returned all staff to full wages – and are paying employees back what they lost. It’s been “emotional” according to agency leaders Sean Cummins and Chris Jeffares. But both cuts – and paybacks – were necessary. Now their 100-strong Australian team is looking forward to growth.

What you need to know:

  • Cummins & Partners decided to cut pay for six months when Covid hit
  • Now all staff are back to full pay and the agency is reimbursing all employees in full
  • The “seven figure” move ends tiered pay cuts: 20-50% for partners; 10-15% throughout the agency and 0% for the lowest earners
  • It was a simple decision and “the right thing to do”, says CEO Chris Jeffares
  • Non-core costs, such as awards budgets, have been binned
  • Meanwhile the business has retained and landed account wins this year including Jeep, Alfa Romeo, Libra, Sapporo, Indeed, Heritage Bank, Taco Bell and Nufarm.

“Obviously, it will be linked to business performance and ours has been good, but you really need to understand the impact this has on your staff’s lives. It’s not like you have just stopped the free coffee, you have actually impacted their livelihood. Respect that.”

Cummins & Partners, CEO, Chris Jeffares

Waking up to smell the Covid

Pay cuts became the norm across almost all industries when Covid struck. But the marketing, media and advertising industry, reliant on others to pay for its services, took a king hit. Clients held cash, events collapsed, investment evaporated. Nobody really knew what was coming.

However, with Australia faring far better than other economies in terms of containment, there appears to be light at the end of the tunnel. Holding group WPP was one of the first majors to return to full pay for all staff in August.

But it still saved a lot of money. Independent agency network Cummins & Partners is going one step further. It is paying staff back what they are owed.

“When you take the extraordinary step of salary reductions, payback should always be a major consideration and part of the strategy,” CEO Chris Jeffares told Mi3.

He says Cummins & Partners can afford to pay, given strong business performance. While other agencies may be less liquid, “you really need to understand the impact [wage cuts and Covid] has on your staff’s lives. It’s not like you have just stopped the free coffee, you have actually impacted their livelihood. Respect that.”

Jeffares says the decision was heavily reliant on full transparency, with the executive team and partners walking staff through every step.

He says being able to talk open and honestly with staff is one of the benefits of independence, alongside the ability to make fast decisions.

“We reacted early and fast to some of the looming economic challenges in early March. Cost management was a key priority,” Jeffares says.

An agency-wide tiered salary reduction that ranged from 20-50% for partners, with 10-15% across the mid-tier, to full pay for for lower salary employees, was quickly implemented.

Meanwhile, all additional costs, such as awards budgets, were binned.

“The conversation with staff was one of substantial transparency – about the economy, the industry, our clients and our people. It explained several initiatives we were putting in place with a sole focus of protecting jobs in a very turbulent time,” Jeffares says.

“We received a huge amount of feedback which was consistently appreciative about our transparency, positive around our candour and surprisingly delivered a big sense of relief for staff.

“There was, and still is, huge amounts of anxiety around employment, and many found a great sense of relief in having a level of certainty for the next six months. Even if it came at a cost.”

 

Full refund

Despite costing the firm more than a million dollars, Jeffares said it took management “about five seconds” to sign off full payback for staff.

But he says the decision – and his staff – are worth every cent.

“It was a really emotional moment when we notified our staff that we would be returning all salary sacrificed over the previous six months,” says Jeffares.

“There were cheers and tears. Some people thought there would be a continuation of cuts, like so many other agencies. Some hoped for a return to full salary levels, but few had any expectation for the refund.”

 

“There was, and still is, huge amounts of anxiety around employment, and many found a great sense of relief in having a level of certainty for the next six months. Even if it came at a cost.”

Cummins & Partners, CEO, Chris Jeffares

Looking ahead

While revenue remains lower than pre-Covid levels, the agency has had a strong year, buoyed by account wins and retentions including Jeep, Alfa Romeo, Libra, Sapporo, Indeed, Heritage Bank, Taco Bell and Nufarm.

Jeffares claims its media division has doubled in size in each of the last two years, with a soon to be announced “massive recent win” necessitating six new hires.

He also believes tighter economic strictures on clients play into the hands of independents with the scale, breadth and agility to cover all bases. Jeffares suggests 2021 could represent a milestone for full service indies. He says almost half Cummins & Partners' business is now full service, with creative-only at 55% versus integrated creative/media at a 45%.

While brands are acutely cost conscious, “that is dramatically outweighed by the desire for increased brand effectiveness,” says Jeffares, “and a unified team really helps that.”

“The growth of digital has necessitated a much closer relationship between creative and media, leading to dynamic interplay between the two,” he suggests.

“In fact, in some channels it is now almost impossible to separate the two.”

 

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Josh McDonnell

Senior Writer

Market Voice

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