The Bottom Line

While a day at a spa, theater tickets or dinner at a posh restaurant might have made the lack of a year-end bonus more palatable, most overworked and raise-less agency rank and file were lucky to get a tin of cookies at year’s end. 2003 marked the third lean Christmas for staffers who just a few years ago stood to be rewarded with as much as 15 percent of their salary come the holidays.

“In this environment, people are so stressed out and focused on the bottom line, they’re forgetting about the people factor,” notes a senior executive at a holding-company-owned agency based in New York, who says several shops in her network skipped year-end rewards.

It’s tough to find a holding-company-owned agency willing to discuss its year-end bonuses—likely because good news has been scarce, say industry recruiters.

“It’s the random [agencies] that are hiring, giving promotions and raises,” says Amy Hoover, vice president of the Atlanta-based recruitment and employment firm Talent Zoo. “There are the Deutsches out there in Minneapolis, Chicago and L.A., winning business and hiring people. But for every Deutsch, there are still 10 Agency X’s that are laying people off.” In lieu of financial rewards, adds Hoover, she saw a lot of title upgrades handed out last year.

Recruiter Paul Gumbinner, president of The Gumbinner Co. in New York, says the bulk of agencies stopped awarding bonuses and raises in 2001, and those freezes generally still stand. “I have seen a lot of people not get raises since 1999,” he adds. A good bonus in a strong year was considered to be 15 percent of an employee’s salary, and a standard bonus at many agencies was a week’s pay. Now, Gumbinner explains, “they budget 2 percent, but after they’re done with a couple of senior people, they don’t have anything left for the juniors.”

Gumbinner says agencies that do award raises usually bump up salaries rather than calculate increases on a percentage basis. An employee earning $40,000 a year, for instance, might see an increase to $44,000 or $45,000; a salary of $100,000 might jump to $110,000.

When rewards were handed out last year, they were largely at smaller, independent agencies. “Not having a holding company controlling the checkbook gives the agency principals more leverage to do something,” says Hoover, adding that agencies outside New York, even if part of a network, have more leeway when not under the watchful eye of headquarters.

“We don’t have Wall Street to worry about,” says Jon Bond, co-chairman at Kirshenbaum Bond & Partners. The New York shop was among the independents that handed out bonuses last month—on the heels of a year that included winning creative chores on Andrew Jergens’ estimated $95 million business—but even in leaner years, employees were rewarded in some way, says Bond. “We’d give a little extra time off,” he says. “You do what you can.”

The 108 employees at Square One also received year-end bonuses, says partner Steve Maxfield, declining to specify how fat the checks were. “They always get something,” he says, “even when times are tough.” Some years, the Dallas shop has substituted cash with two-week blocks of extra vacation time. “We try not to skimp on people, because that’s what the business is all about,” says Maxwell. “We’d rather hold off on buying office furniture or computers for three to six months to reward employee dedication and loyalty.”

Recruiters say the investment is a smart one—many once-loyal staffers who feel unappreciated reckon that a new job is the only route to more money. “Agencies are not giving their people a reason to stay,” observes New York-based recruiter Susan Friedman, who says she has seen an increase in talented executives looking for new posts. “They’ve worked their tails off, and it’s a way to find some form of compensation.”

Friedman found creative ways to thank her staffers this year, buying work done by her employees’ favorite artists and photographers. One received an Annie Leibovitz photo, while another got a William Wegman.

As for 2004, Hoover is optimistically forecasting a 2-5 percent rise in salaries, and other recruiters report similar figures, albeit mostly on the lower end of that spectrum.