BOSTON Arnold confirmed that it would cut some 40-plus employees, about 7 percent of its headquarters workforce here this week and institute across-the-board pay cuts in its three primary offices.
The pay cuts, believed to be a first for the agency business during the current economic downturn, are being made to keep job layoffs to a minimum and will hit the highest-salaried employees hardest, an Arnold representative said.
In addition, Arnold will attempt to mitigate the impact of both the job and salary cuts by paying "performance bonuses" to both remaining staffers and those being laid off, with the funds coming from its 2008 profits.
The pay cuts and bonuses will impact all staffers at every agency office and level of employment, up to CEO Fran Kelly, the rep said.
Job cuts will be made only in Boston, with no layoffs in the McLean, Va., or New York operations.
The rep added: "This is totally based on the economy," but declined to disclose further details.
Per sources, the layoffs will be across the board here in most departments, and are at least partly attributable to the impending loss of RadioShack. That account is in play, and Arnold is no longer active in the review. Spending cuts by various other clients are also a factor, according to sources.
Once the cuts are done, Havas-owned Arnold will employ 550-plus at its Boston HQ. Arnold post-cut would employ perhaps 675-700 staffers nationwide.
This marks Arnold's second downsizing in recent months following a similar size layoff in late October.
The media business as a whole, and ad agencies in particular, have been wracked by such moves since the economy began teetering last fall. Unfortunately, the pace has quickened noticeably in recent weeks.
For example, one of Arnold's local rivals, Interpublic Group's Mullen, last week cut 40 employees (8-10 percent) in its lead office in Wenham, Mass. That followed cuts the week before by several major agencies nationwide.
What's more chilling, the trend shows no sign of slowing, with U.K.-based holding company WPP Group last week disclosing that it plans to trim 2 percent of its payroll, totaling 2,000 employees at numerous agencies worldwide.
These newly unemployed, said recruiters, will need to adjust their expectations to new industry realities -- especially those with traditional backgrounds.