Misdirected Layoffs E-Mail Puts Carat on Defensive

NEW YORK Aegis Group’s Carat issued a memo to its entire U.S. organization last week apologizing for the way employees found out that rumored layoffs were being implemented.

The apology memo was part of the media shop’s effort at damage control after an embarrassing e-mail snafu last Wednesday. The e-mail, outlining procedures for implementing planned layoffs and informing staff and clients about them, was intended for senior management only but was accidentally distributed companywide.

The agency also contacted every client on its roster to try to thwart assertions by competitors that its plan for communicating the layoffs was intended to be misleading.

The shop is cutting a little less than 10 percent of its 750 employees in regional offices around the U.S., including Boston, Chicago, Dallas and Los Angeles, and consolidating its local and national ad buying operations in New York. The layoffs are expected to be completed by the end of this week.

Competitors were having a field day with the documents, which were posted online, suggesting they indicated that Carat planned to be less than forthright when discussing the layoffs with clients. One document recommended that clients simply be told that laid-off staffers are being replaced “with someone we feel will be a better partner for you.”

But in an interview last week, Aegis Media North America CEO Sarah Fay said there was “no integrity issue here at all,” and adding that “we have a model of total transparency” with clients. The disclosed documents, inadvertently released by a human resources executive, were drafts that amounted to an ongoing discussion about how to position the layoffs and new buying setup, Fay said. “I hadn’t even seen them,” let alone approved their release, she said. “It comes down to a mistake that was primarily an e-mail gaffe. Management feels quite badly that people found out about it that way.”

Fay said the shop also contacted every client last week to discuss the situation. “They were incredibly supportive,” she said.

The layoffs are part of a $15 million restructuring charge that Aegis confirmed two weeks ago when it issued its first-half financial results. Carat USA lost several big accounts earlier this year, including Hyundai and New Line Studios. Last year Carat merged its traditional and digital operations in the U.S., putting Fay in charge of the combined entity. Aegis CEO Robert Lerwill said Carat’s problems “stem from the client losses, not the merger.”