World’s largest public relations firm Edelman recently announced that it is reducing its global workforce by 7% as the coronavirus pandemic impacts business severely. The recent development comes just three months after CEO Richard Edelman promised employees of secured jobs during the pandemic.
In a virtual town hall to staff, Richard said the consultancy is no longer able to sustain its business without “layoffs, furloughs, reduced work weeks and additional compensation reductions of mostly senior people scaled by salary level.”
The downsizing exercise is expected to impact about 390 of its employees worldwide.
Earlier in March, Edelman had pledged not to make a single redundancy due to the coronavirus pandemic. But the ongoing economic crisis has forced the company to bend its knees despite being able to avoid layoffs in the two previous recessions in 2001 and 2008.
“Today, despite all efforts, we are beyond the threshold of loss-making and to ensure the long-term health of our business, I must change course,” Edelman said.
“This decision is gut wrenching, especially as I told to you in March that we would have no job losses due to the pandemic. I said we were prepared to take the business down to zero profit. We did not want to get into loss-making, but I said our intention was to press ahead until we could do so no longer.”
Edelman explained that in February, the business was on track to report two per cent growth, even with some COVID-19 impacts in Asia. Edelman explained, “As a business, we have suffered a succession of body blows. This is a truly global recession.
“No office, market or region escaped its impact. We expected the first wave of declines in March, from travel, hospitality, automotive and airline clients whose business faced historic declines in demand. Then, came massive cuts in our energy business as oil prices sank to 20-year lows, which have had a greater breadth and depth of impact on our business.
“We pulled on every available lever to stave off this decision by reducing our operating expenses. These actions included reducing compensation for executives on our global operating committee by 15-20%, ending the use of freelancers, temporarily pausing our internship program, hosting a virtual global strategy meeting, limiting external recruiting to only a handful of critical roles globally and slowing internal promotions.
“As a family business with zero debt and cash reserves, this swift reduction of operating expenses allowed us to maintain staff levels and salaries until this point. Now, in June, we must part ways with talented and wonderful colleagues across the network. This is not a reflection on them, they are our partners and friends, and parting ways with them has been the most difficult decision in my 23 years leading this firm.”
For those leaving the agency, Edelman has promised to provide career transition services, employee assistance programming for six months, LinkedIn learning, networking for opportunities and a $1,000 credit towards personal technology or other measures to help impacted staff.
“For those of you leaving, I am profoundly and deeply sorry. The thought of how this affects you and your loved ones has given me many sleepless nights. My gratitude to you is heartfelt, and you will be deeply missed by me, as well as your colleagues and friends,” Edelman added.
HrNxt.com Newsdesk has researchers and writers with an excellent domain knowledge about the talent ecosystem, and the business environment. The team keeps a tab on the latest happenings in the ecosystem to bring most relevant news and insights for our readers. You can connect with our newsdesk at newsdesk@hrnxt.com.