Publicis CEO Levy "Loves" Recession; Says It "Excites" Him
Publicis chief Maurice Levy says he loves the recession because it “excites” him, a statement that will have his current (and former) employees spluttering into their coffee this morning. Levy told Ad Age, in answer to a question about the downturn:
It doesn’t make me nervous; the reality is it excites me.
I’m excited because this is something that leads me to think about how we can make our organization more efficient, how we can reduce our costs to help our clients, take maximum advantage of our scale to make sure our clients are the winners, and to think about new organizations and new operations and new client wins. I love that.
There’s a reason millionaire CEOs say things like this. It’s because they know that no matter what happens, they will not be the ones laid off, and they will never have to worry about making the rent. Levy’s 2007 salary (the last year for which we have info available) was €3.6 million. (See page 71 of this document.)
Economic tone deafness seems to be part of upper management culture at Publicis right now. Board member and Saatchi & Saatchi CEO Kevin Roberts was caught boasting of getting massages in Thailand and only working three days a week just days after he railed against investment bankers for over-leveraging the market and tanking his staff’s 401(k)s.
Roberts’ salary is €3 million. Note they are both paid in euros, not the less-valuable dollar. (€3 million is about $3.8 million.)
Levy was also asked by Ad Age whether his excitement will trigger layoffs in a drive to “make our organization more efficient.” He said:
I’m very cautious with layoffs. We will unfortunately have in some agencies the necessity of laying off people, and we will do it, obviously, if we have to.
I prefer to anticipate to cut the cost rather than head count. This is a time when we need all of our people pumped and motivated and going after clients. It’s not the time to think about layoffs.
Ad Age: What cost-cutting measures will you take?
Mr. Levy: We want to limit the use of freelancers and temps. And we want to slash our overhead by 10%.
Publicis employees should take Levy’s words with a pinch of salt. As you can see on BNET’s Ad Agency Layoff Counter, there have been plenty of layoffs at Publicis shops. Leo Burnett laid off 75 in January, just days after Levy said he did not forsee layoffs. And that promise came days after another 70 were axed at Digitas.
Here’s a comment on Ad Age’s message board:
I can see how millions of people losing their jobs would be exciting; in fact, I don’t know why I’m not more excited. Oh yea, now I remember, it’s because Publicis recently laid me off. – Agnes Fischer | New York, NY
Final note: Getting cuts out of overhead rather than salaries sounds like a great idea on paper, but good luck achieving it in real life. Publicis’s operating expenses in 2008 were €3.8 billion. Of that, salary expenses were €2.8 billion. The remaining €1 billion was overhead. So you can see that if you want to cut operating expenses, you can get more out of salaries than you can out of office supplies and real estate.
At the end of the first six months of 2008, Publicis agencies earned €1.60 in revenues for every euro invested in staff salaries. But for the full year, Publicis got €1.65. That’s because Publicis’s revenues rose, NOT because each staff member became more efficient. Here’s the proof: Revenues rose by 0.71 percent over the year; salary costs rose by 0.81 percent. Yes, those differences are marginal. But it means that salaries are actually rising slightly faster than revenues — and as salaries are the bulk of operating costs that’s where Levy’s ax will swing.
- Previous Publicis Stories:
- Publicis Q4: $15.5M Army Fraud Settlement Not Noted in Its Numbers
- Leo Burnett Lays Off 75
- Publicis’s Levy Promises No Job Cuts
- Why Isn’t Digitas Growing Fast Enough to Absorb Its Layoffs?
- Saatchi’s Roberts Got Massages in Thailand While 401(k)s Sank and Clients Stiffed His Agency
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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