October 27, 2003
"It is getting better"

Despite the potential for a few more bumps in the road over the next 18 months, our panel of leading executive recruiters are quite bullish on the long-term prospects for employment in the marketing and ad industries.

Despite what your CFO may tell you, numbers don't always tell the whole story. To add colour and context to the salary ranges reported in this year's Marketing Salary Benchmarks, we once again invited several of the executive search consultants who helped us determine them to meet to discuss the state of the job economy for marketing and advertising.
The conversation was hosted by Marketing editorial director Stan Sutter at the Rogers Media offices in mid-September. It ranged over such topics as which business categories are stronger and weaker these days, the challenges Canadian companies face when our economy is stronger than the one in head office, what managers can do to keep and inspire good employees in a tight economy, and what individuals should be doing to improve their own career prospects.

Another year on hold
Marketing: In calculating the salary benchmarks, you as a group have come back with what looks like another year with salaries on hold. Has it been?
Sylvia MacArthur: In terms of increases? Yes.
Rick Chad: Absolutely. If anything it's turned what was a seller's market into a buyer's market. As a result, companies are a little bit more hesitant to make a move. They want to see more people. They're trying to get exact fits. Unfortunately, there are not as many well-trained people as a result of the last few years' downsizing of marketing departments and training programs. And so it makes it a little more challenging to find well-trained people to put into spots. That's why it's keeping relatively even. But salaries certainly haven't increased by any means.
Martin Kingston: It feels like the market in general is lacking in the confidence of growth and it is being economically driven still. We're not much different from where we were a year ago. We're still waiting for the signals to come out of the U.S. from a business point of view. And pretty conservative budgets that have been set as far as growth incentives for this year.
Michael Gates: I think, relatively, it's been remarkably resilient considering SARS and mad cow (disease) and power outages and the war in Iraq. Things have maintained semblance, and there's certainly some momentum. With interest rates staying low, the next 12 months should be better. That may not translate immediately into wage increases, but it's going to get closer to full employment. As soon as we ratchet up a little bit, there's going to be a lot of (upward) pressure (on salaries).
MacArthur: I actually see almost the opposite situation. Salaries escalated fairly aggressively in the late 1990s. And I think it's actually a very uplifting thing that the salaries have held.
There was a rush of activity because of it being a seller's market versus a buyer's market in the late '90s and into the year 2000 and I'm surprised that they've held.
Chad: I think they've held because total salaries being paid out are less because there are fewer people in slots. So you have salaries being held with people having more ownership, or supposed ownership, of territory. Corporately, there's less salary dollars actually being paid out.
I think the only reason it's held is because of the decreased head count. If three people leave, they replace them with two. As opposed to maybe in the old days three people would leave and they'd replace them with three, maybe four. They'd hire two assistants for one brand manager and actually pay a little more out. I still think there's going to be downward pressure on salaries, not dissimilar to what's happened in some sports leagues.
Kingston: Until we get through the bubble, there are still people out there who will take a slightly lower salary than what they earned in their last job, maybe with incentivization. If they deliver, they'll get bonused. There's a lot more of that that I'm seeing.
MacArthur: But is that the candidates lowering their expectations in terms of the role or is that the company lowering the salary?
Kingston: The market is asking that of them, and they are also agreeing to it. There's a job and there's an incentivization too.
Harry Teitelbaum: The candidates themselves are almost contributing to a lower salary expectation because they are interested in working in a better environment and happy to take lower pay in a better environment. So they're influencing salaries as well.
Gates: But are you seeing that very often with people who are employed? I'm not seeing it. The unemployed, yes, but...
Chad: But it's also the people who are in companies who are feeling relatively insecure because they see what's going on around them. Or they're just not enjoying going to work every day. So what happens is what's more important on the security level is sustenance they can achieve in terms of what they need to meet their basic costs and achieving their lifestyle. But that seems to be the priority. They're looking at security and quality of life and that seems to be their priority.
Gates: And I'm seeing a lot of that at $100,000-plus. It's radically smaller. And if you're on the sidelines, you're probably just happy to be back at work. There's that non-stop demand for solid middle-management.
Chad: You remember three years ago? If you could breathe and were a warm body, you asked for 30% more and companies were paying it.
Gates: One thing we're sometimes seeing is that when people depart from senior positions, companies are trying to replace them at a lower salary. For example, if you have a senior creative team at an agency earning $300,000 or $400,000 and for whatever reason they leave, it's highly likely they'll be replaced by a cheaper team. You can't get the cost-savings at a mid-management level, but you can sometimes get the cost-savings on a replacement at a senior level.
MacArthur: I think that's kind of a unique phenomenon in the creative field because I don't see that anywhere else.
Chad: I've seen a few jobs merged where you have a VP of sales and a VP of marketing and one leaves, so the company says let's have the same guy run both. So it becomes a bit more efficient. Whether or not that's a short-term thing?
MacArthur: I've seen that.
Kingston: We've seen jobs disappear completely. But I think all of these comments are short term. What's happening out there right now is just a response to a lot of budget and control. Once we're through this, the jobs will come back.
Chad: I think the jobs are definitely starting to come back.
MacArthur: Other than in the creative category, I have not seen companies replacing the same job, lowering their expectations, or lowering their salaries for the same jobs.
Chad: I'd say that in 30% to 40% of the senior jobs I've worked on this year, they've tried to see if they can hire someone in a more efficient manner because the market is a bit more competitive.
Deals that were negotiated three or four years ago with people who've now left are generally more buoyant because they were competing in different times. I find overall packages are down.
MacArthur: Maybe overall packages are smaller in terms of additional comp with perks and so on. But In terms of base salary, I haven't seen any difference at all for the same job.
Kingston: But we're still just coming out of a period of a lot of freezing of salaries at many, many companies. People are happy to have a job. The demands will follow as the economy starts to improve, their confidence to go into their boss's office and ask for more will happen. But that's when we'll start to see the build happen again.
Chad: The challenge is the mixed signals we're reading now out of the month of August. The number of unemployed are up in both Canada and the U.S. Since I got back to the office on Sept. 3, which is only a couple of weeks ago, we've had an inordinate number of calls for new scenarios. So it's just a question of where the two sides will meet.
A cautious optimism for next year
Marketing: I'd put that question to all of you. Are you getting calls from marketers looking to hire this fall?
MacArthur: Yes.
Kingston: Yes. We all are.
Chad: Fall is a good time of year.
Kingston: It's much more optimistic. There are real orders there, number one. But there's also a lot of talk about jobs that are on the verge of being contracted as well. So people are looking now toward 2004. It's just around the corner and they're starting to gear up for it. It is getting better.
Teitelbaum: Yeah, we sat here last year and we were all pretty optimistic for this past year. But it just didn't turn out that way.
Marketing: So the optimism this year has a stronger foundation than a year ago?
Several voices: Yes.
Kingston: Well, this year we all waited through a relatively slow summer with the expectation that September would be good. And right now we're all nodding our heads, it looks better.
Chad: It looks promising. Now, things can slow down pretty quickly, too. But I don't think it will because a lot of the companies are taking measures... where they are fairly lean right now, they've done their cutbacks, most of the kind of companies that we work with have tightened their belts already and they have done so for a while. Indications are that they're getting a new head count.
Teitelbaum: Yeah, they want to hire. They just don't have approval to hire.
Gates: There's been a lot of hurry up and wait in the last few years. You get started, then they're not sure, then something gets put on hold. Then you talk to candidates who are doing their own interviewing, stuff like that. I've been in talks with this one company for three months now and they still can't make the decision. It's usually something in the background.
Kingston: Several companies we're talking to as well-it's probably quite average-are looking at much more bullish goals themselves as far as their expectations, and the pressure is on for them to have much better years-not 30% (growth) years, but 10%-,15%-plus years-and they've got to put plans in place to do that. So the pressure is on from the point of view of looking at the quality of the individuals they've got who will be able to deliver. Time is ticking for a number of individuals.
The problems of out-performing head office
MacArthur: In general, though, I find that our client companies in Canada have been out-performing their U.S. head offices. And despite that, given the cutbacks and roll backs in the U.S., they still have to take their 10% or whatever it is, and yet still continue to drive the level of business that they've been able to accomplish. And that's putting tougher strain on clients.
Chad: As a Canadian, it's also very disconcerting because you have organizations in Canada that have been out-performing the U.S., but then you have someone in the U.S. does a checkmark and says, "If I absorb this plant in Ontario or Alberta and put it under my bailiwick, my numbers overall are going to look better." As a result, jobs are still lost in Canada, even though they shouldn't be.
It's unfortunate because I still think the quality of the business managers that are coming out of Canada and are being developed here are still as competitive, or more competitive, as anybody in the world, never mind just North America. But we're still, because we're the small cousin to the U.S., being hurt.
Teitelbaum: Equally disconcerting is having to go to the U.S. for approval for every hire.
Chad: I have a situation right now where this company is doing unbelievable here-double digit growth numbers. But in the States, they're stable, they've put in a hiring freeze. They need someone sooo badly...they had approval but they've still got to go back down to the U.S. They've gone through the whole hiring process... and it may not happen. And it will hurt their business.
Gates: The other thing you see as the result of that is Canadian companies that are starting to enter year two and a half of wage freezes. You've got some pretty impatient people here.
Chad: What about companies that had been giving great bonuses and now the bonus programs are no longer as generous?
Less generous benefits and perks
Marketing: That's something we've been reading and hearing this year. Companies looking to cut costs are pulling in those soft employee benefits and things that used to be lavish. They are, in effect, hidden compensation cuts.
Chad: As opposed to Rogers which has these lavish cafeterias (laughter).
MacArthur: I think that's reflective, though, of the unrealistic bubble that we went through. I think a lot of the new economy businesses that kind of drove those things-everybody had to get a cellphone, everybody had to have a laptop, everybody had to get stock and so on-weren't realistic. I think we've just brought it back to a more realistic level.
Chad: The only area where those things shouldn't be cut back is for recruiters (laughter).
MacArthur: One of the things I'm seeing that relates to the U.S.-Canadian situation is a nice trend with the clients we're working with where they're starting to see that this is a distinct marketplace again. It had kind of gone full circle.
Chad: There's a couple of companies like that, but I find the opposite is still the case.
MacArthur: We may be a bit lucky there, because it's quite refreshing to see that change happening.
Kingston: That's nice to hear.
Chad: There are a few like that. But overall it's been turning the other way. It might be slowing down a bit.
Marketing: We talked last year about all these Canadians working in the U.S. who were clamouring to come home in the wake of 9/11 both for job reasons and life reasons. Has that let up?
Chad: They got kicked out. When they lost their jobs. They couldn't keep their visas. And they came back. We don't get as many calls any more because there's just not as many of them there. If they've stayed there, they're gainfully employed.
Teitelbaum: I've heard from a few who are still working in the U.S. who are still interested in coming back.
Gates: That will always happen.
MacArthur: Interestingly enough, within the last month I know of five pretty senior people who had come back to Canada, who've gone back to the U.S.
Chad: Were they gainfully employed when they came back or were they in a situation where their jobs had been eliminated or they couldn't find anything in the States and they decided to come back to old, comfortable Toronto?
MacArthur: They came back to old, comfortable Toronto. But in the last month, they've landed opportunities back in the U.S. I find it kind of interesting that they were at the VP of marketing level and they found better opportunities in the U.S.
Motivating people in a tough economy
Marketing: You've talked about how, for many companies, it's been two and a half years with no increases. Say you are advising managers, how do you keep and motivate people in that environment?
Kingston: We're talking about retention and getting them to act on that. Coaching has become a much more valuable tool that we're providing to clients as well. So helping them now keep their best people seems to be a really good strategy. They know people are upset that they haven't had raises for a while, so what else can they give them? Training as far as supervision skills. Really just career aspiration, helping people figure out how they can grow, and help them with that through education, etc. So that's another benefit and it's not very expensive for a company to provide.
Gates: Another thing we're seeing is that when a company has employees who leave, can they at least get permission to redistribute the wages and not hire? So they keep payroll flat but spread it over fewer people.
Marketing: So there's really no saving when someone leaves, or the company saves just some of it?
Gates: That's one situation I've seen several times. They'll go to New York and say "All right, I need to give this to keep my people." Because they're always in the situation that if they lose them, they're going to have to pay more to replace them.
MacArthur: I'm seeing a tremendous amount of activity where people are moving laterally financially.
Marketing: That's a new thing?
MacArthur: Much more so in the last few years. Previously people wouldn't make a move unless they saw themselves moving forward (financially). Now they're looking for other things: new challenges, proximity to work, quality of life issues.
Chad: What do they do when they are living in Oakville and their company moves out to Scarborough or vice versa?
Kingston: And the reality is the bigger salaries aren't there so now they've changed their priorities.
Gates: And their phone's not ringing six times a month with new opportunities.
Marketing: Are there people walking away from employment, period, saying "I've had enough of the frustration of extra work and no additional pay?"
Chad: Those people usually have some issues because you shouldn't do that in this market if you have responsibility to family. You have to be able to afford to walk away from something. So there are some people who have high stress levels who are.
Kingston: But that would be the case anytime. Nothing's changed.
Chad: There is room for advancement. It's just you have to be more patient.
Kingston: People are moving. And they'll move from Toronto to Ottawa or Halifax for lifestyle as well. And they're prepared to take some cut in salary to do that if there's a better life there, potentially, for their family. So people have changed their priorities.
Managing your own career
Marketing: How do employees improve their situation in this environment? How would you recommend that they get in their bosses' faces in order to get an increase without having to move?
Chad: Work hard.
Kingston: Work hard. Make sure you're being evaluated. And go above and beyond.
MacArthur: You have to start marketing yourself internally.
Chad: And get along with people. Be a team player.
Teitelbaum: But also make the request for more money. A lot of people expect that because they're working hard, they're going to be rewarded. But until they actually say "give it to me..."
Gates: And get mid-year reviews. When you wait for the end of the year and you find out there are issues, it's too late. So you've got to get your check up: "OK, how am I doing? Do you see me hitting the goals I agreed to last year? If not, what am I doing?" You've got to check in so that at the end of the year there's no surprises because of your perception of your own performance and their perception of your performance.
MacArthur: In other words, manage your own career.
Kingston: And I would suggest to a lot of people as well, just to go out and explore the market a little bit too. If a recruiter calls them, don't just say "no" right away (much laughter). You go out, get your network built up. Meet some new people and see what else is out there. Because there are opportunities to be had for good people always.
Chad: And lastly, blackmailing your boss.
Gates: That networking thing is worth mentioning more. Whether people are in associations or whatever. Only building your network when you loose your job is just such the wrong time. A network is something you've always got to be building.
Marketing: You hear people say, "Well, I'm too busy working to network."
Kingston: You should make some time to do that.
Chad: You've got to set your priorities.
Marketing: So by networking you mean it's going to industry functions, it's joining associations?
Chad: Exactly. For example, Stan, how many years have you been with this organization (laughter)?
You don't have time to get out. You have to make time.
I know that won't be quoted (laughter).
Gates: It's just simple things. Keeping in touch with old bosses and former co-workers.
Chad: You talk to somebody and they don't have a reference because they don't know where their boss from three years ago is. It's incredible.
Gates: It's just staying in touch. When somebody loses their job and you find out where they got their next job, it's usually, more often than not, through some networking.
Chad: One other strong piece of advice is: Do your best not to leave your current company on bad terms. So if you leave and something didn't go great, try and fix it over time. Go for lunch with your ex-boss three months later and say, "Hey, I want some advice." So that two years later, when he or she gets a call to reference-point you, they might say, "Well, it wasn't all his fault." Whereas, if you leave it on bad terms, it just has such negative implications. And that's all part of the networking and dealing with things. Stuff happens for a reason. Sometime your boss may not be 100% fair with you, but they've got pressures on them that they can't really tell you about at the time. It's playing proper politics.
MacArthur: I had kind of an interesting eye-opener from a young candidate earlier this year when there was a plethora of newly minted MBAs and one-year-out MBAs that were out there looking for opportunities. They were all, "Woe is me, I was expecting to make all kinds of money and I can't even get a job."
I had a young guy who came in to see me and he absolutely blew me away. He was so creative in his job approach. He came to see me not to help him find a job; he came to see me for advice on which job to accept. He was so clever in his approach. He'd really researched unglamorous businesses, where he felt he could add a lot more value and nobody else was looking at them. And he went out to companies that made switches, all kinds of fairly industrial-type companies that most people wouldn't think to look at. And he was getting huge opportunities within these companies that were going to help his career.
Chad: The only challenge with that is he's got to be careful if he makes that kind of move to go somewhere where he can actually market that experience three to five years down the road.
That actually brings up a different point that is probably a different article. Business schools have, I think, really pushed the envelope too far. They're charging way too much money to students to go to school. Even Schulich, which I don't perceive as top, top tier, they're charging $12,000 a year. And then they're not placing anybody when they come out. So how do you rationalize that? Sorry, I'm off topic.
The hot employment categories
Marketing: What do you see as those hidden gems of segments where there are good marketing jobs that might not be so obvious, or where there's growth?
Teitelbaum: That's really hard to say. Direct marketing, as an example, was the growth category for a large number of years that basically hit a wall two years ago.
Sales promotion seems to have come on in the last few years.
Health care seems to be about the only sector that seems to be consistently growing.
Gates: Except that it's merging and consolidating.
Teitelbaum: Right. It's so hard to say. I wish we knew.
Chad: Remember interactive was hot, hot, hot. And now it's just starting to maybe pick up a little bit again.
MacArthur: Health care. Education. I'm seeing a lot of activity in private schools.
Gates: Government.
MacArthur: Yeah, government. Still anything in and around the housing market.
Kingston: I would also add media. Media companies are reinventing themselves. Traditional media, there's a role for it. But there's new media companies that are emerging and they're looking for new types of people, different strategic expertise and creative media people.
Marketing: Maybe this is giving away secrets, but are there companies people are dying to work for? Companies you find it hardest to lure people away from? Where are the gems? If you want a fulfilling career in marketing and to be paid well too, where do you want to be?
Gates: Well there's two categories. There's companies that are perceived as "sexy." Those might be beer, entertainment, Nike, whatever. But not all of those are the best ones to build your career at. The ones to build your career at are still the classic packaged goods firms and multinational ad agencies.
Chad: And those are becoming fewer and fewer. They're either merging or purging or moving their strategic decisions down to the States. So there's less of those slots unfortunately.
Gates: Yeah.
Kingston: But those are still the best places to build your resume.
Teitelbaum: I think it's sad to say that there are very few places that are "have to have"-places that are really gems. The list gets smaller and smaller every year.
Gates: Classic packaged goods especially. If you are in the direct marketing field, then working for a major bank or a telco is where you need to build your career. And the big multinationals are still a good place to start your career on the agency side. As people get into the agency business, they then want to migrate to the boutiques or the newer shops.
Chad: They have to establish themselves first.
Gates: The people that want to get into the "sexy" things early in their career, the entertainment or sports companies, don't usually get the training and the base to make them marketable even five and 10 years out that they do by going to a classic company.
Chad: Because they don't have the classic training, they don't have as many skills and hence they're not as flexible. At the same time, if you maybe stay too long in too traditional a place and then you want to do something off the beaten track, you may have trouble adapting. So there's a kind of a fine line. You want to not just look at what you're going to get currently, you have to ask yourself "Where do I want to be five, 10 years down the road, and what's the best way to get there?" And it may be a combination of routes; there's different ways to get there. But sometimes people have their blinders on.
The coming big bang: baby boomers will retire
Marketing: To wrap here, it does seem like you guys are fairly positive for the coming year. Let's go around the table and get any final thoughts.
Teitelbaum: I think there's going to be a dramatic event happening over the next 12 to 24 to 36 months. The dramatic event is that boomers will start to retire. We all know this. And we're not really bringing in as many immigrants as we have in previous years. The amount of work will continue to grow, but the amount of workers will not. Thus, there will be a bigger and bigger impact on salaries, which is nice to see considering the flatness we've seen over the last three or four years.
Kingston: And I think if the U.S. economy does improve&&150;we've been waiting for that and we are seeing signs of it now&&150;two years from now our economy will be way better.
Chad: I hope it happens before two years, but I haven't seen overt signs that the U.S. economy is turning around dramatically over the next six to 12 months. I hope it is.
Kingston: There are small signs it's going in the right direction but very, very slowly. It's the slowest recovery in history.
MacArthur: It usually takes half a year to two years for the market to get back up again, but the next 10 years are going to be very strong largely because of the baby boomers. I mean, you've got 70% of your work force that's going to be retiring in that time and only 25% that's going to be coming in to refill that. So you may have a big, big void there, which as you say Harry, is going to drive up salaries. It's going to be a boom time to be a recruiter for sure.
Marketing: But you guys will all be retired (laughter).
MacArthur: We're much younger than we look.
Gates: From our perspective clearly the worst is over. It's just a matter of how quick the recovery is. I mean without some of the unforeseen events we've had this year, I would have thought we'd be in a better place than we are now. So I think the next 12 months will be a gradual build and business will be better for everyone.

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