Edelman has decided to lay off 390 staffers and will be going for pay cuts as well for the rest of the employees. According to the internal communication by CEO Richard Edelman other than laid off employees, company will have to give 5-20% salary cuts in these very difficult circumstances.
CEO Richard Edelman in an internal communication has said: “We must make substantial changes to our business due to the economic impact of the pandemic. As a result, we are no longer able to sustain our business without layoffs, furloughs, reduced work weeks and additional compensation reductions of mostly senior people scaled by salary level. To maintain the financial security of our business, we will reduce our workforce by approximately 390 people, which is less than 7% of our global team, and will be asking for salary reductions from 5-20% scaled by employee compensation level.”
The “gut wrenching” decision goes against Edelman’s assurance in March that the agency will not be laying off people.
“We had done this successfully in the two previous recessions of 2001 and 2008, with only a temporary senior compensation reduction. 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,” the CEO further said.
Talking about the decision, Edelman said: “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.”