Publicis ends salary sacrifice for UK executives earlier than expected

Temporary pay cuts of 20%, 15% or 10% began in April.

Publicis: has reopened White City office
Publicis: has reopened White City office

Publicis Groupe has ended salary sacrifice for its senior UK agency leaders after five months – one month earlier than planned.

UK executives took temporary pay cuts of 20%, 15% or 10%, depending on seniority, in April, as part of a group-wide initiative that was set to last six months.

It is understood that Publicis Groupe, the owner of agencies including Leo Burnett, Saatchi & Saatchi, Starcom and Zenith, told executives in the UK only in recent days that the salary reductions have been stopped.

The return to full pay is set to kick in from roughly the end of August, instead of the end of September, as previously expected.

Arthur Sadoun, global chief executive of Publicis Groupe, ordered savings across the group in April when much of the global economy went into coronavirus lockdown and revenues slumped.

Sadoun took a 30% pay reduction himself for the six-month period from April until the end of September. Other global executives took 20% cuts.

He told Campaign in July that he did not dictate the scale of the salary reductions in each market and instead gave country managers the freedom to decide.

“This has been dealt with at a market level, not at Groupe level, with reductions varying in time and amount depending on the business and country situation,” he said. 

“And, similarly, the decision to lift the reductions will be taken locally by these same leaders. I trust them to do the right thing.”

In the case of the UK, where Annette King is the chief executive, leaders on the group’s executive committee (known as ComEx) volunteered to take a 20% salary cut.

Other senior leaders agreed to accept a 15% reduction and those who earned more than £100,000 were asked to give up 10% of salary.

Publicis Groupe is the world’s second-biggest agency group by headcount with about 80,000 employees and its decision to end salary sacrifice in the UK, where it employs about 5,000, will be seen as a positive sign.

Publicis Groupe declined to comment on when salary reductions might end in other markets.

WPP, its bigger rival, with about 100,000 employees, ended its salary sacrifice scheme globally after only three months in July.

About 3,000 WPP staff, or around 3%, were affected by those cuts. Publicis Groupe and other groups have not disclosed how many staff took pay reductions.

Both Publicis Groupe and WPP reported weak Q2 results globally, with declines of 13% and 15.1% in organic revenue, but the declines were better than some feared and ahead of most of their key competitors, including Dentsu, Havas and Omnicom.

Interpublic was the strongest performer of the big six agency groups but still recorded a slide in revenue of 9.9%.

All of the agency groups took a range of emergency measures to save money during the worst of the crisis. 

Publicis Groupe told investors at its Q2 results that its global personnel costs fell €61m (£55.6m) thanks to a mixture of “hiring freeze, pause in internal promotions, shorter work week or voluntary salary cuts”.

It is thought that the UK operation saved several million pounds by reducing salaries for higher earners over five months.

Publicis Groupe UK has expanded its relationship with several big clients, including BT and GSK, in recent months, despite Covid-19, and has reopened its two most important London offices in Chancery Lane and White City.