MOVING ON FROM 'WARM BODY' HIRES: In the glamourous world of advertising, few agencies saw the need to have a human resources function in place - that is until very recently

Although economies are slowing, top people remain a rare find, especially in China where a booming economy has kept the job market bullish. Richard Lord reports. For advertising agencies, human resource management is generally something that their clients do. In the dynamic, fast-paced, glamorous world of advertising, why would agencies need a formal department to recruit people, and to persuade them to stay? To get an answer, you need only look at the staff churn rate of the majority of Asian agencies. Staff don't stick around long, particularly in the larger markets, where there's room to move and high expectations. The softening economy and the downturn in the dotcom sector may mean that the talent pool is a bit fuller than it was a year or so ago, but it still isn't easy. Agencies will all tell you that they want the best staff working for them, but in order to get them, and to keep them, they need to do something about it. Agencies are increasingly adding a formal HR function, but its role still varies widely. In some, it is little more than a small administrative unit, while in others it's a pro-active department, putting together staff retention programmes and actively assisting with recruitment. Leo Burnett has a centralised, strategic HR department, under regional human resources director Nadia Pan. "We're in the minority," she says. "I don't think a lot of agencies have proper HR functions. We probably used to pay more attention to the front line of the business, and less to the support side. I was hired three years ago because we needed to pay more attention to people management issues." In February 2001, Grey hired Martha Collard, who has a financial HR background, as its regional human resources director. She inherited an HR culture, which could be described as either flexible or disorganised, and is currently trying to put processes in place to make it run more smoothly. "We're having to do things in a methodical way, which is unusual in this industry," she says. "Grey is very decentralised. Unlike Ogilvy or Burnett, local management in Grey has been allowed to manage locally. That can be very successful, but you need to have consistency, particularly when you're doing things like job swap programmes - you need to know that an account manager in one country does the same thing as an account manager in another. "Unfortunately, in Grey, training is not the highest priority - it's perceived as being a high priority, but really it depends very much on the country." Lavina Mehta, Saatchi & Saatchi's human interest director, Asia and Africa, also arrived in February 2001, from Andersen Consulting, now Accenture. Like Collard, she found the advertising industry a contrast from her previous employers. "I'd been in an environment where HR is the norm," she says. "In a lot of agencies, the finance director has some control over HR, and looks at it with a financial hat on." Saatchis has long had a well-developed HR function, and now has a global human resources director. "By giving it so much importance, it shows how highly we regard it," says Mehta. At TBWA, the HR function is mainly administrative. In Hong Kong, for example, local managing director Neil Ducray hires senior staff himself, and dedicates a lot of his own time to it. He claims that 70 per cent of senior people who join the agency are enticed there, rather than them approaching the company - that was partly a function of TBWA's weak position until recently. He's critical of agencies that aren't sufficiently rigorous in recruitment, something that's particularly a problem in Hong Kong: "Part of the cultural inheritance of Hong Kong advertising is warm body syndrome - you meet someone for 20 minutes, make sure they don't have five arms and give them a job," he says. Certain Asian markets are far more prone to staff movement than others, in particular Hong Kong, where the constant people flux reached epic proportions a year or so ago, and is still pretty pronounced. Ducray puts the churn rate for the last year at 30 per cent, and claims that around 70 per cent of the industry has deserted agencies over the last three years, with client jobs being a popular choice. "It's about lifestyle," he says. "Agencies make their money by paying their staff for a nine-hour day, but billing and making them work a 12-hour day." Burnett's Pan agrees that Hong Kong is the Asian market where staff have the least loyalty. "Hong Kong people are used to faster career tracks. Every one to two years they want to review their careers and make sure they're on track. The way the economic situation was here for so long means that they expect to move quickly, and if they don't move at the speed that they want, they'll go somewhere else." Across Asia, the weakening economy means that there are less jobs around and more people to do them - people are keener to hang on to the job they have, and agency retrenchment means that there's a bigger pool of talent for those looking to hire. Also, one of the biggest drainers of talent from the ad industry was the internet sector, but with dotcoms falling by the wayside, there are suddenly a lot of people anxious to get back into the an area of the marketing industry with greater job security. So recruitment and retention ought to be easier. "The changes in the economy have definitely helped general staff turnover and retention," says Pan. "They've also made it even more important to keep key talent." "It's only been easier in the last six months," says Miles Young, regional chairman of Ogilvy & Mather. "I would say the laws of supply and demand are a major factor. We have been through a number of recent cycles: in 1997 to 1999, it was a difficult business climate and it was easy to recruit and retain; in 1999 to 2001, it was a good business climate and it was difficult to recruit and retain; now, from 2001 on, it looks easy again." Saatchis' Mehta is sceptical. "It's not really easier to find people," she says. "The target individuals that we want are the same. More supply doesn't necessarily mean more good people." The exception to the rule, as ever, is China. Amid the regional slowdown, China is still booming, and so the recruitment problems there are those more characteristic of a bull market: a small labour pool and frequent job moves, with the inevitable result of wage inflation. "In China, because the business grows so quickly, and our competitors are also growing fast, it means that we are always looking for more people, but the talent pool is still relatively small, so people get poached easily," says Pan. "The issue is that there's a lot of demand and not enough supply, and so companies are willing to buy talent quickly, which causes a spiral effect on salaries. It can also upset existing staff and they can leave. It's the same situation as in Hong Kong a few years ago." Agencies have a whole range of weapons at their disposal when it comes to retention. The problem is that all of them cost time and money, and it's easy for them to slip down a company's agenda - winning and keeping business is always going to seem more urgent than keeping staff happy. Here agencies with a formalised HR function may have an advantage, because they have people specifically focused on people management issues. Training has traditionally been pretty haphazard in the majority of agencies. Partly this may be to do with lazy assumptions about face and the difficulty of telling people how to do things in Asia, but mainly it's just to do with being lazy. Most agencies, at least until recently, simply didn't have the structures and processes in place to train their people properly. Even when they did offer training, as TBWA's Ducray points out, often it wasn't the right sort of training. "Anyone you talk to will say that their staff are their most precious resource," he says. "But training is perfunctory, and it's always what they want to teach you - the agency's philosphy, rather than negotiation, client management or staff management skills. Most agencies are only just catching on to training as a retention tool. There's a complete phobia about training people on how to manage staff." O&M has been known for its commitment to training since the days of its founder. In Asia, the agency has always had training and development staff, both regionally and locally. O&M'sYoung says training is still the best retention weapon in the agency's armoury. "For retention, training is the critical issue, but not just quality of training - quantity is critical," he says. "Job swaps are not a good means of retention in my experience; they are best directed at development - developing those people who are inherently loyal, not as a remedy for disaffection." Keeping staff happy with training, job swaps, incentives and so on may be expensive, but losing people is even more costly. "The cost of replacing a senior person is a minimum 150 per cent of their annual salary," says Grey's Collard. "Including recruiter fees, downtime, loss of moral and productivity while the successor learns the job, it can be 200 per cent." Collard adds that intangible issues of company culture are more important in staff retention than anything the company pro-actively does to keep them happy: "We're finding out that people stay with Grey because they like the people," she says. "The average senior manager has been with the company for 20 years, and nearly every Asia-Pacific managing director has been there for more than eight years. Keeping the same manager is the main thing to keep people. Money and training aren't so important." Grey's staff turnover varies between 15 and 50 per cent around Asia. Collard says that losing a certain number of people is simply par for the course in the business. "At the junior level, we do expect churn and burn. People don't know what they want to do when they grow up, and they will leave." The danger is that agencies, constantly on the lookout for new talent, become insular in their recruitment. If they get their new staff solely by poaching from their direct rivals, that will inevitably lead to a stagnant labour pool and wage inflation, with the same people doing the same jobs for more money. So there's a need to look outside the industry, which is given extra weight by the increasing importance of non-advertising services - be they direct marketing, brand consultancy, interactive or whatever - to most networks. Now more than ever, agencies are forced to widen their net when they're trying to recruit middle and senior staff. "We're trying to broaden our business, so our range of competitors is potentially huge, which means we have to be a bit more innovative to attract people to work for us," says Burnett's Pan. "We can go to the brand consultancies, interactive agencies, media owners, and even the client side. We're looking for people who have experience in running a business, and some advertising knowledge." Good HR is a virtuous circle. Getting the right people creates an environment people want to work in, and ultimately, a good working culture is more important than any conscious recruitment or retention initiatives an agency puts in place. "It's not the programme you have that makes it work," as Saatchi's Mehta notes. "What really makes it work is the people within the company." That doesn't mean agencies shouldn't load the dice in their favour by putting recruitment and retention programmes in place. But, like any company, if agencies want respect and loyalty from their staff, they need to give respect and loyalty to their staff.

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