After three years of remote and hybrid working, CEOs want their employees back in the office at least a few days per week.
Omnicom CEO John Wren put a line in the sand in February, when he said on the company’s Q4 earnings call that employees would be back in the office at least three days per week by the end of the quarter.
On Thursday (April 13) he spoke with Campaign US ahead of Omnicom’s Q1 earnings call on April 18, where he will reveal those plans to the market.
They include getting employees back into the office at least three days per week; clearly defining who can qualify as a remote worker; downsizing office space by more than 35% globally to accommodate less in-person staff; launching satellite offices around commuter cities such as New York; and upgrading all offices with hybrid work technology as well as access to generative AI through a partnership with Microsoft.
According to Wren, the long-term objective is not to make employees come back into the office five days per week, although some are already doing so. He says Omnicom’s agencies know how to work flexibly now and he’s open to keeping that flexibility in place moving forward. Personally, he said he has enjoyed the freedom to walk his grandson to school every day, something that wouldn’t have been possible earlier in his career.
“People have gotten used to doing their work and having different types of flexibility,” he says. “I expect that is going to be the way of the future.”
Still, Wren believes that in a creative services business, it's important for people to work collaboratively.
“People get familiar with their colleagues and they get assignments and better assignments by being in contact with them, not just getting instructions in the morning about what product they need to deliver by the end of the day,” he said. “Culture has always been a very, very important part of every one of our single agencies. And I figured at a minimum, that’s going to require at least three days per week [in the office].”
The new work guidelines were created by Wren and his team at the Omnicom corporate level but will be executed by local leaders. Different regions will respond differently (in Asia and Europe, for instance, employees come to the office more frequently than in the U.S.) as will different disciplines.
“Pre-Covid, back-office people were there five days per week, whether they needed to be or not,” Wren says. “Client-facing people would often be out with clients – not in the office – but they’re working. You also have people with complicated problems that are best if they’re left alone to go and solve those problems one or two days per week.”
As part of the change, employees will have to qualify for remote work status on an individual basis. Those that don’t have many direct reports, or are very senior at the company or “are the Picassos of their field” are the kinds of situations where employees would qualify, Wren says.
“I’m not making those choices for the managers, but it’s intended to be incredibly flexible,” he adds.
To ease the transition in cities like New York, where commuting is not only difficult but expensive, Omnicom is opening up satellite offices in Nassau County, Long Island, Greenwich, CT, and Jersey City, NJ. Similar satellite offices will emerge around Chennai, Gurgaon and Hyderabad in India as its employee population rapidly grows in the country.
As a result, Omnicom’s real estate footprint will be reduced to accommodate 60% to 70% of staff on any given day of the week. “In some ways that’s going to make it difficult for people to come back five days per week,” Wren says.
While individual pushback is expected, Wren says it's time to move into the next phase post-pandemic – especially as people are moving on with their lives.
“I live on the Westside drive in The [West] Village [of Manhattan], and we have offices on Varick Street, a short walk away. I have passed, not big or high level execs, but employees that I know…hanging out, running to restaurants and doing things that have never gone into the office. This is a way to say Covid will be with us forever, but it's probably going to be more like having the flu, hopefully, and we can’t get much further away from the benefits of having that [in-person] interaction.”
But coordinating the shift for more than 70,000 employees across 70 countries is no easy task. AdAge reported this week that executives at Omnicom’s Chicago office were unhappy with how the real-estate consolidation in that city, which will require them to co-locate with other Omnicom agencies in a new building, was handled, citing a lack of communication and hasty decision making.
Wren says that Omnicom will allow a transitional period for employees to “re-familiarize themselves with the concept” of going into work. He is also encouraging local teams and offices to throw social gatherings to help younger employees meet each other.
“When you get down to the individual level, there are going to be people that resist change,” he says. “We are not checking your computer every morning to make sure you’re there three days a week just yet.”
He acknowledges, however, that the entry-level employees hired during the pandemic are often most resistant to come back to the office – but they are the ones who most need to be present for learning and career development opportunities.
“In many ways that isolation limits the careers of, I think, junior people,” he says.
He added that Omnicom will watch turnover carefully by location and intervene where necessary. The company is also gathering regional and practice area leaders for regular two hour meetings to discuss concerns and challenges and share ideas related to getting people to the office.
The future of Omnicom
Wren maintains that the office space reduction has nothing to do with a pullback in client spending or trouble in Omnicom’s business, but is “really because there is a new way to work.” He says Omnicom’s headcount has increased by 4,000 to 5,000 people since 2018, while its office space has shrunk by 35% since March.
However, it's no secret that clients in key sectors are undergoing mass-layoffs and paring back spending as the economy remains uncertain. Wren said Omnicom is stabilizing its business by entering into longer contracts with clients, which “gives a certain comfort,” he says.
“I don’t want to jinx myself, but I have more three-year contracts now than I’ve ever had before in my entire career,” he adds.
As agencies wait cautiously until the second half of the year to determine how 2023 will play out, Omnicom expects to stick with the guidance it issued in February of 3% to 5% growth on its Tuesday earnings call. Wren estimates that on average, Omnicom services its top 100 clients across 50 different crafts – up from about 12 20 years ago.
“The business was incredibly complex to begin with and clients are looking for simplicity,” he said. “We have gotten better, and better and better at collaborating with each other, working with each other but also recognizing that you don't have to lose the value of the brand to act as a team, so you can get the benefit of both having five fingers and also having a fist where you need it.”
After several years of disposing of assets that no longer fit its strategic growth plan, Wren believes Omnicom is “in a really good position.” But, he is “never satisfied” and is seeking acquisitions in key growth areas – precision marketing, PR and healthcare among them.
He also notes that the average age of an Omnicom employee is about 27 years old, and as people with natural technical skills are now starting to lead the organization, it positions it well for the future.
“A lot of people come with a base knowledge that older people have had to learn, but older people don't make up the mass demographic of who is servicing our clients,” he said.
As for his own future with the company, Wren, who is 70, did not share exactly when he plans on retiring, but noted he and the board don’t “spend more time on anything other than that, because at some point, that will happen.”
Daryl Simm’s promotion to president and chief operating officer in late 2021 makes it “his job to lose, basically, at this point,” he adds.
“Hopefully I will be still active enough to be chairman and available to make sure that I stay around as long as that person wants me to.”