Churn baby churn: is high staff turnover hurting the industry?

Under pressure

Ideas don’t come from factories, and ads aren’t made in a day, yet when Marsden Inch partner Robert Roydhouse recalls a story from a creative, you could be fooled. The team was brainstorming at an agency when someone from accounts knocked on the door to say it was time to go back their desks. There was no more time, and no more money to support the creative process.

The global financial crisis pushed a lot of people out of the industry Roydhouse says, and the pressure was on. Where internal decisions in an agency were once made by an “advertising person”, now CFOs and finance people are making decisions and clients are putting on more pressure. Jeneal Rohrback, another Marsden Inch partner says that’s “deadly to a creative”.

“I think it’s [that]people are maybe not fed up but they are smarter,” Rohrback says. “They go, ‘I didn’t buy into this and I know who I am and I know what I want to do’ and they are making better choices.”

The kind of pressure creatives can be under was brought to light in Young & Shand’s ‘Creative day off’ campaign for Semi-Permanent last year. It features creatives toiling away in Auckland offices well into the night with weary faces and heads in hands.

Creative director Tim Wood says it wanted a unique way to demonstrate the problem to creatives. He says there’s an understanding in the industry that late nights and weekends are going to be required and sometimes creatives put pressure on themselves to put more hours in than they are supposed to.

“Creatives work pretty hard and when you work hard as a creative it’s not the best situation and it’s kind of counterproductive to a creative to do that. It was drawing that to life and reminding creatives you should take a break.”

Even if long hours are an understood characteristic of the industry, OMD managing partner Andrew Reinholds has also seen people question what they signed up for. “Clients want all these things and agencies are asking ‘well that’s great, but how do you expect us to deliver that?’.”

He describes it as “absolutely insane” and doesn’t feel it’s sustainable. Things are being turned around in shorter and shorter spaces of time, but the expectation for work to be smarter, more strategic and more innovative remains.

“I think at the moment everyone is hanging on for dear life, but it’s rapid and it’s only going to get faster.”

Reinholds says this time last year, everyone was saying it’s increased and now looking at where it’s going to be in a year’s time people are thinking: “Jesus that’s been a bit of a challenge for us, how do we make that work?”.

“You talk to anyone in the industry at the moment and you go ‘hey how’s it going?’ and everyone goes ‘fucking hell’,” he says.

Employment turnover in the industry is at 30 percent according to Nielsen. It’s listed under professional, scientific and technical service and sits below retail trade (40 percent) and accommodation and food services (49 percent). 

Developing a culture

Human nature goes a long way Rohrback says, and people lose sight of it when budget, time and clients get tough, and simple things, like acknowledgements for people doing a good job, aren’t being said.

Creatives need to be nurtured, she says “because at the end of the day they produce your product”.

Roydhouse says most employers have recognised the issues and are taking steps to create a balance and people who have to work 70 hours one week are able to take a day off the next.

“I think the people who are running a lot of agencies now are in their late 40s and they are generally family people themselves. They have a bit more of an understanding of the needs and wants of their staff, so it’s not all totally negative.”

At FCB, chief strategist strategist David Thomason credits the management for helping to foster culture in the agency.

Vice chairman FCB Global Brian Crawford told him: “’There’s this fallacy that you can’t build culture”. It’s an interesting point Thomason says, “because you can’t 100 percent but you can do a lot to make it a lot stronger”.

Working to build a strong internal culture is what Thomason says has helped FCB achieve a churn “better than the industry average”, but wouldn’t go as far as saying that he’s found a cure.

One of the things FCB does is respond to any issues raised by the staff in the Kenexa employee engagement survey.

The agency has been a finalist of the IBM Kenexa Best Workplace for five of the last six years, but Thomason says it’s not about winning the award; the point is there is a richness of anonymous feedback from staff the agency can then act on. 

“We go through it with a fine tooth comb and go ‘ok’ some of these things we can only change a little bit but other things you go ‘wow’ and we make sure people know we have listened.”

Another important place of investment is in FCB’s training. One of its creative objectives is to “create good people and find good people, keep good people and help train and improve good people and give them every opportunity to do the best they can,” Thomason says, so there is a lot of internal training.

Recently, the agency has seen all staff take a two-day digital course and every Monday morning at the agency “gathering” people are expected to present their work in a way that will inspire and inform the rest of the team.

“If you can progress in your career within one organisation, and that is one main reason for moving to another one, you don’t actually have to leave.”

OMD has also placed importance on training as part of its culture, and is experiencing reduced churn. In the last year, the rate has dropped to 15 percent, and Reinholds believes it is doing a good job at not losing people to other agencies.

“We are hoping they say: ‘okay I could take the money now, but this organisation is developing me as a person, they are growing me, they are giving me opportunities to learn more so I will become more valuable’.”

He says a culture is “more than just having fun”, it includes its 12-month training programme at every level of the business from juniors to seniors.

Greener grass

Despite agencies’ best efforts, Rohrback and Roydhouse say they’ve had quite a lot of people in the last 12 months come in and say: “‘I’m not enjoying the culture, I’m being held back career-wise, I’m not enjoying this, that and the other’.”

That search for a new culture is a greater motivator than money when it comes to changing jobs in the industry they say. Going back 10 years ago, people could change jobs and get a substantial increase in salary, around 15 to 20 percent. However, now Marsden Inch is placing people in jobs for the same or sometimes even less.

“We’ve met people who have gone ‘I don’t care, bugger this, here’s how much money I can actually live on’ and it could be a third less, or a half and they’ve worked out that they would much rather work somewhere else, supposedly better, less pressure for less money.”

For some, new opportunities lie on the client side because when the GFC hit, some advertising functions moved in-house and new roles for agency people opened up.

While 3rdeye director Andy Sive doesn’t see a change in the work hours and expectations of people in agencies, he says client side is attractive for holding career opportunities and it “just so happens” they might get paid 10 or 15 percent more.

Movements like that, he says, have been around for decades. He says it’s always been the case that someone in a direct marketing role in an ad agency can go to a marketing role in client side, like in a bank or service industry, and people in retail can work in retail agencies and then move to the marketing department.

On the agency side, when the GFC hit contract work became an industry norm. In the last five years, as agencies have started to hire again, Roydhouse says it can be on a three-month basis or just for a particular project. It’s a model he says works well for both the employers and employees.

For employers, it gets around head count freezes and employment costs, like ACC and having to provide holidays, while employees get flexibility and the ability to work flat-out for three months and then have some time off.

The cycle

Despite culture being named as a key reason for people to move jobs, Reinholds says money is still an influence as people are asking for more than they are worth.  

When there are skills in demand and agencies are willing to pay for those skills, people start asking for an extra 25 or 30 thousand more they are worth, which can inflate the entire market.

He says profit margins get stretched and when an agency is already not being paid much by clients, it means there is little room to grow a salary base and less to invest back into the business.

Not only are teams getting smaller, he says lower salaries don’t attract the best and it becomes a cycle.

When people do leave, Reinholds says a deep breath needs to be taken and thought put into what was being done with the salary. “Is it a straight replacement or is there an opportunity to take that salary and go ‘ok do we need someone who has different skills’?”


When there is any change to personnel, particularly unplanned change, it can be disruptive to work flow and agencies’ relationships.

ANZA chief executive Lindsay Mouat says when new people start on an account it takes time for them to get up to speed and build an inherent understanding of the strategy.

He says clients don’t welcome unplanned change and if it is senior level it can put the whole client/agency relationship at risk.

Not only does the agency lose the brand insight, there can also be a transfer of knowledge about the brand to another agency.

However, there is opportunity for the change to have positive outcomes if it is planned, Mouat says. If change happened through succession, he says clients welcome the fresh ideas.

At FCB, Thomason says people will move around to work with different clients for the sake of everyone furthering their career and gaining experience—something, he says, clients also benefit from.

At the same time though, there is a respect for longevity and commitment. He recalls Dennis George who worked for a client for 30 years, “an industry record for stability”, Thomason says. Now, after his retirement he comes in to present the ‘Dennis George Award’.

New talent

That award, Thomason says has gone to younger members of the team since George retired, a commendable effort considering those newer to the industry are contributors to the churn.

Rohrback works at the Media Design School and says students would like to go into an agency and stick it out for quite a while but it often doesn’t work out that way. She says five years ago, the average time with an agency was maybe four years, now it has shorted to two years and that is still acceptable.

In Reinholds’ experience, there is a band of 25- to 28-year-olds going on their OE and “that’s just life”. Rather than compete with the world he says OMD focuses on trying to make sure their experience with the agency is so good, they will return.

Thomason shares a similar attitude toward people leaving to have life experiences and those who return to the agency are celebrated. He refers to them as “boomerangs” and they are given a themed t-shirt to prove it. In the last six months, eight t-shirts have been handed out.

Despite the celebrated returns, Sive says some people view going back to the same agency as “going backwards”. He too has seen a change in the talent pool and sees millennials staying in a role for no more than two-years. He says it will be interesting to see what happens when they work their way up to senior management positions at the age of 40 to 45.

While up until now people have looked for loyalty in a CV, Sive says future managers will be looking at someone who has been in a role for seven years and think ‘why have they stayed so long?’. He says millennials think a lot more about themselves and follow a path according to what they want to achieve, and that will influence management style and work.

“It’s not going to be the same as now,” Sive says. “I don’t know what it’s going to be but I can guarantee you it won’t be the same type of management style we see now as a democratic, open door type of style, it’s going to change, I don’t know what to.”

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