At agencies, furloughs are the new layoffs

As agencies look for ways to survive amid the economic downturn and uncertainty ahead due to the coronavirus, they are now among the companies currently exploring whether to layoff or furlough employees.Furloughs can be a little more attractive for agencies, as it allows them to retain staff while reducing overhead and save cash. With agencies…

At agencies, furloughs are the new layoffs

As agencies look for ways to survive amid the economic downturn and uncertainty ahead due to the coronavirus, they are now among the companies currently exploring whether to layoff or furlough employees.Furloughs can be a little more attractive for agencies, as it allows them to retain staff while reducing overhead and save cash. With agencies being a people business, keeping talent on staff while mitigating balance sheet risk is much more attractive than losing that talent altogether with a layoff.

“A lot of clients are postponing projects, not canceling them, so furloughs help agencies navigate this fallow period whilst also setting everyone up for work again on the other side of this,” said one agency CEO who requested anonymity. “Agencies imagine that they’ll need those employees again when this is all over.”

There is no one-size-fits-all. The definition of a furlough varies by state, as labor laws are different from California to New York to Washington and so forth, but generally a furlough is a leave of absence of some kind. For some, a furlough could mean their agency has asked them to use their paid leave now. For others, it could be that they’re on unpaid leave but they’re able to retain medical benefits.

How agencies employ a furlough will differ based on the agency and state laws but industry experts say that with a furlough it’s likely agencies are more optimistic about the ability to have that employee return to full-time work in the near future. One agency exec shared that he’s been in conversation with other agency heads who are exploring the possibility of staff furloughs for that very reason. 

“Agencies are trying to be as people first as they possibly can,” said Nancy Hill, founder of Media Sherpas and former 4A’s president. “We already had a war for talent going on before all this started. The last thing you want to do is lose really good people that you recruited and to never be able to get them back. You want to do everything you can to retain that top talent during this crisis.”

To deal with the tough months ahead, agencies are exploring all their options including asking employees to take paid time off now or to do shortened workweeks (i.e. a four-day work week and 80% of their salary). With paid time off in particular, agencies exploring that
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