Navigating the 'Cut Salaries or Cut Staff' Quandary

"Our industry was in turmoil," Corporate Ink, a Massachusetts-based PR firm specializing in fast-growing technology companies, wrote in their 2007 Winning Workplaces/Wall Street Journal Top Small Workplaces application. "2001-2004 were the worst in 20 years. Many PR firms cut staff by 50 percent or more."

Amy Bermar, founder and president of the company, chose a different path. "We kept everyone," their application continued.

The decision now sounds concise and rather simple, yet at the time it was anything but. "Amy pulled the entire team together around the conference table and gave us a choice: cut salaries or cut staff," remembers senior account supervisor Corinne Federici, who has been with Corporate Ink for seven years. "No one wanted to see one of their colleagues go."

"To this day I've never heard of anything like it – where a decision of that magnitude was placed in the hands of the employees," she adds.

It turned out to be the right decision – one in which Bermar used her experience navigating two previous industry downturns, in the early and mid 1990s, along with her devoted staff's input to make. She herself took a 30 percent pay cut.

"One thing that kept me going is that in both of the earlier two instances, we came out a significant step up in terms of quality, clients and the way we thought about PR," Bermar says. "So I knew that if we could survive it, and we were planning to survive it, there would be something good on the other end."

Concentrating on quality and quantity of media exposure for their clients and stepping up employee training to ensure client satisfaction paid dividends in the middle to end of the downturn cycle. The firm was able to retain clients – even after those clients had experienced many rounds of layoffs – farther into the downturn than many of their local competitors.

The eventual result was an increase in revenues by over 75 percent from 2004 to 2006. But as Bermar alludes to, the gains were substantially more evident when looking at retention, quality of talent and value that both remaining and new clients saw in their relationships with Corporate Ink. Lori Dustin, the CMO of HighRoads, Inc., a locally based manager of HR programs and suppliers to Fortune 500 companies, goes so far as to call Corporate Ink "an extension of our team."

Feedback like that reflects the company's emphasis on creating an open, trusting and nurturing environment – one that starts in the interview phase. Bermar says besides job-specific tests, such as writing tests, she uses the Predictive Index Survey as a psychometric indicator. When a candidate is midway through the process, she also likes to have them meet with employees who will be working directly with the new hire. "I ask them, 'Would this person have your back?'" Bermar says.

"I had several rounds of interviews with different staff members," says Nina Gill, who was hired last fall as a senior account executive. "The testing was thorough and my scores were actually presented to me, along with the team's assessment of how I fit into the agency, when I came on board. When I arrived at work on the first day, I felt at home, as I had already met most of the staff."

The open atmosphere and strong sense of trust continue to pervade the culture in the form of employee development. Whereas at many other PR firms, junior-level staff are typically confined to more menial tasks, such as answering phones, at Corporate Ink they are given increasing account management responsibility.

"I came to Corporate Ink as an assistant account executive, and in four years grew into a management position – responsible for running accounts, managing employees and growing the firm," says Federici. "That kind of career growth is a direct result of the exposure every employee here has to the business as a whole."

Indeed, all employees are briefed on what the company is doing to achieve desired business outcomes. This, in turn, improves their performance: it helps lower turnaround time for clients.

"We are empowered to think with all the information we need to make a good business decision," Gill says.

"One of the big beefs that companies often have about agencies is that they're so hierarchical that there are a lot of junior-level people on the account, but they're not very valuable because they don't know very much," Bermar adds. "What our clients hopefully end up feeling is that the whole team is pulling for them, and that they can speak with anyone on the team, talk with someone who's able to make a pretty well-reasoned recommendation to either go forward or not do something."

More happy clients, of course, fuels the need for more staff. The small firm has doubled in size over the last three years and Bermar expects that trend to continue.

She recognizes that both the tech and PR industries are "in the throws of seismic shifts" right now, but yet she expresses the confidence of a captain who has weathered worse sea changes that Corporate Ink will stay in the black ink.