Salaries rising in shallow DM talent pool

It may not come as a huge surprise, but the fact is there's a shortage of good, experienced talent in the Canadian direct marketing industry. And, while that may be great news to those with DM experience on their CVs, the...

It may not come as a huge surprise, but the fact is there’s a shortage of good, experienced talent in the Canadian direct marketing industry. And, while that may be great news to those with DM experience on their CVs, the situation is causing major headaches for employers.

One only needs to talk to few direct marketing agency managers to get a sense of just how heated things have become. Tales of account executives and creative types with no more than a few years’ experience demanding – and getting – salaries that approach the six-figure level abound. It’s enough to make industry veterans cringe.

‘When I was going through this business,’ recounts Toronto-based Cohn & Wells managing partner Richard Bernstein, ‘it was accepted that you had to earn your stripes by working hard and gaining experience. If you did that, you’d move up. So, when you were sitting at a table with a client and were talking about a strategy, they’d trust and respect what you were saying because they knew the background you were bringing to the table.’

‘It takes a long time to learn the art and science of direct marketing,’ says Impiric president Trish Wheaton, ‘so given the longer learning timelines and a lack of places where people are getting trained, you see people moving around very quickly. I don’t think it serves people’s careers very well in the long run to be in a hyper-market that doesn’t give them the depth of experience they need in order to make a positive contribution.’

Even some executive recruiters – a.k.a. headhunters – acknowledge that things may be getting a little out of hand.

Terry Hammond, president of Toronto-based Terham Management Consultants, says the whole direct marketing industry has gone through a huge transition over the past several years as the growth in customer relationship management (CRM) principles have begun to take hold throughout corporate Canada. Add in other factors such as the trend toward client companies establishing in-house direct marketing departments, as well as the accelerating ‘brain drain’ to the U.S., and the industry is faced with a pretty tough situation, he says.

‘You’ve got this huge demand… and it’s put huge pressure on the agencies,’ he says. ‘They’re trying to backfill, but there’s not enough qualified people. The whole marketplace now, in terms of new media, direct and database marketing is hugely – and almost critically – in need of talented people, but there’s not enough of them.

‘Searches are now taking us longer and the pool of talent is smaller,’ he adds. ‘It’s frustrating both for ourselves, as recruiters, and our clients.’

It’s also making it tougher than ever for agencies to hang on to their best personnel (clients certainly aren’t immune, but the problem is more pronounced on the agency side). With headhunters calling their staff every day with promises of tantalizing compensation packages elsewhere, agencies have been pressured into devising employee retention strategies that were virtually unheard of even two or three years ago. Everything from in-house day care to paid sabbaticals, direct marketing specialists are being enticed with all kinds of incentives to exhibit the kind of loyalty to their employers that they work every day to get consumers to demonstrate.

So, what’s the problem? The economy is booming – for now, at least – and if a few people in the business are managing to score some sweet compensation deals by moving to a competing agency, say some, more power to them. The flip side of the equation, however, is that many people are moving into highly paid positions that they’re not properly equipped to handle.

One of the factors exacerbating the problem is that there’s been much more demand from clients in the last little while for agencies to include direct marketing elements in their bag of tricks. And while everyone’s happy to have the extra business, it also means that they have to go out and recruit more staff, especially the senior-level people that so many clients expect to have work on their accounts.

The other important issue to consider is the impact escalating salaries have on the cost structures of agencies, and the very real possibility that those increased costs will be passed on to clients. So far, for the most part, agency fees have been relatively stable, but some say it’s only a matter of time before fees start to creep upward. The irony is that clients could well end up paying a higher price for work that doesn’t stand up well to what they were getting in the past.

Of course, not everybody believes the situation is a huge problem. Rather, they say, it is merely an inevitable outcome of the good economic times we’ve all been enjoying for the last few years and that if there is a problem, it will work itself out in time.

Canadian Marketing Association (CMA) president and CEO John Gustavson is one such critic. ‘Gee, guys, it’s a competitive marketplace,’ he offers in response to the complaints he’s heard from agencies feeling the effects of the talent crunch. ‘You’re doing well, so the people who work for you are doing well. It’s part of the normal economic cycle that when you’re busy expanding and growing, talent becomes tight and it costs more money. That’s just the way of the world and you have to accept that as an economic reality in a competitive marketplace.’

Gustavson says that before agencies ‘whine’ about losing their employees after incurring the time and expense of training them, they should ‘turn to their own retention policies to see how they plan on keeping their young talent after they’ve trained them.’

When an employee leaves, he says, it’s an indication that ‘to some extent you haven’t convinced that young person that there’s a career path for them with your organization, or you haven’t advanced them quickly enough, or you’re not paying them market value.

‘If you want to keep your talent, pay them properly,’ he says. ‘It’s plain and simple – it’s a market economy.’

Next Month:

Training and education – restocking the pond