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Advertising Expected to Suffer as CEOs Reject Widespread Redundancies

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According to an article in yesterday’s Business Daily Africa, Kenyan employers are looking to cut their marketing budgets rather than cut down on workforce numbers. They are apparently deterred by the costs of making employees redundant, and are therefore looking to other areas of their operations for opportunities to make savings.

The article cites the Kenya Institute of Management (KIM)  claim that “expenses for planning, legal fees and severance package” are so high that they make redundancies an unappealing option. It also makes the very good point that widespread layoffs demoralise remaining staff and erode a company’s knowledge base. Still, I am puzzled as to how a well-run company could afford to trim the fat anyway.

When times are good and the economy is doing well, some companies may be a little too laissez-faire with their recruiting practices. Every director suddenly needs two secretaries, there is an intern whose main duties seem to consist solely of taking lunch orders and counting paper clips, each department manager has a deputy manager who liases with the rest of the team. Things can get out of hand. Bearing in mind that labour is one of the biggest overheads a company will have, it makes more sense for companies to run on the minimum amount of people needed, rather than recruit for every specific task. See, if everyone in the company is an capable of adapting to a variety of roles, workforce numbers can be kept down.

Nobody likes getting the sack, and letting people go is no fun either. But it strikes me that a downturn is precisely the time when businesses should be increasing their advertising and marketing spend rather than cutting back. If you’ve been working up to building your public profile and increasing awareness of your brand while times are good, the worst thing you could do in a downturn is to allow attention to drift away. If you do, you will have to start from the beginning again when the economy picks up. It makes far more sense to maintain your profile so that you are not forgotten, so that it requires less effort to generate sales and income in a more amenable economic environment.

Naturally, not all businesses are suited to running a permanent skeleton crew, and some businesses could probably afford to cut their marketing spend to nothing without suffering any drastic ill-effects. But the idea that marketing is an activity that can easily be discarded is a drastic one, and one that could be gravely misguided.

[Image by JasonEPPink]


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