Edelman is cutting 390 people, which represents seven percent of its global staff, and ordering pay cuts from five to 20 percent to deal with the impact of the COVID-19 pandemic, Richard Edelman told a virtual town hall today.
He called the decision to cut staff "gut wrenching," especially in the light of his March statement that there would be no job losses due to the pandemic.
That pledge was based on Edelman's willingness to take the business down to zero profit, but he did not want to get into the red ink column.
Since the firm is now "beyond the threshold of loss-making," it must shed staff to ensure the long-term health of the business.
The CEO said the firm was on track in February to register two percent growth despite COVID-19 outbreaks in key Asian markets. It was operating on an 11 percent margin in March.
Currently, Edelman is operating at a slight net loss and is using cash reserves to offset slower receivables.
As COVID-19 spread in March, Edelman's travel, hospitality, automotive and auto business took hits. The ensuing collapse of the global energy business resulted in blows to the rest of the firm.
The firm must now part ways with talented and wonderful colleagues across the network, according to Edelman. "This is not a reflection on them, they are our partners and friends, and parting ways with them has been the most difficult decision in my 23 years leading this firm," he said.
Edelman's leaders will speak with each person targeted for lay-off as soon as possible.
In addition to severance, the firm will offer career transition services, employee assistance programming for six months, including emotional support, financial guidance and counseling; LinkedIn Learning and the firm's own learning curriculum for six months; and a $1000 credit for purchase of personal technology.
"For those of you leaving, I am profoundly and deeply sorry," said Edelman. "The thought of how this affects you and your loved ones has given me many sleepless nights."
As for the future, Edelman continues to have deep confidence in a strategy premised on earned reimagination and trust.
Given the profound challenges the world faces, Edelman believes there has never been a more important time for a PR firm that can help business fulfill its role in healing our society.