Just before the 2008 financial crash, we lost our CEO.
Murray Chick was a planner, Gordon and I were creatives, none of us were account handlers, so we needed a new CEO fast.
When the crash happened we had a lot of employee’s jobs to protect.
So we quickly merged with another company who had a CEO.
We saved everyone’s jobs but if we’d had more time to think we’d have realised it wasn’t a good fit, because we didn’t think the same way.
For instance: we had a new-business director who was paid according to how many days a week he worked.
If he worked one day a week he got £20k a year, 2 days per week £40k a year, and so on.
We employed him for 3 days a week, so he got £60k a year.
He was one of the best new business directors we’d ever had.
We’d previously had new business directors that got us in to see lots of clients, but it was usually just wasted time.
The people we got to see weren’t senior enough to decide anything, but they enjoyed looking through ad agencies’ creative work.
And if these people aren’t looking for a new agency, that just wastes everyone’s time.
The great thing about our new business director was he knew which meetings to get us into.
He would spend his time making contacts so that he knew which clients were actuallythinking of changing agencies.
Then he would get us included on that list, so we weren’t wasting time presenting to people who were just window shopping.
He got us on serious pitch lists, and we won two major clients in a year, and did great work on both accounts, so we were very happy with him.
But the CEO of the agency we merged with wasn’t happy at all.
He said to me, “This guy’s on £60k per year but he only works 3 days a week. I can get a secretary to do his job for £25k and she’ll work 5 days a week.”
I didn’t quite know what to say, we weren’t judging the new business director’s job on the same criteria.
I didn’t think it mattered how many days a week his bum occupied a chair in the office.
I thought we were paying him for new business, and on that metric he was good value.
I said “Look, we’ve had cheaper people who work 5 days a week and we end up with no new business at all, so that’s money wasted.
He costs more but he’s delivered two great pieces of business, so that’s £60k well spent.”
But the CEO wasn’t having it, he fired the guy on £60k and put a £25k secretary on it, and we never won another piece of new business.
As far as the CEO was concerned, he’d saved £35k; as far as I was concerned he was just wasting £25k.
Oscar Wilde said of someone, “He knows the price of everything and the value of nothing.”
So the management question is, should you consider price or value?
The price of the new business guy was £60k, but the value was two great accounts.
The price of the secretary was £25k, but the value was zero.
Mike Gold once said to me, “The only equation is: is what you get worth what it costs?”
I think Goldie was right, that’s what it always comes down to.
We work in advertising, we should know how it works.
As John Ruskin said: “There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey.”