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2002 Was a Bonus Year for Grey Direct Employees

Bucking an agency world in retreat, Grey Direct gave bonuses to all 400 of its U.S. employees for their work on existing and new accounts in 2002.

Larry Kimmel, chairman/CEO of the Grey Global Group shop, personally handed checks and a commemorative T-shirt to every Grey Direct employee in New York, Chicago, San Francisco, Los Angeles and Atlanta.

“My attitude is that it's insane not to give your best performers bonuses as well as raises, because unless you do, you're going to lose your most talented people,” Kimmel said in New York. “I can say at the same time I don't promise everybody a job for life, but I do guarantee if you're driving client revenue growth and that's helping Grey Direct grow, you'll be rewarded.”

Only select employees won bonuses last year. The year-end bonuses are part of Grey Direct's Profit Pool program in which U.S. agency employees get a minimum equal share bonus depending on their tenure there every quarter. So employees vest every quarter.

The bonuses cap a year of gains for Grey Direct in the United States. The shop last year won accounts like Network Associates, Sun Microsystems, Xerox Corp., Panasonic and United Airlines' MileagePlus program, valued at $50 million to $60 million. It did not lose a single account last year.

Total billings from these new gains were not disclosed, nor was the U.S. agency's take for last year. But 2001 worldwide billings from 1,200 employees in 46 offices across 35 countries were $1.35 billion.

Other major Grey Direct clients include Oracle Corp., JP Morgan Chase & Co., BellSouth, GlaxoSmithKline, Nokia and Cendant Corp. The agency prints and mails more than 3 billion pieces a year for clients.

Kimmel said the agency's focus on return on investment shaped its profit-sharing philosophy.

“So every person we hire, every proprietary tool we build, every acquisition we consider, every partnership deal we engage in and every training program we conduct are singularly focused on ROI,” he said.

Grey Direct employees should consider themselves lucky. According to a December report in Advertising Age magazine, 50 percent of ad agencies are not giving bonuses for 2002. Bonuses that are given will be smaller than in 2001. About 23 percent of the agencies said they made selective salary cuts.

Ad Age also found that gross income will fall at 46 percent of the surveyed agencies in 2002. And 41 percent of agencies reduced headcount vs. 31 percent who said they increased headcount.

“We're still hiring,” Kimmel said. “We're hiring in Chicago, in San Francisco. There isn't an office in Grey Direct where we're not hiring. This year we've hired the most people in Chicago, New York and San Francisco to service our new accounts.”

Grey Direct hired about 100 people last year. It plans to increase U.S. agency headcount this year to 500. Positions are open in account management, creative, production, traffic, studio, database and strategic analytics.

“It's a buyer's market now, and for agencies that are hiring this is a wonderful moment in time to attract incredibly talented, motivated and dedicated people,” Kimmel said.

“Of course, there are a lot of people who know how to do direct response communications, meaning they put an 800 number or a business reply card on an ad,” he said. “That's not the kind of talent that we want. We want people who know and can prove they've increased client profits by direct marketing communications.”

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