Digital and design agencies ‘running on empty’

Annabelle Dickson Tuesday, December 27, 2011
12:30 PM

Digital and design agencies are increasingly being asked to work for free in the tough economic climate, according to a survey published today.

Design Industry Voices shows how small firms have suffered following the financial crisis, during the recession and the long, slow recovery.

Meanwhile an Institute for Public Policy Research think tank said the country’s “faltering” economic recovery was putting pressure on firms to cut costs and reduce staff.

A survey of 500 agency workers showed that most clients in the design and digital industries expected more work for less money, leading to fewer permanent staff and more unpaid interns.

Staff turnover had increased in recent years, with people working for digital and design agencies saying they were feeling the brunt of the “long, slow recovery” from recession.

A minority of those questioned said their agency helped employees deal with stress or rewarded them if they put in extra work.

Rachel Fairley, lead author of the research, said: “Digital and design agencies appear to be running on empty. Clients expect more work for less money to make up for budget cuts. Staff have disengaged - they are overworked, undervalued, and fed up of poor leadership.

“More of them than ever intend to change job within 12 months, with far reaching consequences in this uncertain economic climate.”

The report follows a warning by Revenue & Customs that fashion companies could be prosecuted for not paying their interns.

In a move welcomed by the deputy prime minister, Nick Clegg, HMRC said it had written to all 102 fashion houses involved with September’s London fashion week, warning them about non-payment of the minimum wage of £6.08 an hour for those aged 21 and over.

Kayte Lawton, Institute for Public Policy Research (IPPR) senior research fellow, said: “If an intern is doing work for a company, then they need to be paid. It’s as simple as that. Employers often mistakenly believe there is a grey area around internships in the national minimum wage legislation that allows them to take on unpaid interns as long as both sides understand it is a voluntary position - but this is simply not the case.”

The Design Industry Voices survey also found:

More than eight out of ten (85pc) say that clients expect more work for less money

More than seven out of ten (71pc) say clients expect more work in pitches for free

More than eight out of ten (82pc) say client budgets have been reduced

More than half say agencies are employing fewer permanent staff (58pc), using more freelancers (55pc) and more than two fifths are using more unpaid interns (43pc).

Design Industry Voices also shows that agencies are experiencing more staff turnover than ever, since the recession began in 2008:

More than half (58pc) of staff intend to change job in the next twelve months

More than a third (35pc) have been with their agency less than a year.

People working in digital and design agencies say they are feeling the brunt of the long, slow recovery. Fewer than one in five respondents consider that their agency is performing ‘very well’ in respect of ‘helps employees to manage stress’ (12pc), ‘rewards people for going the extra mile’ (15pc) and provides ‘appropriate workload for staffing levels’ (15pc).

Stef Brown, managing director of On Pointe Marketing, which was also involved in the survey, said: “Clients are increasingly nervous that the ‘A’ team pitched, but an unstable ‘B’ team are delivering. And feeling like you aren’t on the ‘A’ team is demotivating, giving employees another reason to consider leaving. Not only this, but producing creative work for free during pitches means agencies are giving away their most valuable commodity: their intellectual property. I can’t think of any other professional services business where this is tolerated, or even considered an option.”

6 comments

Hi Rachel, I don't think there is a misattribution here: the reference to the IPPR is that a separate report out at the same time talks about pressure on firms to cut costs.

Report this comment

Paul Hill

Wednesday, December 28, 2011
One of your own respondents hits the nail on the head: “In my area of graphics we are finding that a lot of clients are happy to try and do the work themselves and don’t really value what a designer brings to the table as much as they once did. Other than budgets I think this is mainly due to the availability of useable software, digital print that requires less knowledge for setting up files and availability of stock templates websites." The problem is that the balance of power between supplier and buyer has changed, because the buyer now has increasingly the power to do it himself in-house. This is the root cause of the problem you are documenting. You do not however seem to understand what is causing it. The so called digital design people no longer have a skill that others want to pay very much for, because its become universal. Like I say, if you don't know C++, start learning it now. The future of IT work is not getting a premium salary for being what is now averagely computer literate. The only secure future is in having real programming expertise. I use C++ as an example. But basically, you don't know C or Java, you have never heard of Eclipse, you don't know databases or real systems, or network management, or computer security at a serious level, if you are relying on your ability to produce pretty web pages using tools available to anyone.... you have no future in the business. Its the equivalent of standing on a street corner with a shovel, looking for work. The saddest thing is people who do not seem to realise how easy it is now for anyone to product a professional web site from a template, and keep desperately hand crafting their stuff. And mostly without even knowing CSS! And seriously expecting people to pay for their antique working practices!

Report this comment

Resident

Wednesday, December 28, 2011
This is the third year we've surveyed the Digital and Design Industry and it has been fascinating and disheartening writing the report. Read the full report (not by IPPR - it has been misattributed) for views from colleagues. There has to be a better way. http:www.designindustryvoices.com

Report this comment

Rachel Fairley

Tuesday, December 27, 2011
For years buyers have kidded themselves that you can haggle the price down and down to a fraction it was and still 100% of what they refuse to pay for. It's been called a generation that knows the price of everything and the value of nothing, but they actually don't know the price at all. Maybe buyers should ask themselves this simple question: "If you were paid half your wages, would you do all 100% of your work automatically?" Except many buyers are paid on the basis of how much they can chisel off the bill, so the question is never even asked. It's the inevitable consequence of power without responsibility, short-termism and the Arthur Daley School of Management ethos that characterises the UK.

Report this comment

Carl Bennett

Tuesday, December 27, 2011
All this non-productive rubbish should be prosecuted for not paying interns. It is tantamount to slave labour. How much do the bosses pay themselves ?

Report this comment

"V"

Tuesday, December 27, 2011
The problem is that the work is being de-skilled. Its getting easier and easier to do web design using standard off the shelf templates. The scope for creativity in what is basically a computer user activity is declining. Web design at the moment is at the level that business planning and accounts was just as spreadsheets were being introduced. That was, believe it or not, once an activity that needed programmers to do it. Shortly after spreadsheets arrived, accountants had become their own programmers and IT departments shrank. If you are not writing C++ its time to learn it. If you don't, you will be like an expert hansom cab driver in the early days of the car and the bus. Over.

Report this comment

Resident

Tuesday, December 27, 2011