PAY PLAN TO PUT PRICE ON QUALITY, QUANTITY:COMPENSATION AT JWT SHIFTS FROM FINANCIAL PERFORMANCE TO CREATIVE

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[london] Starting early next year, J. Walter Thompson Worldwide chief executives, heads of planning and creative directors will be rewarded-or penalized-based on a purely subjective assessment: Are their ads better or worse than the year before?

Explained Worldwide Creative Director Allen Thomas, the new program "effectively means part of their income will be determined by the quality of their work and either withheld or given at the end of the year. Managers tend to be judged solely on financial results. Now it's quality and quantity.

NO MORE FIXED SALARIES

"It's not just for creative directors," Mr. Thomas noted. "It's also for whomever is running the office and the heads of planning."

Many agencies are trying to move from fixed salaries to greater reliance on variable compensation by employing an array of bonus plans usually related to financial performance. JWT's move to judge creativity separately is novel, however, and reflects growing demand by multinational clients for better work from their agencies.

Miles Colebrook, JWT London's president and CEO, attributed the move toward more variable compensation to cost cutting. "It keeps the fixed costs lower, especially after the tough times in the early '90s. Also, it gives room to incentivize people who are doing well."

It also may be traced to the fact that clients want more total communications packages rather than just media advertising from their agencies, said Mr. Thomas. "It's easier to do that if [payment] is fee-based rather than commission-based, because you only get commissions on TV, print and poster work."

In January 1997, each major JWT operation will be asked to submit work from 1996 representative of all major clients and covering all relevant media. The quality of the work will be compared to work from the previous 12 months by a top-level panel headed by JWT Worldwide Chairman and Chief Executive Burt Manning, Worldwide Creative Directors Allen Thomas and Jim Patterson and the company's co-presidents, Peter Schweitzer and Chris Jones. About 200 people, or 5% of JWT Worldwide staff, will be affected. Incomes could go up or down by as much as 10%, said Mr. Thomas.

"We were talking about a tangible way of improving what we do," he explained, adding that it's difficult to effectively measure creative output by some abstract standard of excellence. "It wasn't until we hit on comparing one year with the next that we realized we had an acceptable benchmark."

The panel will assess work purely on creative criteria: "Do I think the work is good, distinctive, unusual, interesting advertising," summed up Mr. Thomas.

A POPULAR MOVE

So far, Mr. Thomas said, "[linking remuneration to creativity] has been a very popular move within the company. Everyone wants to work in an agency known for the quality of its work. Of course," he admitted, "we can't get a genuine reaction until after the first year."

Many agencies reward creativity, although JWT appears to be the first to build it into a formal incentive plan. Young & Rubicam Europe, for example, will award "five-figure" cash prizes at yearend for the most creative TV and print campaign made during 1996, said Bernard Barnett, Y&R's director of corporate affairs.

Derek Bowden, CEO of Saatchi & Saatchi Advertising in Europe, Africa and the Middle East, said his agency loosely rewards people according to creativity.

"Our bonus scheme calculates a series of criteria, including revenue growth, profits, contribution to the network business and the quality of the work," he explained. "Creativity is one of a series of benchmarks."

Similarly, Leo Burnett Co. considers creative efforts an important element of performance-related goals, but they are not judged separately, a Burnett spokesman said.

Tim Jackson, director of investor relations at Cordiant, said the company considered linking pay to creativity for Saatchi and Bates Worldwide a few years ago, but decided against it. "Creativity is a very difficult concept to measure," said Mr. Jackson. "We decided that if the creative was providing what the client wanted, it would probably be reflected in the financial results."

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