I am old enough to remember a time in London when friends would spend the odd evening trying to work out what our contemporaries were earning. Back then, someone’s salary was an interesting source of speculation.
Nowadays there isn’t much point in asking what someone earns. Instead you can find out all you need to know about a Londoner’s wealth by asking two apparently innocuous questions instead. These are “Do you work in banking” and “when did you buy your house”.
A third, supplementary question “are you a Russian criminal of some kind” may occasionally clarify matters.
The first question is important. The last few years have seen rewards in the financial sector move far beyond reach of any other salaried economic activity. Of my own university contemporaries, with one exception, every single person who works in banking or finance is richer than everyone who does not. Along with that spectacular exception (Dr Michael Lynch, the onetime billionaire founder of Autonomy) I am one of only a few people not working in finance or law who could be described as vaguely prosperous.
But the housing question is just as much a cause for concern. Someone brilliant in our industry who has not yet bought a flat, or who has bought one only recently, cannot reasonably expect to be well housed in London in their lifetime. Contrastingly almost any minor advertising staffer who borrowed heavily in the mid 80s is a millionaire. If this iniquity affected people by gender or race rather than by age we would consider it appalling.
These problems aren’t unconnected. The property issue is certainly worsened by the city/oligarch factor (it is an eye-opener to see how well senior advertising colleagues live outside London, New York and Tokyo where they do not have to compete with large financial or expatriate communities). It is compounded by a tax policy which taxes earnings derived from work at 41% but gives vast allowances to money made from selling your house, engaging in Russian criminal activity or peculiar banking practices. Taxing the proceeds of hard work more heavily than the proceeds of luck and deviousness seems odd behaviour from a chancellor who is supposed to be a Socialist and a Presbyterian, but there you go. It’s also a bit galling to see London endlessly celebrated as a “centre for the creative industries” when the city’s real wealth goes to people of high numerical ability yet limited imagination working in a culture of stultifying conformity.
So how can we compete? We can’t.
So, er, don’t.
Everything we have learned as marketers surely teaches us that you should never tackle a competitor in a field where they enjoy unassailable strength.
It is now almost impossible to out-earn people in financial services. It is, however, amazingly easy to outthink them. They are not imaginative to begin with. But, on top of this, their herd mentality has rendered them incapable of independent thought, action or taste. A successful banker simply aspires to be an even more successful banker. (You can see the effect of this in ghettos such as Clapham or Fulham where the uniformity of aspiration has created something resembling a council estate only with the average income multiplied by 50.)
Indeed, so driven now are such people by competing with each other (rather than asking whether the game is worth winning) that, in the Anglo-Saxon world at least, almost all people with type-A personalities (what I call ‘Nature’s BMW drivers’) have completely lost the plot of capitalism. The purpose of which is surely not to accumulate as much money as possible but to accumulate as much money as is necessary to have a good time with as little effort as possible.
In asking the question “who has more money” we have completely lost sight of the question “what is this money for?”
Look at the strange people who are admired in business nowadays. Twenty years ago it was people like Hugh Hefner or James Goldsmith, people with lives worth emulating: now it’s a bunch of austere workaholics – or septuagenarians who still go to the office every day. Do you think Hefner (a pioneer of the working-from-home movement, incidentally) ever took a Blackberry into the grotto? Now there was a man who really understood work-life balance.
Today, no sooner is the word out that Conrad Black knows how to throw a decent party than the vultures start circling.
We, as a creative industry should fight this trend. We should ignore the senseless greed and purposeless effort of other areas of business and set out to establish ourselves as simply the best place for sane, imaginative and thoughtful people to work anywhere in the UK. Which isn’t far from what the business was when I joined it in 1988.
Back then we earned a lot less than our banking colleagues too. But I don’t think we doubted for a second that we had other benefits which compensated for the differential. With a little imagination (and that is our USP versus bankers, remember) we can restore those benefits.
Here’s how we could do it at Ogilvy.
1) Move at least half the agency out of London. Brighton or Ashford might be a good idea for a second location. New electronic means of communication no longer require everyone to be in London all the time. Ashford (with fast trains to Victoria, Charing X and St Pancras) is a hideous place but the surrounding countryside is glorious, with apple-cheeked barmaids serving large tankards of frothing ale on every village green. An agency which offered the option of living out of London would attract more than its share of those bright young talents who can’t afford London. Your agency could have its own cricket pitch (better than a pool table, no?). Best of all, people could stay in Whitstable all week.
2) Cut all senior people’s salaries by 20% and cap them at around £100,000. As part of my rejection of senseless capitalist thrust, I occasionally ask myself whether extra money would actually add to my happiness. The answer is the opposite. When given more money than you need, one is prone to engage in foolish, uncreative, status-driven activities such as buying second homes abroad (only sensible, frankly, if your idea of a good summer holiday is going to the same bloody place every year and then spending two weeks learning the Italian for “my septic tank appears to have exploded”). Yachts - no more than floating caravans that make you sick - are even stupider still. The rising levels of wealth, coupled with the low prices of consumer goods, mean that differential displays of status require increasingly foolish expenditure.
3) Use half the money saved in senior salaries to create a large bonus pool to be shared among younger staff – who generally need lump sums more than senior people do.
4) Use most of the remainder to join Netjets and keep an Ogilvy Gulfstream poised on the tarmac at Lydd or Biggin Hill 24 hours a day. As Hefner, Warren Buffett and Conrad Black have all found, private aviation is the single compelling reason to be rich rather than merely prosperous. And, as Conrad found, the very best kind of private aviation is the kind you don’t pay for yourself. (It’s more tax efficient, too.)
5) Award bonuses not of money but of working perks. After a certain length of service people earn the right to work from home weekly or to work irregular hours.
6) Spend well on hospitality and entertaining (Paris, remember, is only an hour and a half away). If they are having a good enough time, people don’t mind what they are paid. I mean, if you heard that a friend of yours had landed a job at the Playboy mansion, your first question probably wouldn’t be “what’s the pension plan like?”
7) Instigate a four-day working week of 10 hours per day. I do most of my best thinking at the weekend, which means a three-day weekend would make me 50% more productive. And what a USP that would be for future recruits.
8) Remove payment by the hour and replace it with – well, anything frankly. This system of payment maintains the absurd pretence that value created is proportionate to effort expended –the very belief a creative organisation should be fighting. According to payment by the hour, the value of a song is directly proportionate to the time it took to write it. This conception leads to the encouragement of unproductive but time consuming activities in agencies: account management, for instance.
9) Kent Grammar schools would amount to a saving of perhaps £30,000 in pretax income for most senior staff with children – partly offsetting my swingeing pay-cuts. Private education is another rich man’s folly – generally a means of ensuring that your children can eventually lead professional lives in banking and accountancy involving just as much grinding tedium as your own. (Fortunately I have different aspirations for my two daughters: my dream is for them to become country and western singers, and hence I have told them that an expensive education would be a serious setback to their careers versus, say, time spent waitressing at a truckstop.)
10) Restore compulsory company cars (au fond people really prefer cars to salary – but if you give them – or their wives – any choice in the matter, they tend to choose the boring option of money instead). The agency should also operate a small stable of really flash motors to loan to younger staff. If a 23 year old can turn up at a wedding with their banker chums in an Aston once a year, who cares what they actually earn?
Money is, in short, a commodity. As believers in differentiation, we should seek to reward people in currencies that our competitors cannot supply in greater quantities – such as civility or quality of life. Unusually this approach could actually hold appeal to our shareholders and ourselves.
How do you react to this proposal? I would be very happy to discuss it further – either in the space below or at a meeting held at a country pub some time after 11am.
Too radical? It is only a later expression of David Ogilvy’s dream of moving the agency to Princeton from Manhattan, a plan vetoed by cowardly colleagues. Its time has now come.
I too am fascinated by how the 'credit crunch' has shifted the vein of this discussion. As a graduate looking for that foot in the door, I am keen to learn what kind of house is standing on the other side.
Belatedly I have come to the discussion. Before I joined the creative universe, I was a city boy, managing funds and enjoying the oh so hilarious discussions over dinner on the knotty subject of Canadian Macro Economics, ahead of a team meeting at 7am sharp on a Monday. How the hours just flew by. And the only rebellion in the 'if you want a friend, get a dog' world was my red silk lined tailored suit. Oh yes, and we didn't have Porches because they were considered profligate in clients eyes, but still, we had cars of equivalent value..and Paul Smith of Ogilvy said us city boys made ad folk look good...
I did have cause to wonder why I was doing what I did and helpfully Benjie Foot, head of Save the Children in Africa and brother of the much missed Paul Foot, told me I was making money so people could donate to his charity. A bit cod but I bought into it.
Stil, it made me think about what I was doing, how we (the city) evaluated eachother and how herd like we were in going about our business, the way we spoke, the things we did both in and out of work.
So, I left, jumped ship and joined the dark arts as my ex city colleagues put it. Sure, we're a bit more free in terms of how we think, but I find the same issues arise as I experienced in the city. Business at the end of the day is business. In my mind, I obtain more satisfaction with the product of advertising than I ever did from the city but, and it is a reasonable but, the money is worse.
I also worked for Ogilvy at The wharf, a stale and sanitised environment (The Wharf, not Ogilvy) if ever there was one. The city boys had to be taught how to dress down on Fridays, we prided ourselves on a degree of flamboyance in the new grey square mile. Our clients came to us, but we had to stick an office in Theobalds Road to ensure that we could snare clients who couldn't be *** to get to The Wharf...although our own boat was a big willy waving plus here....and in our industry chinese whispers took the whole boat concept to another level...the Ogilvy hovwercraft was one, the Ogilvy helecopter was the best though.
Working in the rural idyll is a wonderful dream and in some contexts it's a bonus to be able to quaff an ale in a hearty rural pub (Hants, West Sussex on the Downs is best) but few things beat the dynamic of working with a bunch of people who, in the real world, would never coalesce. In short I love it and still wonder who decided a five day week was how we should trip through our working lives?
Wow. I'm tempted to send the link to all the people, who've been asking why I'm selling my BMW and going to Falmouth this September to get MA in Creative Advertising :) And thank God BMW's are so expensive - comes handy when one decides to trade a nice ride for a brilliant job.
Absolutely fantastic piece, I hope you raise these points at this morning’s board meeting!
One point to make on bankers; they in fact some of the most imaginative people around – so creative are they that they’ve managed to sell people debt and monetise risk. More and more imaginative & elaborate ways of creating wealth through producing actually very little in terms of product or service illustrates this. Point is, as you mention, is that the marginality of wealth v. happiness sets in very early (40k I believe) and the cycle sets in.
N.b. Brighton's unemployed work force is the most highly qualified in the country, imagine the benefits & savings of employing such people in a city that delivers such a high quality of living?
Hmm. Some of these proposed benefits are arguable: I work in Oxford Street, and if my agency were to move to Ashford I know I'd resign immediately. (This is England, not Spain. It's not like you can work outside while catching tan!)
Same for other ideas, such as the 10-hour workday: personally, I tend to stop being productive after 5.
The good thing is, this is not what you need.
People are attracted to this industry by the opportunity to be creative and to be in the company of talent coworkers.
Keep creativity and talent, and you can save the money (to a reasonable extent).
P.S. Problems come when you lose the talent, as I blogged about.
Rory Sutherland
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Member since: 03 Jun 2008
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