High ranking and highly expendable

Restructure announcements from Thomas Cook/JMC and Thorntons show marketing departments already under threat from a weak economy. But this time it’s the directors, not middle ranks, who face the axe. By David Benady

Less than one in six UK businesses have a marketing director on their management board and, as recession looms, some wonder whether the relative weakness of the marketing function will hasten the eagerness with which finance directors identify it as a prime candidate for budgetary cuts.

Decisions that are taken over the next few months could have an impact on the shape of businesses for many years to come. In the recession of the early Nineties companies cut back on recruiting graduate marketers and this led to problems through the mid-Nineties as businesses struggled to find enough middle-ranking brand managers to fill burgeoning positions that were created as the economy recovered.

But while marketing budgets – particularly those for advertising – could be slashed at the stroke of an accountant’s pen, many companies will be reluctant to sack their middle ranking marketers. When the economic situation starts to improve their services will be more important than ever.

Over the past two weeks, the announcement by the world’s airlines that they are to shed up to 100,000 jobs will have sent a chill through their marketing departments. But in reality, it will be operational staff who will bear the brunt of the redundancies. While some marketers may go as well, they are thought to be in a comparatively safe position.

According to Nick Cloke, a former airline marketer who now runs consultancy business Catalyst, the marketing department will be one of the last areas airlines will cut. “Regardless of cuts in routes, you have still got to get the brands to market, whether there are 150 routes or only 120. The first thing to go is marketing recruitment, which will be cancelled, and new product development for new routes and brands.”

He says marketers will be called upon in a matter of months, after safety fears have died down, to create a burst of promotions to sell discounted seats. But this has its dangers too, he adds. “Marketers will be criticised if they do not get the results. They are the first people to blame, and some may face the chop if they are not delivering.”

While middle-ranking marketers may escape the worst of any redundancies, things are not so clear cut at the highest level. There is a huge pool of redundant marketing directors in the UK, and last week it looked like it might get a little bigger.

Thomas Cook announced it was consolidating the separate business units for its JMC tour operating division and its Thomas Cook arm, which includes the retail division, distribution and Internet services. The move will lead to 60 senior managers losing their jobs, and two marketers have been left to fight it out for the consolidated marketing director’s position. Lindsay Allardyce, JMC’s marketing director, and Kevin Styles, marketing director of Thomas Cook’s distribution arm, are involved in an all-or-nothing battle for the top slot, in the knowledge that the loser is likely to face redundancy.

The consolidation was brought about after Thomas Cook’s ambitious plans to promote JMC as a radical tour operating brand backfired, when an outbreak of water poisoning hit one of its resorts soon after the brand was launched. Thomas Cook spokeswoman Alexis Cole says: “It makes more sense to have one team looking after the whole portfolio. There’s an integral link between Thomas Cook and JMC. It is nothing to do with events in the US, it is part of the programme we have been putting together for some time to do with making the business more efficient and profitable. We haven’t been as efficient as we could have been.”

If the economic situation deteriorates, more companies could look at similar restructuring exercises, merging business units and axing whole layers of management, from finance to human resources and marketing. Perhaps having a seat on the board will protect marketing directors from having their roles merged with others – though there is a growing trend to merge marketing and sales under the title of commercial director.

Last week, confectionery retailer Thorntons announced that it would halt its search for a marketing director to replace Helen Wilcox, who left in May (MW May 17). Instead, chief executive Peter Burdon will assume the role. A spokeswoman says the decision has been taken not to fill the position “in the short term” given Burdon’s skills and experience. But one observer says that few marketers would jump at the chance of working for Thorntons, after the difficult conditions it has faced in recent times.

At National Lottery operator Camelot, chief executive Dianne Thompson is one of the few marketers to have risen through the ranks to take the top job. She believes more boards should have someone with experience of marketing, rather than promoting those who have come through finance and operational positions. But last week the company announced that sales and marketing director Ian Milligan was leaving the company after three years, and a new commercial director was being sought to sit on the board. A spokesman says that the new director “is likely to have experience as a top level marketer. Their perspective and experience of customer focus and being consumer facing is important for a business like ours where we are trying to be player focused.”

But the creation of the commercial director’s role raises the question of whether Camelot really could have a dedicated marketer sitting on the board. What, after all, would he or she do apart from hire an ad agency or run the odd promotion? With Thompson already from a marketing background, the company could even become top heavy in that area, though with marketing budgets being increased to &£90m a year against a background of declining sales, it is clear a massive marketing task needs to be undertaken.

The truth is that sales is a field where results can be easily measured. But the effects of marketing are more difficult to quantify, especially when they concern perceptions of the brand. So by calling the role “commercial director” Camelot avoids the problem of having two warring executives, one from sales and the other from marketing, trying to take credit for any increase in sales or dodging the flak if sales fall.

While most marketers look set to hold on to their jobs as recession looms, it is likely that a growing number of marketing directors will be asked to step into a combined sales and marketing position in the commercial director role.

But the prospect of companies continuing the trend of appointing marketing directors to their boards still looks slim.

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