Why Aira is Using the Government's Coronavirus Job Retention Scheme
On March 19th I posted on LinkedIn about everything we’d done as a company to manage the utter chaos that Corvid-19 was causing. We’d made the big calls early - postponing MKGO, closing the office, giving extra support to the team, and building financial scenarios that would help us make key decisions.
This time a week ago everything was going "to plan". We had lost a big chunk of short term revenue with a number of our clients pausing their marketing activity, but had also seen some wins with new clients coming on board and others increasing activity.
Then it happened.
Shortly after stricter lockdown measures came into force we had a number of large clients ask to pause their campaigns. In the space of 72 hours we moved from "plan A" - a scenario of losing revenue but not needing to make any difficult decisions - to skipping "plan B", and moving straight to "C".
Before going into more detail I need to be absolutely clear: from a long term financial point of view, Aira is still in a great place. In the short term, however, we have a revenue gap and because of that have made the decision to utilise the government’s Coronavirus Job Retention Scheme by furloughing a number of our team.
We’re very aware that the furlough support for businesses will end when social distancing measures are relaxed and some form of normality returns. At this point, we want to be in as strong a position as possible because we know that lost revenue will not come back instantly. By furloughing people now and using this support, we make things easier for us further down the line and avoid needing to make redundancies.
I’m not going to lie: this was a tough decision. Paddy and I desperately wanted to keep the entire team together through all of this and the process of deciding who to furlough was painful to say the least. I was dreading the calls, but in yet another confirmation of how strong we are as a team the support shown by everyone has been incredible.
Every single person that we spoke to understood; the wider team reaction was a "collective hug" with both public and private messages of support being sent. In short: we have each other’s backs and if this shitty situation has done anything, it’s brought us closer together. Here's an example from an email:
"I think I can speak for all of us affected when I say that the way You/Shannon/Matt(s) have handled the situation and continue to be supportive of us whilst we go through it is so appreciated. You mentioned in the call that the way we've reacted has cemented why you hired us - but for me, it cements why I chose to work for Aira and why I will always be an advocate for the business.
"Things will be OK and we will be back bigger and stronger when this is over :)"
And another from Slack:
I could keep going for a lot longer but you get the idea.
Could Aira keep people on until things come back?
We could have avoided this route and kept everyone on board now, but we don’t think that this is the right decision for the long-term health of the company. The main reason for this is that we simply do not know how long it will be before our clients are able to recommit marketing budget to us. If we knew 100% that it would be, for example, three months, then we may be able to accept incurring a fixed amount of losses during that time.
Our clients have all made it clear to us that they are pausing and fully intend to come back to us, with many estimating a few months before that happens. As a business we have also been flexible when it comes to holding clients to contractual obligations by deferring spend. In the short term this may have hurt us a little but, again, we're thinking of the long term.
With such a large, unknown variable, we’re not able to predict what the negative effect on our cash reserves and cash flow would be. Therefore, keeping people on full-time during this period increases the level of risk.
Our focus right now is very simple:
Ensure that anyone who is furloughed has a company to come back to when everything returns to normal.
By taking these steps now and accepting the support available, we are putting ourselves in the best position possible to ensure everyone has a job at the end of this situation.
What the Coronavirus job retention scheme (aka furloughing) means for Aira employees
- Anyone affected has been placed on temporary leave and during this time, is unable to perform any formal duties or carry out any work at all for Aira.
- The government covers 80% of gross salary, with additional contributions for ER NI & ER Pension. As a business we’re making additional contributions and have increased this to 90%.
- The minimum furloughed term is 3 weeks but we expect some of our team to remain furloughed until 31st May 2020, which is when the government coronavirus job retention scheme is due to end. This may be extended but there has been no indication yet and will depend how "normal" life is.
- The team are allowed to take training programs or engage in any active learning activities so while furloughed our team can access and use their Aira training budgets as usual. We have also put together a list of free resources for them and others to use.
- Online training sessions organised by other members of the team are also allowed, so we’re actively pushing the team to run "lunch and learns".
- We have a number of social activities such as Friday’s "beer o’clock", and are encouraging furloughed employees to join. This isn’t mandatory by any stretch, but staying in touch is more important now than ever.
- Under the scheme the team are allowed to carry out volunteer work, so we’re assisting with that if people want to. Here is some guidance on various schemes and how to apply to different UK charities and the NHS.
- There is more official guidance for employees on the official government website here.
What else is Aira doing?
Alongside using the job retention scheme, we’re doing a number of other things to reduce our costs:
- Placing some staff who are ineligible for the Coronavirus Job Retention Scheme onto part-time hours. They are ineligible because they started at Aira after 28th February 2020 and, as hard as we tried, there is currently no legal workaround for this.
- Significantly reducing our support from freelance consultants and specialists, effectively moving as much as we possibly can in-house. We’ve been mindful that many of the people we work with have been a big part of Aira as we’ve grown so are doing our best to support them too.
- Utilising government schemes to defer tax payments and ease any cash flow pressures.
- Paddy and I are not taking salaries for three months.
- We are also trying to retain as much "business as usual" activities as possible, which includes our own marketing activities. This is why we went ahead with the launch of the State of Link Building Report and have lots more on the way.
One final thing to mention. As a business owner I understand the potential stigma of using this scheme, and if you’re in the same position this may form part of your thinking.
Taking this support is not a personal failure and doesn’t make a business any weaker.
As you’ve heard a million times already, we’re in unprecedented times and while this kind of support is available we should feel comfortable using it: there will be a time in the not too distant future when we’re on our own again, so by taking support now we’re protecting our team and setting ourselves up for long-term success.
We are more focused and motivated than ever to get through this storm and come out the other side with the great team that Paddy and I have been building for over five years. We’ve made hard decisions, as many other business owners are having to do right now, and it will all be worth it when this is all over and we see each other again.
For clients who may be reading this, we’re more committed than ever to you and as Paddy said here, our team is fully focused on you.
For potential clients, we are very much open for business and would love to chat with you if we can help you at all during this time. Formal or not, we want to help other businesses get through this difficult situation.