Monday, April 27, 2009

Penton goes to four-day workweek to cut costs

Penton is moving to a four-day workweek through the summer in an effort to cut costs.

According to a memo sent to employees this afternoon by Penton CEO Sharon Rowlands, the move effectively translates into a 20 percent pay cut. However, the memo also says the company "we will spread the pay reduction in smaller increments throughout the end of the year to reduce the immediate financial stress on you and your families." (Clarification: a comment on this post correctly points out that it's misleading for me to call this a 20 percent cut. If Penton does, in fact, return to a five-day week after the summer, the effective pay cut will be considerably smaller when averaged out across the rest of the year. )
Furthermore, the move to a four-day week "will not impact" benefits, the memo said.

I've pasted a copy of the memo below. I'll be looking forward to coverage from Folio and BtoB magazines in the near future.

Hello Everyone,

I wanted to provide a brief update on how we did in quarter one and share with you some important steps we are taking to further control our expenses going forward.
The first quarter was the toughest in my business career. Not only did many of our properties report results that were significantly below a year ago and well below budget, but while we were reorganizing along the lines of markets, we were forced to eliminate a number of positions across the company. This isn’t uncommon in the world today especially for companies in the media industry and ones that have a heavy debt burden. We squeaked through the first quarter thanks to all of your efforts - but the next couple of quarters aren’t looking easy.
So we have to balance short and long term decisions in times like these. Some of these are really the right decisions for the businesses - like resizing audiences and identifying more efficient ways of doing things. Others may seem counter to what we want to accomplish long-term - like dramatically reducing the sizes of magazines or the amount of content. After all, if our content is so valuable, wouldn’t our readers need MORE of it right now? Sure, but remember that one of our Achilles heels is that we are mostly supported by advertising which has collapsed.
Speaking of advertising, it has not only collapsed in print, but as a company, we haven’t shown the growth we should on the web. Penton is really tracking a long way behind the industry in terms of percent of revenue that is digital, and we are not showing growth. The good news is we have great focus on changing this picture and longer term I am bullish on what we can do here, but it won’t change overnight.

We have some tremendous exhibition franchises that on the whole pulled us through 2008 and contributed a lot of our growth last year. There will be pressure on these businesses as customers are forced to cut back all their marketing spends. Even some of our strongest shows will show negative growth this year.
Despite incredible pressure on our businesses, we achieved a great deal throughout the first few months of the year - we reorganized our business into a market-facing structure; we delivered our audit significantly ahead of prior year; a number of our businesses delivered great financial results given the economy; and in response to my request, Penton employees provided over 150 ideas to help reduce our expense base.

While we are proud of these achievements in quarter one, the stark reality is that our overall revenue picture continues to rapidly decline. This is not a reflection of our efforts but the result of the widespread financial erosion impacting almost every business and importantly the industries we serve. I wish I could wave a magic wand and change the momentum to a positive one quicker, but it’s not possible, and whilst I continue to believe we have tremendous opportunities ahead and we will see this business flourishing in the future, today we still have a tough road ahead for a few quarters.

As you well know, over the past several months, we have attempted to offset our revenue challenges with proactive cost saving measures – as I listed above. These actions, coupled with your contributions in scrutinizing every expense, have lessened the impact. However, with no clear indication that the economy will turn in the short-term and with our revenues continuing to decline, further action is required to ensure Penton remains fundamentally sound.

Please know that the senior management team and I have carefully weighed the need for the measures I am about to announce. We consider our employees our company’s greatest asset. We are committed to doing everything possible to keep our company on track and to provide you with stable and rewarding employment. With that said, in light of the current circumstances, I have made the very difficult decision to implement temporary measures that will impact each employee’s pay.

We are instituting a reduced work schedule during the summer months. From the week before Memorial Day through the week before Labor Day, the Company will reduce its operations from a 5-day work week to a 4-day work week. For many of our businesses this will involve closing our offices on Friday. Other businesses may need to take the reduction in blocks of days. The end result will be the same for every employee at every level however - it will equate to a four day work week and a corresponding reduction in pay to reflect this reduced work schedule.

Whilst the reduction in work week will be contained only to the summer months outlined above, we will spread the pay reduction in smaller increments throughout the end of the year to reduce the immediate financial stress on you and your families. Special rules may apply to employees in California and to non-exempt employees, and we will be reaching out to these employees and their managers with information and specific instructions.
This revised work schedule will not impact your benefits. In some states, you may be eligible for unemployment for the unpaid leave. If you are interested, please contact your local unemployment office. We have prepared a set of Frequently Asked Questions<> regarding this revised work schedule, which you can find posted on the Pulse. In the next few days, your local leadership will organize group meetings, and there will be follow-up communications from your HR reps giving you more detail.

I understand this is difficult news. Thank you for your understanding and continued dedication. I am confident that if we continue to keep our focus on our customers and commit fully to delivering solutions that drive results, we will not only overcome these short term challenges, we will be better positioned to achieve new levels of success in the years to come. I urge you to try and find some upside in this temporary change and use the extra time for yourself, your family, and your friends – time can be a gift. I don’t say this to belittle the financial impact – I know that this is a big deal. I also want to reinforce that I am determined we will come out of this recession strongly and will go on to do great things. We have some tremendous initiatives across the company that this note isn’t the right vehicle to discuss and plan to share my thoughts with you through a video communication that you will see in the next 10 days. If you have any questions, please do not hesitate to contact your manager, any member of our Human Resources Team, or me directly. And thank you again.



  1. It doesn't look like a 20% pay cut to me. It looks like a 20% reduction *for just 14 weeks of the year,* which will be spread out across the rest of the year. That would average out to less than 10% for the rest of the year.

  2. Why does Penton have 127 jobs posted on if they're reducing workflow by 20%??

    Check this out...this is another example of lipstick on a pig PR

  3. Anonymous,
    You're right. If the company reverts to a five-day week, the pay cut would average out to be smaller.

  4. What do you think the odds are they will go back to a five-day work week?

    Maybe they are hoping a few people will get fed up and leave over the summer. Then they won't fill those positions and might be able to go back to a 5-day work week in the fall.

    -- A.K.

  5. Hi A.K.,
    I'd be surprised if they thought they could keep things afloat by working a four-day week for very long. So unless things continue to deteriorate, I think they'll go back to five days.
    But I'd also be surprised if they weren't hoping that the salary cut might push some folks out the door for good.
    So this move may accomplish two things: it cuts costs through the end of the year and it likely reduces headcount going into 2010.

  6. Penton has been cutting costs in order to grow for a decade. And still, "as a company, we haven’t shown the growth we should on the web. Penton is really tracking a long way behind the industry in terms of percent of revenue that is digital, and we are not showing growth." The days of 60% margin print ads are over. The business model is dead.

  7. Wow, Penton is really making out on this deal at the expense of the employees.

    Think about it: This is still a deadline-driven business. Just because they're shortening the work week doesn't meant they're going to extend deadlines. Therefore, I bet a lot of employees will put in extra hours during the four days the office is open just to hit deadlines.

    That's the equivalent of cutting everyone's pay without shortening the work week. This whole "giving everyone an extra day off each week to spend with their families" is simply a PR stunt to make it sound better than it really is.

    Honestly, do you think Penton is expecting production to decrease by 20% over the summer months?

    This company needs to bring back Nussbaum as CEO.

  8. Do you think Sharon Rowlands is taking a pay cut to work for Penton? Check out her previous pay point:

  9. Penton can institute a four-day work week or a five-day work week possibly for its exhibition business, but the truth is that most reporters, especially those supporting e-media franchises, are working 50-60 hours a week minimum.

  10. This is crazy. The last poster stated that "Penton can institute a four-day work week or a five-day work week possibly for its exhibition business"

    Let me tell you how wrong that is. I know some of the people in the exhibition business and there is no way they can put a show on working 32 hours a week. Most of them work 50 - 60 at least in the run up to the show. There is no way that they can work the reduced hours and still put on their expos. And from what I hear no one in the company has bothered to explain what they are supposed to do about that.

    To make matters worse, this cut is across all portions of Penton, that means even the divisions that are making money are going to take a hit. Well maybe that is "fair" in some crazy CEOs mind but to the people that have toiled for years to make the company a profit and they are already being paid under the industry standard there is no reason to expect them to stick around.