That's for sure.

Very few, if any, of the analysts on the earnings call have a clue about the impact of THESE layoffs at IPG, which essentialy amounts to a mass reduction in available manpower and talent. The analysts instead are focused on why costs weren't decreased faster, in line with a near 20% collapse in revenue, so that the net line could remain flat or show a more modest decline.

From the release:

"Over the past nine months, Interpublic has taken about $120m of severance expenses and cut 4,100 employees, or 9 per cent of its staff."

What does this mean?

To put this in perspective, it means an unprecedented number of forced headcount reductions -- mass layoffs -- among fairly senior staff. And that's the talent erosion Roth is concerned about, as he should be.

In people mgmt and human resources, this industry has operated for decades on standards loosely referred to by nearly everyone who has worked in a big agency environment as "industry standard." These are generally very poor, and in some cases legally questionable, approaches to employee management.

And the standard that comes into play relating to this earnings report is this: "industry standard severance" -- which here means the perverse and cruel practice of providing one week of salary as severance for EVERY FULL YEAR the employee has completed at the company. This would be distributed as "regular income" for tax purposes, meaning it's fully taxed at the applicable local and federal rates.

To the numbers, let us seek some meaning and context for this:

$120 million, 4100 employees effected, over 9 months:

1. That's an average of 460 employees every month -- or about 25 employees laid off EVERY BUSINESS DAY -- for 9 months. Of course, this would occur in various units, and in various offices. But this is pretty deep cutting, and is no doubt effecting morale.

2. To the important points on cost: An average of about $30,000 in severance payments were made to each of the 4100 employees. And when understood in the conext of the industry standard cited above, you can see this mass layoff included many senior people. There are, of course, dozens of ways to slice these numbers...

...but on AVERAGE, each effected employee is/was earning $150,000/yr and had 10 years of service on the books at an IPG company.

And THAT'S THE "AVERAGE" EMPLOYEE. Obviously cannot account for some with employment contracts (a small minority), or other arrangements.

Now that's a lot of fairly senior people (at least in this industry) out the door. And represents the collapse of the talent pool.

Luv, Hammer.