What would you do?

qqqqqqIt’s every entrepreneur’s worst nightmare. A call has just come in from Wiley E. Coyote, CMO of the Acme Rocket Company, your largest client. Acme’s billings represent 50 percent of your total business. Gulp. You tell your personal assistant to put Mr. Coyote’s call through to your line.

Sure enough, it’s bad news. Coyote wants global representation, and is moving his entire account to one of those nameless, faceless holding agencies. A letter officially informing you of 30-days written notice will arrive by FedEx later in the day.

After your life flashes before your eyes, you set the phone back down in its cradle and wonder, ‘Now what’?

Well, in the case of Cary, NC-based IgniteSocial, CEO Jim Tobin took swift, decisive and highly controversial action.

He not only immediately fired 50 percent of the firm’s 110 employees, he also offered to pay any agency that hired one of his outcasts $5,000 if they didn’t cut it within the first 90 days of employment.

That’s a novel approach to be sure, but it’s not what I’d do.

Having been through several lay-offs, downsizings, rightsizings, adjustments or whatever euphemism you’d like to substitute for firings, I can tell you they’re no fun.

In nearly 20 years of business, we’ve only had to downsize two or three times. The first came in the aftermath of the technology bubble burst in 2000, and the other occurred a few years ago when, like IgniteSocial, we lost our biggest client to a global competitor.

But, we’ve always taken a different tack in managing Peppercomm:

1.) We never, ever, let one client dominate our billings. It’s beyond risky to allow one client (Note: It was Chrysler in Ignite’s case) to account for 50 percent of the firm’s billings. That’s just asking for trouble.

I believe our largest clients represent 15 to 18 percent, respectively, of our total billings.

2.) As a result, should one of those clients decide to up and leave, we’re not left in a Defcon 5 situation in which half of our staff needs to be let go immediately.

3.) I wouldn’t offer a $5,000 guarantee that all 50 of my recently-fired employees will excel in their new gigs. Instead, I’d take that $250,000 and disburse it among the four or five top performers among the Chrysler 50. I’d hang onto that talent.

4.) I wouldn’t publicize my fire sale. Sure, CEO Jim Tobin comes across as a nice guy in the Adweek feature, but his announcement is akin to Captain Smith of the RMS Titanic’s announcing a sale on deck chairs after striking the berg. It reeks of desperation and inspires fear.

5.) The Ignite announcement will scare remaining clients and employees alike that the agency isn’t long for this world, and that they should follow Chrysler’s tracks and select a new agency (or employer).

I wish IgniteSocial, Jim Tobin and the recently downsized Chrysler 50 well in the future. But, in my opinion, this whole disaster has been badly bungled from the get-go. But, hey, that’s just my opinion.

What would you do if Wiley E. Coyote was on hold, and just champing at the bit to lower the boom on your agency?

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