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Accountant Willott Kingston Smith has warned that wage inflation forced, partly by the rates demanded by a limited pool of on-line designers, will erode design consultancies’ profits if it goes unchecked (News, DW 6 October). How would you deal with the situation?

‘I don’t see why this should be a problem – the incredible salaries that are being demanded by a ‘limited pool’ of investment bankers, corporate lawyers and other professionals doesn’t seem to have dented the profits of their sectors. So why should the more modest demands of designers do so? If the new media businesses were to remain relatively undifferentiated, this might have become something of a problem. However, it is rapidly niche-ing. So, while we at Precedent have an enormous amount of respect for companies that build sophisticated e-tailing environments, or engaging entertainment sites, our expertise is different. And there is no evidence, as yet, that there are too many other companies which understand how to create effective corporate sites aimed at a range of audiences. We need to employ people who are able to do this, and find that we can sell their skills at a premium.’

James Souttar, Senior Consultant, Precedent Communications

‘Profits tend to start declining late in the business cycle, because salaries get bid up by competitors in pursuit of a limited pool of talent. This really begins to bite when prices get bid down by the same competitors in pursuit of a declining pool of work. Both of these happened at the end of the 1980s. Our experience is that then, and now, job satisfaction is more important to people than money.’

Charles Wright, managing director, wolff olins

‘We have noticed at 20/20 that it is becoming increasingly difficult to find the right talent, so it is extremely important that the people we recruit can be billed out at an appropriate rate commensurate with their salary. Because there is a real shortage in the marketplace, design consultancies need to make sure that they invest properly in the people they employ already. They need to pay them what they are worth, but they should also provide them with the opportunity to produce outstanding work, a great working environment, correct levels of responsibility (as well as accountability) and an investment in continuous training .’

Rune Gustafson, Managing Director, 20/20

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