With the recession paralyzing corporate spending, some businesses are offering their services for free. The main hope is that the goodwill engendered will lead to paid work when the economy bounces back.
An article in USA Today notes that other reasons some businesses are offering free labor are to continue to market themselves and to keep their employees busy. An altruistic reason cited was to help other struggling businesses. But the main reason appears to be "to stay in the good graces of key clients."
Calling such efforts "pragmatic idealism," Robert Ford, management professor at University of Central Florida, told USA Today, "If your clients weather the storm, they'll remember that you were willing to give them a hand when they needed it most."
For instance, Watts Wacker, a futurist and management consultant, said his annual revenue at his consulting firm, FirstMatter, will likely be less than $200,000 this year, well down from an average of $800,000. Inspired by President Obama's inaugural address urging Americans to act with hope and virtue in troubled times, Mr. Wacker e-mailed his best clients and offered his services for free as the "nation's business model had changed."
An Austin-based landscape architectural firm TBG Partners took him up on the offer and Mr. Wacker is giving an inspirational talk to TBG's employees next month for free. Only travel expenses will be covered. In the past, Mr. Wacker earned up to $30,000 delivering keynote addressees at conferences.
Following Mr. Wacker's lead, TBG's president Earl Broussard wound up offering TBG's services for free under the "pay it forward" caveat that any firm accepting the offer would also look to offer free services to others. TBG wound up developing plans for a potential themed residential community with a major hotel for Johnson Development, an effort for which it charged up to $40,000 in the past.
"Earl knows if the project comes to fruition, he will in all probability be involved with it," said W. Douglas Goff, director of land development at Johnson Development.
Mr. Wacker also recently hosted a free webinar for the Outdoor Advertising Association of America, which paid him around $60,000 in 2007 to moderate and organize its annual convention.
"He's not expecting quid pro quo," said Stephen Freitas, marketing chief for OAAA. "But it's a chance for him to market the Watts Wacker brand."
"This is absolutely amazing," remarked David Van Fleet, management professor at Arizona State University, to USA Today of the free labor trend. "It's all about keeping personal relationships with clients. But you have to be very, very cautious, because when things pick up - and you start charging - you've got to open negotiations all over again."
Discussion Question: What are the pros and cons of offering services for free during tough times? Under what circumstances should such free-labor offers be made?