H&K prepares for a change of style

Hill & Knowlton has replaced stalwart UK CEO Marie Louise Windeler with the younger Sally Costerton. Tom Williams assesses the challenges she will face

Hill & Knowlton moved speedily last week to settle the question of who would take over from its long-serving UK CEO. The appointment of EMEA head of technology Sally Costerton to replace Marie Louise Windeler, who has been with the agency for 20 years, was announced to staff last Wednesday evening, shortly after PRWeek went to press with news of the latter's imminent departure.

But while chairman and EMEA CEO Andy Laurence admits PR-Week's revelation had 'accelerated our communication', he says Costerton's
appointment was something H&K had been 'considering for some time'. She is believed to have got the nod over a number of external candidates.

Former chairman David McLaren describes Costerton as an 'inspiring choice', pointing to her 'real passion for the business. She is energetic, has a strong intellect and huge integrity'.

Several sources, many of them ex-senior staff, suggest Windeler's exit is the direct result of years of underperformance at the agency since the dotcom collapse. Laurence firmly denies this. Either way, after two decades at one of the industry's most demanding agencies, Windeler – unavailable for comment as PRWeek went to press – will surely relish some time out.

Mixed fortunes
Sarbanes-Oxley prevents H&K, as a WPP firm, from providing financial and staff data. But figures disclosed to Companies House show that in 2001 it had a fee income of over £26m and 355 staff. The subsequent dotcom crash knocked fee income down by a quarter to £19.5m in 2002, while 94 staff, 71 of them account executives, lost their jobs.

Some of its peers suffered similar strife. Bell Pottinger, for instance, lost 27 per cent of its fee income between 2001 and 2002, and slashed headcount by 92 staff. Citigate's fee income also fell by a quarter, with 64 jobs lost.

Despite numerous senior comings and goings, staffing levels at H&K (up to the last available figures for 2004) have stabilised, while fee income has plateaued at around the £22m mark.

Yet 2004 was particularly difficult for the company's consumer side. The end of a 40-year relationship with Kellogg's was a huge symbolic blow, alone stripping £1m from its coffers (although it still retains the cereal maker's public affairs account).

That year the agency also lost sports marketing and sponsorship MD Alun James to Four Communications and joint marcoms MD and 16-year stalwart Wendy Mair. Topping it all, in November 2004 McLaren stepped down after a decade as CEO and then chairman. He reappeared soon afterwards in the same position at Cohn & Wolfe.
H&K's healthcare division went through a similarly rough ride in 2005 when UK healthcare MD Mike Kan defected to Edelman in the same role. His replacement, Nicola Ilett, lasted less than a year and has been replaced internally by director Shipra Singh.

'The agency has struggled since the boom of 2000,' says one former H&K staffer. 'There has been a high turnover of senior staff and it was a big hit to lose such senior people.'

Another says that while H&K has been good at servicing client relationships, clients have been lukewarm over its tendency to run each practice as a boutique, fighting for business against specialists in their area.

Former H&K head of technology Giles Fraser hired Costerton as his replacement before leaving the firm in 2000 to found Brands2Life. 'It is really hard for international players to compete locally and keep pace with smaller, more dynamic businesses,' he notes. 'You have to leverage all your strengths. McLaren did quite a good job of that and H&K needs to get back to this.'

The full story is not so clear cut.

Laurence can say with some justification that he is 'very confident' about 2005's figures, which have not yet appeared at Companies House.

H&K still counts consumer products giant Procter & Gamble among its clients and last year picked up HSBC. And the firm's corporate and public affairs offerings appear to be going from strength to strength, with clients ranging from management consultancy
Accenture to the government of the Maldives.

Then there is Intel. As technology chief, Costerton was instrumental
in winning the EMEA chunk of the microchip maker's account. The win did much to cushion the recent loss of Hewlett-Packard to Porter Novelli and Burson-Marsteller, and again H&K's public affairs division retained its part of the H-P brief (PRWeek, 3 February).

Different approach
But Costerton is more than just an effective new business clincher. Those who know her well, such as Fraser and McLaren, point out that she is particularly good with staff. Windeler might have been an extremely effective operator, credited with the successful restructuring of the agency's marcoms division into what Laurence describes as a 'leading offer', but she is described by some as 'aloof'.

It is thought that Windeler was at her best with a small group of business leaders and less effective at communicating with the rank and file. Laurence makes no comment on this but acknowledges the importance of a 'close-knit team'.

It is an issue that has been compounded by the sheer size and unwieldy nature of H&K's global board. Laurence, though, says it has diminished from 40 in 2001 to 'just over 30', and insists it is not a hindrance to the way the firm does business.

On the challenges ahead, Costerton is somewhat vague. 'The client needs to be the centre of our business,' she says. 'We need clear senior leadership. Senior people need to be very connected to the business.' With Costerton at the helm, her intimation is that she will strengthen that link.

Dan Holliday, founder of consumer shop The Fish Can Sing and a former board director at H&K, believes there must have been a temptation to find someone who would merely oil the wheels of H&K and WPP's global strategy. But he says Costerton will address 'the more pressing challenge of sharpening up H&K's competitive positioning [in the UK] and then put together a plan and a team that can execute it'.

Further detail on the Costerton game-plan and what this will mean for the agency will only become clear in the months ahead. But it is fair to say H&K in the UK is about to show a very different face.

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