COMMENT: Platform: Why pay deals are losing PR its entrepreneurs

There must be a better way of incentivising consultancy staff than top heavy salaries, says Charles Cook

There must be a better way of incentivising consultancy staff than top

heavy salaries, says Charles Cook



Last Saturday, under the headline ‘Irresistible Pull of the Poachers’,

the FT’s leader page feature explored the growing concerns of financial

sector employers at the way in which City salaries are being ratcheted

up as investment banks scramble for key staff.



Admittedly the scale of some of these top banking packages exceeds the

annual payroll of many PR consultancies but where bankers lead, will

financial PR executives follow? If recent experience of seeking senior

consultants for our own medium-sized consultancy is anything to go by,

the answer is ‘not if we can help it’.



Base salaries of six figures are now relatively commonplace for senior

financial PR account directors in their mid-30s with, say, 12 or 15

years’ relevant experience - or so the headhunters assure us. Add in the

perks and one can find a growing band of thirtysomethings whose fully

built-up cost to their employers could be as high as pounds 15,000 per

month.



I’m all for high pay, providing it accurately reflects the recipient’s

contribution to the consultancy’s income. So, if your base salary is

pounds 100,000 and your employer’s finances are geared to the reasonable

ration of revenue amounting to three times base salaries, you will be

expected to generate at least pounds 300,000 in fees. Apply the usual

working weeks per year/hours per week sum, and your chargeout rate

approaches pounds 350 per hour.



There’s the rub. To make sense of such high salaries, an employer has to

ensure that clients will pay these rates.



At the top end of our business there is no doubt that the contribution

to corporate clients in advising on strategic communications issues is

worth every bit of these fee levels. But there is a big difference

between the real strategic consultants and those whose prime skill is as

excellent senior account handlers and implementers.



The answer must lie in more rigorous linkage of pay and performance and

querying the headhunters’ seemingly unquestioning assumption that ‘the

market rate’ on base salaries is the only way to remunerate people.



No managing director should begrudge paying a true ‘rainmaker’ their

fair share of the revenue that he or she creates - even to the extent of

paying them more than the MD receives. But the way to do this is to

establish a more highly geared performance system so that bonuses form a

greater proportion of an individual’s total remuneration package.



I know of one financial PR consultancy which regards a 20 per cent

performance bonus as exceptional and 15 per cent as a more realistic

ceiling. Where is the real risk and reward sharing in this? Surely the

essence of public relations is that the best performers are

entrepreneurial by nature. Structure the ‘stick and carrot’ correctly,

and they will respond to the prospect of being able to significantly

enhance their pay by their own efforts.



This debate is, of course as old as the hills. But that is no reason to

accept the inherited wisdom. It is perhaps time for a more creative

approach to remuneration issues in our own industry.



Charles Cook is managing director of corporate and financial

communications consultancy Grandfield



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