ANALYSIS: CONSULTANCY MANAGEMENT; Can PR afford to ignore geography altogether?

Alison Canning’s decision to resign as chief executive of Burson- Marsteller UK calls into question the wisdom of doing away with the role of country managers

Alison Canning’s decision to resign as chief executive of Burson-

Marsteller UK calls into question the wisdom of doing away with the

role of country managers



However you look at it, the manner in which Alison Canning leaves

Burson-Marsteller seems a sorry conclusion to a hugely successful career

at both B-M and its sister company Cohn and Wolfe.



Her decision was prompted by the introduction of B-M’s new practice-led

management structure which takes effect in Europe from October. This

does away with the role of country managers like Canning, although

regional managers - like European CEO Ferry de Bakker - remain.



B-M has reason to believe that its new practice-led structure is the way

forward, and has already introduced it successfully in other regions.



But the loss of Canning has focused attention on the rationale behind

the move. For ultimately PR is still a people business, and people of

her calibre are not easy to find.



B-M responds with the usual reassurances about the quality of the

hundreds of other staff in the group. And, to be fair, B-M tried hard to

find her other positions within the new structure. But from the outside

it looks as if a talented PR practitioner and chief executive has been

sacrificed on the altar of a management theory.



De Bakker says he ‘very much regrets losing such a powerful player’, but

there was simply no job the firm could offer that she wanted. But the

bigger question is whether practice-led agencies can do without country

managers who have profit responsibility for their own offices.



Canning says she regrets not being able to see through her four year

strategy for B-M UK, although she fully supports the new structure. But

she is sceptical about agencies ignoring geography altogether. ‘The

pendulum will swing across and then come back a bit,’ she says.



De Bakker says the structure has worked well for B-M in the US,

encouraging it to bring the change to Europe.



‘B-M is of the size that it can do it and see if it works. We will have

five practice structures in Europe, each with over 100 staff and dollars

15 million in income.’



B-M is not the only agency to examine the idea. All big global agencies

are finding themselves under pressure to maintain an edge over smaller,

more nimble local rivals with lower overheads. The practice-led approach

has many admirers. It puts the combined power of its global expertise at

the disposal of client needs. Not only could this give them the edge in

winning global or regional cross border accounts, but - so the theory

goes - it will add strength and depth to their ability to win local

business. In certain cases, it may also reduce management costs.



PR agencies are not sailing into uncharted waters with this move. The

structure mirrors that of many other professional services firms,

including management consultancies.



Ironically, leading management consultancy McKinsey has just published a

research article called ‘The return of the country manager’ in McKinsey

Quarterly. It argues that the transnational model is slow and complex,

and describes how multinationals are re-introducing country managers in

order to better meet local client needs.



The article suggests that although the ‘transnational model is

nominally introduced to improve client service, often they achieve the

reverse.



‘[Globalisation] actually increases local customers’ desire for personal

attention,’ it says. ‘These customers have seldom felt well served by

their suppliers’ transnational restructuring.’



The McKinsey research also suggests that although it may involve some

cost savings, the structure does not always make the company run more

smoothly. Some multinationals found it led to ‘a nightmare of

organisational complexity, divided responsibility and delays’.



Jose Antonio Llorente, former chief executive of B-M in Spain, also

points out that sector specialists are not necessarily the best business

managers, and vice versa. He quit B-M in June last year to start his own

agency, JA Llorente y O Cuenca, which now ranks 15th in terms of fee

income.



‘B-M always had people to look after specialist areas of business,’ he

says. ‘But they were there as a source of knowledge, like a research and

development resource to help the country managers. Now they are managing

a business and that is something very different.’



There is also the question of developing business within each market -

both organically and in terms of acquisitions.



‘When multinationals are weighing the pros and cons of local adaptation,

they should recognise that country managers with P&L responsibility are

better placed than head office staff to determine how much must be

invested to increase market penetration,’ says the McKinsey article.



On top of that, cross-border PR teams will still have time differences

and language barriers to cope with. More importantly, there are cultural

differences between local markets, even within regions like Europe. It

may be that the export of a homogenised brand of ‘McPR’ is not

necessarily what clients in these local markets want.



But service companies like PR, or even ‘perception management’ firms,

are perhaps a special case. The global and regional teams are smaller

and more flexible. Technology has also made it easier for them to work

together. Can they make practice-led structures work where others have

failed?



Shandwick’s Peter Gummer believes so. He spelled out his hi-tech vision

of the future, in a keynote speech to last month’s Hard Commercial Edge

of PR conference.



He argued that the technological revolution we now face will overturn

the way the media operates, the way business is conducted, and the way

that PR agencies operate.



That will include, says Gummer, flatter structures and borderless

agencies. ‘The notion of geography will disappear. PR will become a

global business, 24 hours a day, 365 days a year,’ he said. ‘And most of

it will be handled by virtual agencies - because clients will no longer

pay for the office space.’



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