Hill & Knowlton has been forced to rethink its leadership structure after the surprise resignation of global CEO Paul Taaffe.
Taaffe shocked the agency world by resigning this week after 18 years at the consultancy. His move is understood to be in response to H&K's merger with US public affairs shop Public Strategies (PSI) in November, which has seen PSI staffers taking key leadership positions in a new structure.
Taaffe found himself reporting to global chairman Jack Martin, founder of PSI, and it is thought this arrangement prompted his exit. Martin has now assumed Taaffe's global CEO responsibilities.
One former senior H&K executive said that the merger had turned out to be 'a reverse takeover' with PSI effectively seizing control of H&K. The source said: 'It is extraordinary the way what the biggest agency in the world is being dismantled ... PSI is now running the show, but it has no international experience.'
Another source suggested that once the structure in the US was bedded in, senior H&K figures in Europe were likely to come under pressure.
However, Sally Costerton, chairman and EMEA CEO at H&K, insisted that the PSI merger was 'amicable and constructive'.
Howard Paster, WPP executive vice president of PR and public affairs, noted that Martin Sorrell's recent comments citing the strong performance of Burson Marsteller indicated he was 'looking for more' from H&K.
He added the merger had resulted in 'crowding at the top' and said: 'We respect and understand (Taaffe's) decision.'
Taaffe joins other senior staffers in stepping down this week - long-serving chief marketing officer Tony Burgess-Webb has also announced his retirement and MaryLee Sachs, director of H&K's worldwide marketing comms practice, will also quit the agency.
11 January 2011: H&K global CEO Paul Taaffe resigns
7 January 2011: H&K chief marketing officer Tony Burgess-Webb announces he is to retire
7 January 2011: MaryLee Sachs, director of the global marketing comms practice at H&K, resigns
November 2010: H&K merges with PSI and Jack Martin becomes chairman.