WAITING IN THE WINGS: With many agency CEOs 60 or over, ClaireMurphy looks at succession plans

For a handful of the highest-profile PR agencies in the US,

determining future leaders is a simple task. Family businesses know who

will be in charge. At the Rubenstein group of agencies, for instance,

sons Richard and Steven, and daughter Ronni, make for a Rupert

Murdoch-style succession strategy, with the former two running

Rubenstein agencies. And at Ruder Finn, David Finn's children, Peter

Finn, Amy Binder, Kathy Bloomgarden and Dena Merriam, all hold senior

positions within the company.



At several agencies, such as Weber Shandwick Worldwide,

Burson-Marsteller and Edelman, the current leaders are still in their

40s.



But at Ketchum and Hill & Knowlton, where leaders are closer to

retirement age, succession plans have been worked on over a number of

years, with Ray Kotcher and Paul Taaffe, respectively, being gradually

groomed for the agencies' top jobs.



Taaffe has not been officially rubber-stamped for H&K's worldwide

chairman and CEO job, but his name is widely touted in the industry as

successor to 57-year-old Howard Paster. Who might replace US president

and CEO Tom Hoog, who sources indicate will retire by year's end, is

less clear, although worldwide head of corporate practice Harlan

Teller's name has been linked with the job. Ketchum's Kotcher has

actually been working closely with chairman David Drobis since the early

1990s, so his switch to the CEO slot last June was seamless.



Who's next?



But for some of the other top agencies, there's more uncertainty hanging

over the future leadership. Fleishman-Hillard CEO John Graham, for

example, has assembled a cadre of 12 people, a combination of

geographical and practice leaders, who make up his second level of

command. Graham, 60, swears that he has no single deputy among those

12.



He says he intends to stay on as CEO for 'some time to come,' and that

he has 'a number' of potential successors in mind, but has not put any

specific plans in place.



At Porter Novelli, 58-year-old CEO Bob Druckenmiller refuses to comment

on the nature of any plans for future management of the agency, although

sources indicate that David Copithorne is a likely successor. Helen

Ostrowski, general manager of P-N's New York office, has also been

mentioned as a possibility.



Manning Selvage & Lee CEO Lou Capozzi, 54, says it can often be

counter-productive to identify an obvious deputy too soon. 'Businesses

like ours, which have such an emphasis on collaboration, aren't served

by drawing organizational charts at a very senior level. It's like when

you have a team of five basketball players - the coach doesn't want to

pick out one as the star and insult the four others.'



Careful planning



But senior management egos aside, there is a very good reason why

agencies need to think carefully, and well in advance, about who they

want to take over at the top. In the 1990s, PR went through a

metamorphosis as agencies grew at a ridiculous rate (in both employee

numbers and geographical reach) and clients began to take PR more

seriously.



PR agencies not only counsel big business these days, they are big

business.



All the more reason why senior management should take a page out of

General Electric's strategy book and pay serious attention to grooming

potential chiefs. 'If, as an industry, we want to be admitted to the big

league, succession planning is the kind of is sue that needs to be

addressed,' says Jack Bergen, Council of PR Firms president.



What it takes to lead



As if that were not a pressing enough reason, add the fact that the role

of agency head honcho has changed drastically in the past decade, and

the importance of leadership planning really starts to sink in.



As PR agencies have grown both in size and complexity, the role of

agency leader has evolved into a montage of jobs, including cheerleader,

cultural advocate, technology expert, human resources guru and financial

whiz.



Once upon a time, managing a PR agency was a relatively straightforward,

if not simple, task of assembling a decent team of PR people, enough

clients to stay in the black and keeping the two groups happy. Most

often, the person who emerged to lead the agency was the practitioner

who best proved his (and it generally was a 'he') worth to clients.



As Jean Allen, a senior partner in recruitment agency Heidrick &

Struggles' communications group, explains: 'Ten years ago, agencies

wanted rainmakers as leaders, the people with Rolodexes full of contacts

and business-building skills. That's seen as less important now; other

qualities have become more crucial.'



The problem of attracting and keeping talented people has become such an

issue to agencies in the past five years that CEOs' HR skills have come

into sharper focus. 'The agency leader of today and the future needs to

be part PR practitioner, part sales and marketing professional and part

HR guru,' says Bill Heyman, president and CEO of headhunter Heyman

Associates. 'The greatest need is that this person can produce the kind

of culture in an agency that will recruit and retain the best talent.

This applies even given the current economic climate.'



'It used to be enough to be a fairly dynamic leader - a smart,

high-energy person with self-confidence - and to not worry about the

softer side of management,' adds Heyman. 'Nowadays, the likability

factor is so much more important. The leader sets the tone for the

culture of an agency and you want potential recruits to feel that

chemistry.'



It also means that a higher premium than ever before is being placed on

training and development, something that the smartest agency leaders

take on as a personal crusade.



Kotcher characterizes his own management style as focusing on HR issues

first, and 'applying them through a PR lens.' Under his guidance, the

agency works within his HR philosophy: happy employees produce delighted

clients, who feed more business into the agency, which sustains the

health of the agency and in turn keeps the workers happy. This 'virtuous

circle' idea is also expounded by MS&L's Capozzi.



At the very top



One of the most obvious changes to the biggest American PR agencies in

the past decade has been ownership. Of the top five, only Edelman

remains independent, while the others have been snapped up by worldwide

communications groups.



But agency leaders maintain that this hasn't necessarily changed the

nature of their jobs, claiming there has been no extra pressure from

their new parents. 'It hasn't been an issue,' says Graham of Omnicom's

1997 purchase of Fleishman. 'We go to them each year with our targeted

figures. It's a bottom-up approach, rather than top-down.'



H&K's Paster is equally adamant that having a new owner with

responsibility to shareholders hasn't adversely affected his role, or

made him feel the need to be more aware of the financial side of

business. 'I don't think Richard Edelman has any less of a demand for

quality management just because he's independent. Yes, the business of

running an agency is changing, but not necessarily because of

ownership.'



New issues to deal with



However, new ownership has brought new access to investment for the

largest agencies, which has meant off-the-scale growth, in numbers of

employees, offices and global reach.



Paul Taaffe, president of Hill & Knowlton, believes burgeoning agency

size is the single most pressing challenge for the agency leader of

tomorrow.



'The old issue with agency management was that the people who were good

at account work weren't necessarily good agency leaders, but often found

themselves promoted into that role.'



'Now the issue to deal with is size. The top agencies have tripled their

worldwide income over the past five years to take them individually over

the dollars 300 million barrier. It's not inconceivable that some will

break through dollars 500 million in the next few years, even given this

slowdown. That entails an entirely different kind of leadership. '



Taaffe points to H&K's solution to this sprawling complexity -

engineering a structure that includes geographical, practice and client

managers to manage the business. 'The agency leader has to come up with

a structure that can cope with a business of such size and scope.' He

predicts more senior agency managers from the advertising world, where

these issues have been addressed earlier, will switch to the PR

business.



As agencies grow larger, they are creating increasing numbers of

specialties to cater for ever-more complex client needs. This leads to

another new task for the agency leader - structuring these specialities.

Should they report straight to the CEO? Should they also have

geographical reporting lines? Both systems have been tried, with varying

degrees of success at each of the major agencies.



But the problems don't end there for the CEO juggling new practices.



He (and possibly soon she) is faced with a whole strata of PR people

coming up through the ranks as specialists. Capozzi points out: 'The

business is going to have to figure out how to accommodate these

professionals who don't choose the management track. We need to find

ways to show that a senior crisis person who we bill out at dollars 500

an hour is just as valid to the organization as a 35-year-old MBA

graduate. If the only way that 'success' is defined is by managing part

of the business, that's wrong. These specialists do a great job for our

clients.'



Because of dilemmas such as these, many senior PR agency managers

subscribe to the view that the PR agency of tomorrow is going to need

something akin to a 'professional' manager to lead it through a period

of unprecedented change. 'We think of ourselves as having worked in the

heyday of PR firm growth, but we haven't seen anything yet,' Capozzi

says. 'The emergence of the professional manager is an inevitable

outcome of the growth of the agency business.'



Capozzi admits that growth in agency size puts a strain on him to keep

up with the change. 'The prospect of the 10,000 employee-agency

emphasizes the need for more serious credentials as a manager. My

professional background as a financial writer won't serve me well unless

I can translate it into management skills of leadership, direction,

delegation, as well as accounting for our agency's performance.'



Taaffe also testifies to the priority of sharp management skills.

'Obviously, you must understand the PR business, but at least as

important is the ability to take tough, often unpleasant decisions to

keep the business in shape.'



Staying close to the action



Interestingly, this is the one area that invites dissent amongst the

major agency players. While many of the 'new breed' assert management

skills as a priority, some of the more senior industry leaders are

adamant that the person at the top must be a PR man or woman first and

foremost.



'It would be my worst nightmare to have managers not working on client

business,' says Graham, who has structured the agency he has run for 27

years so that he can still spend 40% of his time on PR work. His desire

to remain hands-on with client accounts isn't only because he feels he's

still good at it. 'It helps me keep a feel for what's going on. I think

you can quickly become isolated unless you keep in touch with the

accounts. It's easier for me to take strategic decisions on which

direction to take the business when I am familiar with client

needs.'



His counterpart at H&K, Paster, similarly refutes the idea of a manager

who is more devoted to the processes of agency life than the practice of

client business. 'Size of the agency doesn't necessarily affect the

quality of the management,' he says. 'Agency leaders of the future will

have to continue to be client-facing people first. You just have to add

to those client-counseling skills. I wouldn't like to see an

'institutional' system of managers coming into the business.'



But Ketchum is a good example of the need for classic management skills

applied to a business at a crucial point in its growth. The agency

started the 1990s as a fairly small PR shop that was part of an ad

agency. It was bought by Omnicom in 1996 and has since quadrupled in

size, becoming international in the process.



Although Ray Kotcher emphasizes his roots as a PR man, Kotcher spends

much of his time trying to turn Ketchum into the Dell of the PR

world.



(The computer giant is famed for its dedication to delivering the same

experience to every customer).



'I do spend a lot of time with clients, but there are people here who

are much better than me at PR,' says Kotcher. 'I'm not bad at it, but my

time is better spent constantly reinterpreting the Ketchum brand,

professionalizing our business.'



'My challenge is to ensure that, as we grow, we stick to our culture of

co-operation, teamwork and trust. These are the qualities that set us

apart, and I spend a good part of my time institutionalizing that

culture at an operational level, putting the processes in place that

make it real for staff and clients. If we are to truly create a seamless

experience for clients, no matter where they work across the world, we

need consistency in how our people perform throughout the agency.'



Changing with the times



The need for business savvy extends beyond size issues. PR agency chiefs

of the future will make complex decisions about spending large amounts

of money on technology to increase efficiency, and facilitate the kind

of processes described by Kotcher. They'll also spend even more time

dealing with law firms and bankers while negotiating mergers and

acquisitions.



In addition, the increasingly hyper level of competition among the big

agencies means finding new services to offer, differentiating them to

clients. Paster defines this as the strategic ability to 'spot industry

trends, but also to anticipate what clients might want in the future and

plan how to provide it.'



As Bergen observes, the ever-tougher agency game means that those at the

top will have to reinvent themselves yet again - as

super-innovators.



'They need to break out of the traditional mold they've always been in,

into new areas. They'll have to address the possibility of buying, or

being bought by, management consultancies. And consider how to offer

clients new Internet services.'



The global nature of clients' business is now being reflected in the PR

agency business, meaning that managers need to be more aware of life

beyond US borders than ever before. 'Clients want agency leaders who

move in the same international arenas they do,' says Paster. Or, as

Bergen puts it: 'We've all talked global for 10 to 15 years. The agency

leaders of tomorrow will actually have to deal with the implications of

it.'



The day will soon come when a major PR account will move in an

international realignment similar to the DaimlerChrysler ad switch,

which cost True North its independence. When that watershed happens, PR

agency leaders will truly be playing a global game.



But for now at least, the emphasis is on lining up those people who will

be able to compete on a world stage.



If that sounds like a hard task, imagine how much harder it is to be

catapulted into the role. Capozzi admits to feeling occasional

'frustration' when he can't spend enough time with clients (he estimates

spending 25% of his time on client work).



'I grew up in the profession, spent all my time thinking about my

client's problems and developed my skills as a PR man,' he says. 'Then I

got promoted to run a dollars 100 million company, which is a job that

requires an entirely different approach. But I still think of myself as

a financial writer.'



Hoog expresses similar feelings about how his job has evolved: 'I

certainly had the right mix of skills for the right time, but I'm not

sure if they would be so relevant in five years' time.'



No doubt, it's a tough transition. Kotcher estimates that the amount of

time he spends with clients has not changed in the past 10 years, but he

has had to add in numerous other tasks in efforts to guide the strategy

of the agency. 'I've just had to fit more into my time - we're talking

getting in very early and leaving the office very late. It's a function

of globalization and of all the information now at our disposal.'



John Graham has seen more than a few changes in the profession during

the 27 years he has been running Fleishman-Hillard. He has created a

structure for the agency that both allows him to spend a good portion of

his time doing what he loves - dealing with clients - while

masterminding the kind of growth which has seen Fleishman climb right up

to the top of the American PR tree.



But despite Graham's achievements, it will be whoever holds the reins at

the agency in 10 years from now who will ultimately shape Fleishman's

part in the global communications dance - for which the curtain has only

just lifted.



SUCCESSFUL SUCCESSION



Ketchum



Dave Drobis, Chairman



Age: 58



Years as CEO: 10



Successor: Ray Kotcher



Ketchum was the first agency in recent memory to address the issue of

succession. Having worked closely with David Drobis for the past decade,

Kotcher moved into the CEO role last June, and Drobis became

chairman.



PRWEEK PREDICTS THE FUTURE



Fleishman-Hillard



John Graham, CEO



Age: 60



Years in Job: 27



PRWeek Pick to Succeed



Picking a likely future leader of the US' largest PR agency is a tricky

task, as the dynamic Graham has no obvious deputy. Of the 12 senior

execs who make up Graham's next level, none has pre-eminence over the

others. Although Graham admits that he has put no particular succession

plans in place, he says he has 'a number' of potential successors

amongst the 12. 'Anyway, I intend to stay on as CEO for some time yet,'

adds a sprightly Graham.



Odds: 12 horses are in the paddock, but no race is scheduled.



Hill & Knowlton



Howard Paster, Chairman and CEO



Age: 57



Years in Job: 7



PRWeek Pick to Succeed



Paul Taaffe, President



Australian-born Taaffe is truly a global citizen these days, having

worked in the UK, and supervised Europe, the Middle East and Africa in

his previous H&K role. He's also seen as having close to the perfect mix

of experience, having headed up Unilever's corporate affairs in the UK,

before becoming director of Shandwick Consultants. He moved to New York

last fall and is generally regarded as Howard Paster's

CEO-in-waiting.



Odds 2-1: A fine pedigree makes this colt a shoe-in.



Hill & Knowlton USA



Tom Hoog, President & CEO



Age: 62



Years in Job: 7



PRWeek Pick to Succeed



Harlan Teller, Global head of corporate practice



The name of H&K's Chicago-based corporate head is regarded as being in

the running for Tom Hoog's job when he retires, although the rumor mill

says it's not a done deal. Other names in the mix are Ron Hartwig,

EVP/GM in LA, and Phil Sheldon, GM in New York. However, Teller is

well-regarded within both the agency and the industry, having guided

clients through a variety of crisis situations, M&A's and legal issues.

He joined H&K in 1996 after 20 years with Burson-Marsteller.



Odds 4-1: The early pacesetter.



Porter Novelli International



Bob Druckenmiller, CEO



Age: 58



Years in Job: 9



PRWeek Pick to Succeed



David Copithorne, President



A journalist-turned tech PR man, who sold his agency (Copithorne &

Bellows) to P-N in 1995, Copithorne was promoted to president last

November, a position from which he runs the US business. Although

Druckenmiller is prickly on the subject of succession, with UK-based

veteran Peter Hehir recently retiring, Copithorne appears to be

best-placed to take over from his boss.



Odds 3-1: Has rallied from the back of the field to nudge ahead, but the

finish line is not in sight.



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