From the editor-in-chief: Why Teneo's Kelly had to resign and what it means for corporate PR

Declan Kelly’s resignation from the helm of Teneo yesterday (Tuesday) signals some important developments in the business world and implications for the PR/comms sector.

From the editor-in-chief: Why Teneo's Kelly had to resign and what it means for corporate PR

For those who hadn’t heard of him, Kelly is a 53-year-old Irish-American businessman and philanthropist. He began his career as a journalist in Ireland but became better known as an adviser to Hillary Clinton in the late 2000s, before co-founding the consultancy Teneo in 2011.

And Teneo is arguably the most significant agency to emerge in the world of PR over the past decade.

From nowhere in 2011, this consultancy has headquarters in New York and London, pulling in annual revenues of up to $400m; both in comms fees and in restructuring and management consultancy revenues, and from an array of blue-chip firms including Facebook, McDonald's and Tesco.

The London office alone has become well known for hiring senior politicos such as William Hague, Amber Rudd and Sir Craig Oliver.

Teneo positions itself as the advisory firm for big business CEOs, having successfully taken on not only long-established corporate PR giants such as Brunswick and Finsbury, but broader management consultancies too.

Then, last Thursday (24 June), the Financial Times revealed Kelly had lost his board seat at the anti-poverty campaign group Global Citizen and ceded some of his responsibilities as head of Teneo, after allegations of drunken misconduct at a fundraising concert.

The allegations were that Kelly had behaved inappropriately at a party on 2 May linked to the high-profile concert put on by Global Citizen, chaired by Prince Harry and Meghan Markle, which featured artists including Jennifer Lopez. According to the FT, several sources claimed the inappropriate behaviour included the non-consensual touching of a number of women. A spokesperson for Kelly said he “deeply regrets his actions” and had apologised to those he had offended. The next day Global Citizen removed him from its board.

But over last weekend pressure was mounting on Kelly to resign, particularly after one of its major clients, General Motors, severed ties with the consultancy, costing Teneo about $250,000 a month in lost fees.

And on Tuesday, Teneo announced that Kelly had resigned to immediately be replaced by fellow co-founder and chief operating officer Paul Keary. The third co-founder, Doug Band, left the firm – which was valued at more than $700m in 2019 following an investment from venture capital group CVC – earlier this year.

In a statement yesterday, Teneo said: “We want to thank Declan for his leadership and dedication over the past 10 years in building Teneo into the world’s pre-eminent CEO advisory firm.”

Kelly admitted he had made “an inadvertent, public and embarrassing mistake for which I took full responsibility and apologised to those directly affected, as well as my colleagues and clients”.

He added: “A campaign against the reputation of our firm has followed and may even continue in the coming days. However, regardless of the veracity of any such matters I do not want them to be an ongoing distraction to the running of our company.”

Significantly, a decade or two ago, a firm like Teneo and a boss like Kelly may have thought they could ‘tough it out’, relying on the whole thing ‘blowing over’.

But today we live in different era. This is, after all, the post-Bell Pottinger world.

In 2017 Bell Pottinger, at the time one of the UK’s biggest and longest-established corporate consultancies, collapsed into administration after it was found to be fomenting racial tension in South Africa.

Of course there is no comparison between what Bell Pottinger was accused of and the allegations against Kelly, but the former collapsed surprisingly quickly as one after another of the agency’s clients resigned their accounts for fear of being ‘contaminated’ by their advisory consultancy’s dodgy behaviour.

So when GM parted ways with Teneo earlier this week, the consultancy’s management would have been keen to reassure other clients it was taking strong action to prevent any further unravelling of their business.

Equally CVC, so soon after its own investment of hundreds of millions in Teneo, may have applied pressure to the agency’s leadership; so it too would be seen to be taking a strong stance on ethical behaviour and good governance.

Another important factor in Kelly’s departure would have been the nature of the allegations against him.

Over the past few years there have been several high-profile cases regarding sexual harassment in the financial and corporate world, not least in 2018 when two reporters, including the Financial Times’ Madison Marriage, went undercover at the men-only Presidents Club event in London. The journalists documented widespread sexual misconduct causing the demise of the club itself and damaging allegations against several key businessmen.

With Teneo regularly called in to help (often female) business leaders with reputational crises, the consultancy’s credibility could have been called into question with such allegations against its own chief executive.

After all, the classic crisis management handbook advises prompt admission of guilt, if applicable, followed by swift remedial action to salvage long-term reputation.

So what now for Kelly, his firm Teneo, and its place within the powerful world of financial PR?

The next few months will tell us whether this story will now gradually fade away or there will be further revelations about the individuals involved.

Presumably, Kelly retains a significant ownership stake in Teneo and therefore influence within it.

After this swift action, some major acquisitions in recent years, and with about 1,200 consultants worldwide, Teneo is likely to remain a powerhouse in the corporate advisory world for years to come.

Nevertheless, it is intriguing that there have now been substantial changes in ownership and leadership among all ‘big three’ corporate PR firms over the past 12 months.

In July last year, WPP’s Finsbury, The Glover Park Group (GPG) and Hering Schuppener announced a formal merger, with the holding company taking a 50.01 per cent stake in the venture. The new entity, Finsbury Glover Hering, now has Finsbury founder Roland Rudd and GPG founder Carter Eskew as co-chairs, with Alexander Geiser, former managing partner at Hering Schuppener, as CEO.

The management team owns 49.99 per cent of the new entity, with some notable female regional bosses emerging.

And just last week Brunswick agreed to sell a 10.7 per cent stake to US merchant bank BDT Capital Partners, valuing the business at about £500m. The deal was said to involve a payout of £140m to the global comms consultancy's 200 partners.

Just under half that total equity is expected to go to co-founder, figurehead and chair Sir Alan Parker, who has insisted he will stay at Brunswick.

These remain huge consultancy firms, creating vast wealth for their founders.

But these same executives have tended, despite their best efforts, to become too much ‘the story’ of late.

Finsbury’s Rudd, who played a key role in the failed Remain campaign during the Brexit vote in 2016, later became involved in a high-profile spat over The People’s Vote organisation in autumn 2019.

In April 2018 Brunswick’s Parker resigned his role as Save the Children's international chairman after 10 years in the role. He said a change was needed given the challenges facing the charity and the sector, but his handling of complaints about the charity’s ex-chief executive Justin Forsyth’s treatment of female staff a few years earlier had cast a shadow.

Then 18 months ago, at the US Super Bowl, Teneo’s Kelly was bizarrely picked up by TV cameras grabbing some shut-eye in the stand during the sporting spectacle. At least eight brands jumped on the social media bandwagon ribbing the quickly identified Kelly for his ill-timed nap.

And now, over this past week, we’ve had the latest furore.

Parker always used to quote the old public relations adage: “Never get between your client and the footlights.” Sage advice indeed.

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