Much has already been written about the spectacular fall from grace of Teneo co-founder, chairman and CEO Declan Kelly, who resigned from the firm on Tuesday after admitting to inappropriate behavior at a charity event in May.
Once a client as high profile as GM deserted the consultancy after the story of Kelly’s behavior at a fundraiser on May 2 broke in the Financial Times, his position became untenable.
The FT last week reported that Kelly was drunk and engaged in nonconsensual touching of women and men at an event hosted by anti-poverty nonprofit Global Citizen, which subsequently removed Kelly from its board.
Global Citizen is chaired by Chris Stadler, managing partner at CVC Global Capital Partners, which took a majority stake in Teneo in June 2019.
Once the FT story broke, Kelly issued a statement in which he admitted full culpability for the incidents: “On May 2, I made an inadvertent, public and embarrassing mistake for which I took full responsibility and apologized to those directly affected, as well as my colleagues and clients.”
However, it’s worth noting that Kelly’s departure is only the latest in some fundamental exits from the advisory firm that established a reputation for high-level – and expensive – consultancy at the most senior levels of organizations.
Vice-chairman Richard Powell, who formerly ran one of the agency’s most lucrative divisions – strategy and communications – left Teneo in May. The former Burson-Marsteller worldwide COO is now president at Chobani Futures according to his LinkedIn profile.
Kelly’s co-founder Doug Band left Teneo in December, a week after an extraordinary interview in Vanity Fair detailed the broken relationship between Band and former President Bill Clinton, for whom he was once a special adviser, and the Clinton family.
Teneo’s third co-founder, former COO Paul Keary, this week assumed CEO duties following Kelly’s departure.
It is more than somewhat ironic that two such high-profile individuals - Kelly and Band - should depart the agency they founded, and which was fundamentally linked to their personalities and extremely high-level and high-profile contacts, after some less than stellar reputation management activity.
In his resignation statement, Kelly cryptically alluded to “A campaign against the reputation of our firm has followed and may even continue in the coming days.”
There has been speculation about the source of that campaign and it does seem curious that major news outlets including the FT, The New York Times and The Wall Street Journal all doubled down on this story at the same time three months after it happened.
The latest drop by the FT alludes to "dark arts" and "spin" and the all-too-familiar language the mainstream media uses when it comes to talking about the industry. And the story is very prominently displayed under the banner 'Public relations.' So it's clearly not a good look for PR.
On his LinkedIn profile Kelly cites the fact that he is “recognized in particular for his crisis management experience.” Both Kelly and Band made great play of providing strategic counsel to, and working exclusively with, CEOs and other senior executives.
This was a major ingredient of Teneo’s secret sauce. Unashamedly expensive, it would use its connections to breeze into the boardrooms of some of the world’s top corporations and gain the ear of the CEO, often putting existing stakeholders’ noses out of joint such as in-house chief communications officers and the PR firms that advised them.
Of course, Kelly is not the first agency executive or consultant to employ those tactics. Martin Sorrell was famous for it during his time at WPP. And there are others closer to the pure PR industry that have been known to operate similarly. All's fair in love and business.
But Kelly was a unique operator and his modus operandi helped parlay Teneo into a 1,250 person-strong significant competitor to more establishment and less personality-based players such as Joele Frank, Finsbury Glover Herring, Brunswick Group, Sard Verbinen, Abernathy MacGregor and one of his former employers, FTI Consulting.
Observers of his methods note that, where many consultants would outline a client’s problem, Kelly was renowned for offering a solution. They say CEOs liked him, especially those new to their top role, and were seduced by his rhetoric, which often revolved around big and sometimes left-field ideas. Others wonder how many of those big ideas resulted in real value to those clients and who ultimately benefited from them.
But Kelly’s energy and audacity certainly convinced many clients that together they could get things done, although that energetic reputation took something of a hit when he was pictured asleep in the stands during the first quarter of last year’s Super Bowl in one of the most expensive seats in the house.
Teneo also had a dash of showbiz about it in the star names from politics and business Kelly and Band hired over the years among their senior advisers, including former President Bill Clinton and former British Prime Minister Tony Blair and, currently, individuals including former speaker of the House of Representatives Paul Ryan, Senator George Mitchell, former Xerox CEO Ursula Burns and former IBM CEO Ginni Rometty.
High-profile current staffers include former city of New York police commissioner Bill Bratton and New York Governor Andrew Cuomo’s daughter Mariah Kennedy Cuomo.
The firm didn't participate in RFPs and adopted a take it or leave it approach to new business negotiations. It successfully established a reputation that you weren't an elite CEO unless you had Teneo on your team.
Maybe this was why Kelly always seemed to have a slightly uneasy relationship with the term “PR,” despite working for Ireland’s then largest PR firm Murray Consultants back in the day on leaving journalism, and subsequent stints at FleishmanHillard, Financial Dynamics and then, on that firm’s sale, at its acquirer FTI Consulting.
When PRWeek included Kelly on our annual Power List in 2017, Teneo attempted to get us to remove him from the list. The implication was that Teneo was too important to be considered “just a PR firm,” such was its sway with CEOs and the C-suite at organizations. Many reporters and editors have similar anecdotes about being on the more over-persuasive end of the Teneo media relations machine - and that tone was set from the top.
A representative from Teneo declined to comment when I contacted them for this story. CVC Capital Partners did not respond to requests for comment.
However, there are some excellent PR practitioners plying their trade at Teneo, including former Goldman Sachs global head of corporate communications Lucas van Praag, former Burson-Marsteller U.S. crisis lead Paul Gallagher and U.S. media strategy director Casey Morgan, former Dow Jones CCO Bethany Sherman and former Kekst and Co. MD Andrea Calise.
As Teneo’s new CEO, Keary’s challenge will be to retain his senior talent and high-profile roster of advisers and rebuild the reputation of a firm that advises on reputation but whose own reputation has been sullied by the actions of its former CEO. Clients will certainly be looking for less drama around the firm than has been the case over the past six months.
A report in Axios this Wednesday suggested CVC Capital Partners had been trying to “deemphasize” Kelly’s influence since its acquisition of a controlling interest, acquiring businesses outside his areas of core competency, including the June 1 purchase of Deloitte's U.K. restructuring business - handily completed before news of Kelly's charity event behavior emerged.
It is not clear what the status is of Kelly’s ownership stake in Teneo now he has left the firm under a cloud. A representative from Teneo declined to comment on this.
In the current climate it is difficult to see him being able to re-emerge in a reputation advisory role elsewhere, but we should never underestimate the powers of redemption. In April, he set up a private equity firm called Integrum specializing in tech services investments with Ursula Burns and two other partners. Integrum is the Latin word for "reinstatement," though there is currently no trace of Kelly on the firm's website.
Either way, private equity firms want returns on their investments and CVC will be looking for some short-term stability in order to put it in a position to flip Teneo and unlock the value it saw in that investment.
But given the "campaign against the reputation" of the firm and the momentum this story is continuing to generate, that doesn't look like it's going to be a simple task. A law firm was hired by Global Citizen to conduct an outside investigation into the events of May 2.
Clients may conclude they want advisers on corporate reputation and crisis with a slightly lower profile that don't have such a tendency to become the story - one of the first rules of effective public relations.