There must be a better way of incentivising consultancy staff than top
heavy salaries, says Charles Cook
Last Saturday, under the headline ‘Irresistible Pull of the Poachers’,
the FT’s leader page feature explored the growing concerns of financial
sector employers at the way in which City salaries are being ratcheted
up as investment banks scramble for key staff.
Admittedly the scale of some of these top banking packages exceeds the
annual payroll of many PR consultancies but where bankers lead, will
financial PR executives follow? If recent experience of seeking senior
consultants for our own medium-sized consultancy is anything to go by,
the answer is ‘not if we can help it’.
Base salaries of six figures are now relatively commonplace for senior
financial PR account directors in their mid-30s with, say, 12 or 15
years’ relevant experience - or so the headhunters assure us. Add in the
perks and one can find a growing band of thirtysomethings whose fully
built-up cost to their employers could be as high as pounds 15,000 per
I’m all for high pay, providing it accurately reflects the recipient’s
contribution to the consultancy’s income. So, if your base salary is
pounds 100,000 and your employer’s finances are geared to the reasonable
ration of revenue amounting to three times base salaries, you will be
expected to generate at least pounds 300,000 in fees. Apply the usual
working weeks per year/hours per week sum, and your chargeout rate
approaches pounds 350 per hour.
There’s the rub. To make sense of such high salaries, an employer has to
ensure that clients will pay these rates.
At the top end of our business there is no doubt that the contribution
to corporate clients in advising on strategic communications issues is
worth every bit of these fee levels. But there is a big difference
between the real strategic consultants and those whose prime skill is as
excellent senior account handlers and implementers.
The answer must lie in more rigorous linkage of pay and performance and
querying the headhunters’ seemingly unquestioning assumption that ‘the
market rate’ on base salaries is the only way to remunerate people.
No managing director should begrudge paying a true ‘rainmaker’ their
fair share of the revenue that he or she creates - even to the extent of
paying them more than the MD receives. But the way to do this is to
establish a more highly geared performance system so that bonuses form a
greater proportion of an individual’s total remuneration package.
I know of one financial PR consultancy which regards a 20 per cent
performance bonus as exceptional and 15 per cent as a more realistic
ceiling. Where is the real risk and reward sharing in this? Surely the
essence of public relations is that the best performers are
entrepreneurial by nature. Structure the ‘stick and carrot’ correctly,
and they will respond to the prospect of being able to significantly
enhance their pay by their own efforts.
This debate is, of course as old as the hills. But that is no reason to
accept the inherited wisdom. It is perhaps time for a more creative
approach to remuneration issues in our own industry.
Charles Cook is managing director of corporate and financial
communications consultancy Grandfield