Alison Canning’s decision to resign as chief executive of Burson-
Marsteller UK calls into question the wisdom of doing away with the
role of country managers
However you look at it, the manner in which Alison Canning leaves
Burson-Marsteller seems a sorry conclusion to a hugely successful career
at both B-M and its sister company Cohn and Wolfe.
Her decision was prompted by the introduction of B-M’s new practice-led
management structure which takes effect in Europe from October. This
does away with the role of country managers like Canning, although
regional managers - like European CEO Ferry de Bakker - remain.
B-M has reason to believe that its new practice-led structure is the way
forward, and has already introduced it successfully in other regions.
But the loss of Canning has focused attention on the rationale behind
the move. For ultimately PR is still a people business, and people of
her calibre are not easy to find.
B-M responds with the usual reassurances about the quality of the
hundreds of other staff in the group. And, to be fair, B-M tried hard to
find her other positions within the new structure. But from the outside
it looks as if a talented PR practitioner and chief executive has been
sacrificed on the altar of a management theory.
De Bakker says he ‘very much regrets losing such a powerful player’, but
there was simply no job the firm could offer that she wanted. But the
bigger question is whether practice-led agencies can do without country
managers who have profit responsibility for their own offices.
Canning says she regrets not being able to see through her four year
strategy for B-M UK, although she fully supports the new structure. But
she is sceptical about agencies ignoring geography altogether. ‘The
pendulum will swing across and then come back a bit,’ she says.
De Bakker says the structure has worked well for B-M in the US,
encouraging it to bring the change to Europe.
‘B-M is of the size that it can do it and see if it works. We will have
five practice structures in Europe, each with over 100 staff and dollars
15 million in income.’
B-M is not the only agency to examine the idea. All big global agencies
are finding themselves under pressure to maintain an edge over smaller,
more nimble local rivals with lower overheads. The practice-led approach
has many admirers. It puts the combined power of its global expertise at
the disposal of client needs. Not only could this give them the edge in
winning global or regional cross border accounts, but - so the theory
goes - it will add strength and depth to their ability to win local
business. In certain cases, it may also reduce management costs.
PR agencies are not sailing into uncharted waters with this move. The
structure mirrors that of many other professional services firms,
including management consultancies.
Ironically, leading management consultancy McKinsey has just published a
research article called ‘The return of the country manager’ in McKinsey
Quarterly. It argues that the transnational model is slow and complex,
and describes how multinationals are re-introducing country managers in
order to better meet local client needs.
The article suggests that although the ‘transnational model is
nominally introduced to improve client service, often they achieve the
‘[Globalisation] actually increases local customers’ desire for personal
attention,’ it says. ‘These customers have seldom felt well served by
their suppliers’ transnational restructuring.’
The McKinsey research also suggests that although it may involve some
cost savings, the structure does not always make the company run more
smoothly. Some multinationals found it led to ‘a nightmare of
organisational complexity, divided responsibility and delays’.
Jose Antonio Llorente, former chief executive of B-M in Spain, also
points out that sector specialists are not necessarily the best business
managers, and vice versa. He quit B-M in June last year to start his own
agency, JA Llorente y O Cuenca, which now ranks 15th in terms of fee
‘B-M always had people to look after specialist areas of business,’ he
says. ‘But they were there as a source of knowledge, like a research and
development resource to help the country managers. Now they are managing
a business and that is something very different.’
There is also the question of developing business within each market -
both organically and in terms of acquisitions.
‘When multinationals are weighing the pros and cons of local adaptation,
they should recognise that country managers with P&L responsibility are
better placed than head office staff to determine how much must be
invested to increase market penetration,’ says the McKinsey article.
On top of that, cross-border PR teams will still have time differences
and language barriers to cope with. More importantly, there are cultural
differences between local markets, even within regions like Europe. It
may be that the export of a homogenised brand of ‘McPR’ is not
necessarily what clients in these local markets want.
But service companies like PR, or even ‘perception management’ firms,
are perhaps a special case. The global and regional teams are smaller
and more flexible. Technology has also made it easier for them to work
together. Can they make practice-led structures work where others have
Shandwick’s Peter Gummer believes so. He spelled out his hi-tech vision
of the future, in a keynote speech to last month’s Hard Commercial Edge
of PR conference.
He argued that the technological revolution we now face will overturn
the way the media operates, the way business is conducted, and the way
that PR agencies operate.
That will include, says Gummer, flatter structures and borderless
agencies. ‘The notion of geography will disappear. PR will become a
global business, 24 hours a day, 365 days a year,’ he said. ‘And most of
it will be handled by virtual agencies - because clients will no longer
pay for the office space.’