The high profile departure of the ’gang of five’ from Shandwick
Consultants demonstrates both the strengths and weaknesses of the PR
The model upon which the five have based their new company, the Hogarth
Partnership, is becoming an increasingly popular one - an inverted
pyramid with senior directors and support staff but few in the middle
ranks, and a willingness to work alongside other consultancies.
This kind of set-up is a response to several trends - a strengthening
in-house sector, a move towards more project-based work, and a client
demand for strategic input rather than down-the-line implementation. As
such, it is surely a sign of a maturing industry - one where PR is less
process driven, and its importance recognised by the greater status and
resources allocated to it in-house.
The problem for consultancies is how to service an increasingly
sophisticated client sector; provide specialist advice; incentivise
staff to come up with the best solution for the client - and still make
a decent profit.
The changes ’brought forward’ by Shandwick in the aftermath of the
breakaway - the creation of three new business units (financial, public
affairs and corporate); and a move away from account groups towards
teams of people working across those practice areas - are a response to
the same pressures.
Then there is the ’management issue’. As demand for the best people
increases, it becomes correspondingly more difficult for consultancies
to hold on to them. The problem, therefore, is how to manage the
inevitable breakaways that an entrepreneurial industry will always
spawn. In this case, Shandwick, not wishing to appear a soft touch, is
applying pressure on the departing executives to stay within the bounds
of their contractual obligations to keep their hands off their former
employer’s staff and clients for 12 months.
In practice, it is unlikely that such restrictive covenants could stand
up for long. Nor is there much to gain from queering the pitch for those
clients that decide of their own volition that they would prefer to be
with the new firm.
Having rattled its sabres menacingly, Shandwick is now rightly moving
towards a negotiated settlement with its wayward children. This is a
wise move which should result in a carefully negotiated, phased
withdrawal of staff, with minimal disruption to clients.
In a people business like PR, no consultancy can hope to avoid the
possibility of breakaways altogether. It is also a sign of a maturing
business that such situations can be dealt with sensibly and with good
grace - albeit through gritted teeth.