Editorial: Quantifying the cost of success

Nicola Horlick, the 35-year-old fund manager removed from her job at Deutsche Morgan Grenfell last week, earned a reputed pounds 1 million a year.

Nicola Horlick, the 35-year-old fund manager removed from her job

at Deutsche Morgan Grenfell last week, earned a reputed pounds 1 million

a year.



The reaction of the general public has, unsurprisingly, been mixed:

admiration for her undoubted pluck, astonishment at her media

manipulation, and not a little envy at the size of her pay-packet. What

almost everyone in the City agrees is that she was very good at her job

and was value for money.



It is ironic then, that certain elements in the City should choose the

very same week to register their unhappiness with the level of fees paid

to financial PR firms.



The City clearly finds it perfectly acceptable that a talented

individual should earn a seven-figure sum but balks at the same figure

being paid to a public relations firm for its part in a takeover

battle.



The reason for this schizophrenic view is that Nicola Horlick’s

contribution to the clients of Deutsche Morgan Grenfell was precisely

quantifiable, the advice of PR experts is not.



Thus it has become all too easy in this accountable age to discount the

contribution of communication experts whose input may defy accurate

measurement, but which may nevertheless be vital to a successful

outcome.



Citigate, for example, may have made a great deal of money from its role

in Granada’s takeover of Forte. But if it netted a pounds 1 million fee,

that would still represent rather less than one per cent of Granada’s

total outlay on advisers and underwriters in the bid.



Since the takeover was successful one cannot imagine that the victorious

Gerry Robinson begrudges a penny to Citigate or any of his other

advisers and agents.



During the wave of massive privatisations in the 1980s, the same

questioning of fees arose with respect to advertising agencies and the

huge budgets spent on persuading ordinary folk - Sids as they have been

dubbed - to buy shares. In hindsight, it is clear that almost all of

those flotations were a great commercial success. The money spent on

advice and relevant communication pales into insignificance compared

with the sums raised from the sale of shares.



Today big companies fight big battles for big stakes. The best PR firms

and other expert advisers are the increasingly sophisticated weapons at

their disposal. Without them they risk failure, which is

unthinkable.



In the City, reputation is a precious but fragile flower. Skilful public

relations can protect and enhance it, but while that expertise may not

come cheap, the City should recognise that it is often very good value.



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