campaignlive.co.uk, Friday, 24 March 2006 12:00AM
Despite being locked in mutual antipathy, WPP's Sir Martin Sorrell and his Publicis Groupe counterpart, Maurice Levy, have more in common than either of them might care to admit.
Both embody their companies in a way unmatched by any other leader of a global communications organisation. Yet both are the wrong side of 60, and, while neither shows any sign of slowing down, the questions about what happens when they do are growing louder. Moreover, the overpowering influences of characters such as Sorrell and Levy can work against the development of the financially astute entrepreneurs who should be the leaders-in-waiting. "Emotionally, it becomes hard to let go and you don't attract the people around you to be your successor," one analyst says.
Whether they like it or not, however, the supergroups are required to concentrate on succession planning as never before. "Sorting out succession is important in any public company," Lorna Tilbian, the media analyst at Numis Securities, says. "Because communication groups are people businesses, it's vital."
The pressure is compounded by stringent corporate governance rules imposed on companies by the Sarbanes-Oxley Act introduced three years ago by the US government. "It means we have to take the succession issue very seriously," a senior executive of an Interpublic operating company in New York says.
"It's hard for anybody who isn't here to understand what a monster governance has become." Indeed, it was ISS, the US body that specialises in corporate governance issues, that caused some discomfort at WPP's most recent annual meeting by prompting the question of succession to be raised.
Certainly Sorrell, now 61, is coy about the issue, which remains highly sensitive. So much so, that one normally talkative senior manager of a WPP company declined to discuss the matter even off the record.
Outside the immediate confines of the holding companies' headquarters, however, succession usually gets debated only when something highlights it as a potential problem. The investigation taking place within Sorrell's Italian operation is a high-profile example. "If groups are showing good growth and healthy share dividends, investors may not focus on succession issues as much as they should," Bob Willott, the editor of Marketing Services Financial Intelligence, says.
Nevertheless, it is becoming clear that the methods by which major holding companies are run are changing. More collaborative leadership structures are likely to emerge, which will allow operating company chiefs and heads of other disciplines, from finance to human resources, to be more influential.
Havas, for example, has just promoted Fernando Rodes from head of its Media Planning Group division to group chief executive. He replaces the banker Philippe Wahl, who stepped down after less than a year. "As all-round marketing communications groups, these companies are less likely to be run by classic admen in future," Isobel Bird, the executive headhunter, says. "Future leaders may well come from broader backgrounds."
Omnicom, which has a good spread of resourceful forty-something executives led by John Wren (who, at 53, is young for a head of a leading marketing services group), is being cited as a good example of how to make succession seamless.
"Although it's not a pressing problem for Omnicom, the group seems to have anticipated it and is handling it well," Willott says. Moreover, the Omnicom example is being watched closely elsewhere. "Levy sees what Wren is doing as a much more interesting model than the one he has," a Publicis Groupe source admits.
Omnicom sees succession as part of a perpetual process, overseen by Gary Rubis, one of the group's directors. Similar systems are in place to identify future leaders among the group operating companies. "We know who the candidates are, even though they themselves may not," Wren says.
And what if he were suddenly unable to continue running Omnicom? "I could be replaced by more than one person. What's certain is that the necessary people have been identified. The board knows who it would go to."
Curiously, Michael Roth's role since taking over at the still-ailing Interpublic could be emulated elsewhere if it is seen to work. A lawyer and accountant by background, Roth, 60, arrived with no advertising baggage and is the first IPG chief executive not to have cut his teeth in agencies.
Nobody doubts the scale of Roth's task. However, those who know him say Roth is playing to his strengths. While he deals with Wall Street, he is said to rely heavily on the advice of experienced admen such as Steve Blamer, FCB's global chief executive, and Steve Gatfield, IPG's executive vice-president of network operations.
Could Roth's operating methods be the precursor of the way holding companies will be led in future? "If he succeeds, it will create a very interesting precedent," a highly placed figure at a rival group says.
Meanwhile, other groups that have relied heavily on high-profile figureheads to fuel their growth must also look at alternatives. Although Levy, 63, has committed himself to Publicis until 2010, the group is said to be developing a more devolved system that will operate after his departure.
Levy, though, suggests he is not as indispensable as others believe. "I've not only led Publicis to a dominant position in France and Europe but into the top tier of global communications groups," he says. "The aim isn't to find a replica of me, but somebody who can take us to the next level. I believe we already have plenty of people with the potential to do that."
A likely scenario is a more egalitarian arrangement in which the head of the group's advertising interests becomes its most prominent individual as part of a management collective. "The people involved already know who they are," a Publicis insider says.
At WPP, the perceived lack of a succession plan continues to dismay.
Willott confesses astonishment that no successors have emerged from within the group. "Given the calibre of the networks Sorrell has bought, it should have been possible to pluck out contenders for a group role," he argues.
"But there's never been any sign of it and you have to ask if WPP has the strength of leadership it needs."
Philip Lader, WPP's chairman, insists the criticism is unjustified. Not only are internal and external candidates constantly monitored, but the board could act swiftly were anything to happen to Sorrell to prevent him continuing as chief executive, he says.
Some commentators have suggested WPP could be de-merged, with separate stock market listings for each constituent part, if a credible successor cannot be found. "I don't see it happening soon because Sorrell is likely to be around for some time yet," Tilbian comments. "But it's difficult to see how WPP could remain as it is after he goes." Lader acknowledges Sorrell is a "one-off" but adds: "No individual is replaced in every dimension. It's already been shown that large creative organisations can succeed with different models."
Across the Channel at Havas, the succession issue is complicated by other questions. Is Vincent Bollore, 54, the corporate raider who won out in last year's power struggle against Alain de Pouzilhac for control of the group, in for the long haul? Will he give sufficient attention to succession with other business interests making demands on his time?
Bollore certainly acts like a man intending to stay put. He has even set his retirement date for 17 February 2022, the group's 200th birthday.
By that time, it is likely to be under the control of one or more of his children, albeit with a highly devolved management.
"I'm not a one-man show," Bollore told Campaign. "We have evolved a consensual style of management here and I don't want to change that."
"Bollore has sunk a lot of his own money into this group and is deadly earnest about it," a Havas insider says. "Also, we're different from Publicis and WPP in vesting the real power in the operating units. It makes the chief executive's role less key."
That may be equally true of the other holding companies over time, as the charismatic chiefs who bestride them bow out. "Of course businesses need leaders," a top network manager says. "But we've all come to realise the direct replacement route may not be the right way to go. There's more than one way to skin a cat."
Time will reveal whether Publicis Groupe will have the courage of its internationalist convictions and appoint a non-Frenchman as Maurice Levy's successor. Levy claims to be open-minded about it. The so-called Directoire, the inner cabinet that oversees the group, has French, British, US and Japanese representatives, any one of whom could become the "first among equals" in the more collaborative system that looks likely to follow Levy's departure.
THE RUNNERS AND RIDERS
7/1 Jean-Yves Naouri director, Publicis Consultants
10/1 Rick Bendel chief operating officer, Publicis network
20/1 Kevin Roberts worldwide chief executive, Saatchi & Saatchi
50/1 John Farrell president and CEO, Specialised Agencies and Marketing Services
50/1 Steve King worldwide chief executive, ZenithOptimedia
The outcome of the succession steeplechase at WPP is impossible to predict because nobody outside the group board knows who is on the list of runners or how often it changes. The fact that the search for Sir Martin Sorrell's eventual successor is shrouded in such secrecy has led many to question whether WPP has a plan in place at all.
But Philip Lader, WPP's chairman, claims that far from neglecting the matter, the board has been giving it rigorous attention with internal prospects being watched and external prospects constantly monitored."Some would argue that this should be done in public but I strongly disagree," Lader says. "To do so would turn it into a horse race in a group where we seek co-operation among the operating companies."
One long shot is a pairing of Eric Salama, the chief executive of WPP's Kantar research division and a former Sorrell "fixer", with a financially astute City-facing partner.
THE RUNNERS AND RIDERS
4/5 Mystery outsider
100/1 Eric Salama chief executive, Kantar
150/1 Mark Cranmer chief executive, Research International
Everybody agrees Omnicom has a high-quality field contesting its succession. However, the battle to follow John Wren looks likely to be a two-horse race between two of the group's most rapidly risen stars.
Michael Birkin, the president and chief executive of Omnicom in Asia, could shade it if he succeeds in improving the group's performance in the region, long considered its Achilles heel. However, Andrew Robertson is expected to run him close. Those two aside, the list of contenders is a long one.
THE RUNNERS AND RIDERS
6/4 JF Michael Birkin president and chief executive, Omnicom Asia
6/4 JF Andrew Robertson chief executive, BBDO Worldwide
10/1 Randy Weisenberger Chief financial officer, Omnicom
15/1 Chuck Brymer chief executive, Interbrand group
50/1 Ken Kaess chief executive, DDB Worldwide
Having brought in Michael Roth to restore its financial health, IPG can be expected to break with the past by never again having an adman in sole charge. Since his arrival, Roth has concentrated on getting the finances right while taking advice on network matters from a small number of trusted advisors.
His eventual departure could leave the way open for two of his closest confidants, probably in partnership with a financial specialist. One is Steve Blamer, the worldwide chief executive of FCB. Frustrated at hanging around for Ed Meyer's job at Grey, he is now tasked with ensuring that FCB remains relevant as a global network. The other is Steve Gatfield, IPG's executive vice-president of network operations and a seasoned network operator - his immediate task is to lick the ailing Lowe Worldwide into shape.
A third contender could be Harris Diamond, the Weber Shandwick Worldwide chief executive. "He's a very savvy holistic thinker who runs a big organisation well," an associate says.
THE RUNNERS AND RIDERS
2/5 Steve Blamer worldwide chief executive, FCB
6/4 Steve Gatfield executive vice-president of network operations, IPG
10/1 Harris Diamond chief executive, Weber Shandwick Worldwide
Fernando Rodes may be the new Havas chief executive, but few doubt that Vincent Bollore will lead the group for the next 16 years while gradually devolving power to one or more of his children. Like Rupert Murdoch, Bollore, the group's chairman and principal shareholder, is keen to satisfy his dynastic ambitions by handing over to the seventh generation of his family. He has three sons and a daughter whose ages range from 18 to 28. One son already works with him, another is a film producer.
THE RUNNERS AND RIDERS
4/5 One or more of the Bollore children
10/1 Fernando Rodes chief executive, Havas
25/1 David Jones global chief executive, Euro RSCG
100/1 Mercedes Erra chairman, Euro RSCG France
100/1 Stephane Fouks CEO, Euro RSCG France and Euro RSCG C&O.
This article was first published on campaignlive.co.uk