Close-Up: Live Issue - Where have all the chief execs gone?

Why is adland finding it so tough to hire chief executives, Emma Barns and Kate Nicholson ask.

Network chiefs will increasingly have to look outside their traditional advertising hunting grounds for heads for their London offices as the dearth of local candidates continues to hamstring their recruitment efforts.

TBWA\London, DDB London, Euro RSCG and JWT share a common problem - they are all looking for candidates to head their London shops. And they are all looking in a market in which convincing candidates are scarce.

They could choose to promote from within - but, with a couple of possible exceptions, they don't have the right management talent waiting in the wings.

And following Sir Martin Sorrell's successful snaring of Jim Kelly and Robert Campbell to be the joint managing partners at United London (formerly HHCL United), credible external candidates are also looking pretty thin on the ground.

In part, the problem stems from the recession of the mid-90s, when agencies were forced to cut back on recruitment. The knock-on effect is fewer quality senior managers, making the pool of next-generation chief executives a shallow one in which to fish.

A scarcity of candidates at management level and the competition in the market has had another side effect: agencies have become increasing reluctant to bankroll their managers' professional development, fearing that their newly acquired qualifications will become their passport to taking up better-paid jobs elsewhere.

But the real problem for the network chiefs is not the lack of talent, but that there are so few candidates who actually want to run the large advertising agencies that are part of a network. Top-level management is being seduced by the start-up culture. As agency owners, their financial prospects are much better than most of their peers in network shops.

One agency source says that to compete with the appeal of start-up shops, agencies need to find new ways to remunerate their top-level staff: "The rewards in (network) agencies are not enough. They are not entrepreneurial business models, so there's no reason to stay. As a result, executives are now launching their own agencies. United is an exception, but you have to remember Jim Kelly and Robert Campbell are getting equity, not just a straight salary package."

So what can agencies do about it? Networks do have the advantage of being able to bring in top talent from overseas. Such appointments involve risk, however. Will the candidate work well in the UK market, for instance. And will they like living in London? They can also look outside traditional advertising for potential leaders.

Chris Pinnington, the UK chairman of Euro RSCG Worldwide, explains: "Ad agencies are re-thinking how they work to be more integrated; this will bring in new talent from a broader base."

One prominent example is Nigel Jones, the new chief executive at FCB London, who joined from Claydon Heeley Jones Mason, the direct marketing shop he helped to found.

Other networks, such as Euro RSCG and United, are starting to offer remuneration packages that compete financially with what a start-up can provide - and deliver greater job security. But for now, it is still far from obvious who the new generation of inspiring and energetic leaders will be.

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GROUP CHAIRMAN - Chris Pinnington, UK chairman, Euro RSCG Worldwide

"The transition from senior account director to chief executive is dramatic and not many people turn out to be brilliant. This has always been the case but now, coupled with the fact that people are leaving the country to work in agencies abroad, or setting up on their own, it is even more difficult to hire good people.

"Kelly and Campbell's hirings suggest that if the right package is constructed, then the network agencies can be more appealing than a start-up. They have to offer more than the standard salary. If there's a significant share in the agency, then this can offer that excitement that is part of the appeal of a start-up."

START-UP CHIEF EXECUTIVE - Mark Lund, chief executive, Delaney Lund Knox Warren & Partners

"Network agencies are not growing fast, so the potential rewards for staff are limited. It's hard for them to give generous incentives. The slow growth also means that as the chief executive of a network agency, it is all about seeking out small gains, not driving the huge growth that many of us go into advertising for. This makes the independent agencies, with their quicker growth, more appealing.

"The only answer is to re-create the level of entrepreneurialism in these agencies. There is no substitute for senior management having a vested interest in the future of their agency."

HEADHUNTER - Gay Haines, worldwide chief executive, Kendall Tarrant

"It used to be that when you needed a chief executive, you would look below the current one and there would be four fantastic group heads all in waiting. This doesn't happen anymore.

"This comes from the industry's problems in attracting talent in the first place. Advertising is not top of the list for today's graduates, and we're losing talent to the City and professional services.

"We need to be less risk-averse in hirings - we have to broaden our sights and hire from different industries and different countries. We must be more courageous or we will forever be fishing in the same pool."

HOLDING COMPANY CHIEF - Maurice Levy, chairman and chief executive, Publicis Groupe

"It has been difficult to recruit talent over the past two decades because people have been attracted by the City and the internet boom. The problem is particularly acute in the UK as it is one of the most buoyant financial marketplaces and the top talent is drawn to that.

"We cannot compete with the City in terms of compensation, but the work we do is more interesting and so more attractive. Many of our people have a stake in the business and this will continue and increase. It is attractive for people to be entrepreneurs under the protection of a holding company."