Adland's management merry-go-round

Why can't London agencies hold on to their chief executives? Pippa Considine examines a peculiarly British problem.

Adland is experiencing something of a leadership crisis. The past couple of years have seen wholesale change at the top of London's creative agencies, with 15 of the top 18 network offices changing their chief executive (see box overleaf). In 12 of these cases, the top job has gone to an outsider.

Three top UK ad agencies are currently looking for a new chief executive: rumours abound that two others are also on the hunt. It seems some agencies have taken their eye off the ball when it comes to succession management - and the job of chief executive of a top London ad agency is not as desirable as it once was.

Andrew McGuinness left the chief executive's job at TBWA\London last year to co-found Beattie McGuinness Bungay. He says losing people to start-ups, where initial costs are low, is the nature of the ad industry beast.

"Part of what attracts people to advertising in the first place is the fact that it's a meritocracy," he says. "The ultimate expression is to see how well you do with your own thing."

But there are underlying reasons why start-ups will continue to take top talent away from the networks. Paul Bainsfair, TBWA's European president, has had to deal with the fallout caused by such defections, and says the prevailing uncertainty about the future structure of agencies in an age of emerging media is becoming an extra incentive. "The feeling that we're moving from advertising to big-idea-generation gives people more reason to think they might go out there and try their own thing," he says.

Those new agencies may reason that they are better-designed to cope with changing client demands. "It's possible the start-ups are able to argue that they are geared up for the new communications era," Bainsfair says.

Certainly, the newer, independent, local agencies have been winning business from the big, network shops convincingly. Clemmow Hornby Inge and BMB are in Campaign's current top-ten new-business league, with VCCP also showing strongly.

This number of successful start-ups in a relatively small market is a peculiarly British phenomenon. According to David Jones, the global chief executive of Euro RSCG: "London is a unique market, with a highly developed start-up culture. In the UK, start-ups are more fashionable and sexier and clients are often more inclined to give them their business. In the US, they don't generally succeed - the size and scale of business is a barrier to entry for start-ups and means the top talent generally believes they will be better off staying with established agency brands."

But it's not just the carrot of independence that is tempting management talent out of the big network agencies. There's also the stick being wielded by holding companies, which is putting people off the top jobs in network agencies. The job of running a big, traditional agency has become less sexy over the years.

London agencies are in a peculiar position in terms of their importance to international networks. Paul Hammersley, the chief executive of The Red Brick Road, has headed agencies for Omnicom in the UK and IPG in the UK and the US. "The UK is insignificant in revenue terms to the US," he says. "But it is significant in terms of international reputation. You need a strong London office to win global business."

Making a London office strong is also something of a conundrum. "You need to have a strong sense of local culture, which is difficult if the network is becoming more homogenous on a global basis," Hammersley adds. "They don't really want a spiky, independent local agency. There's a fundamental contradiction."

Issues of control can make the job of running an agency seem less attractive. Jones says : "As clients have put more emphasis on budgets and procurement, many holding companies and agencies have over-emphasised systems and control and squeezed out creativity and entrepreneurialism."

At most big network agencies, the split of UK business has become increasingly more international and less local. As a result, the local chief executive has limited control over some of their biggest accounts. One chief executive describes how you might be "gifted" an international piece of business with a 4 or 5 per cent profit margin, but still be expected to meet far higher target margins overall.

The rise in the number of big international accounts that require top-level management has taken more potential chief executives out of the running. According to one senior agency executive: "The really capable, big senior suits have moved into other roles, working on big, worldwide client accounts, where their job is high-profile and well-remunerated."

Although chief executives at the big agencies are still paid handsomely, there are issues with compensation. In the 80s and 90s, top executives had the incentive of potentially lucrative share options, with the lure of a chateau in the South of France or a yacht if they could stay the course. But more recently, network agencies have been shy of dreaming up bonus systems for local chief executives, especially where a global accounting structure doesn't allow for too much slack lower down the food chain.

"Agencies probably need to say, this person is going to make all the difference to our business," Hammersley suggests. "Then, in three years, if he or she succeeds, we will reward them well."

At the beginning of this year, Mark Cadman, the new chief executive of Euro RSCG London, had to choose between taking a new job at either Euro RSCG or The Red Brick Road, or staying put at JWT London. According to Jones, Euro RSCG was able, crucially, to provide the right entrepreneurial freedom.

"There are very few companies of our size and scale that can allow people entrepreneurial freedom and independence," he says. "We can offer them their own train set, but with all of the size." Although he received no equity as part of the deal, Cadman did get a profit share as part of his package.

WPP took a similar approach when it offered 12 per cent shares of United to Jim Kelly and Robert Campbell to persuade them to take the top UK jobs at the micro-network.

Another way to find a chief executive is to bring someone in from another industry, sector or country. But most agree the intimate nature of the UK industry makes it hard for an outsider to break in and make good. "We're a very networked market - very competitive and at the same time friendly and supportive," Tim Lindsay, the UK group chairman of Publicis, says. "If you leave a job, everyone offers you a desk and a phone and lunch at The Ivy. It's very difficult for people to move in from the outside."

All eyes will be on Alison Burns at JWT, who, despite being British and having experience at UK agencies, has built her experience of senior management in the US. JWT is one agency that used to promote internally, bringing on a succession of homegrown leaders over the decades. But recession in the early 90s led to a cut in recruitment and training budgets and the habit of succession-grooming has been lost in many agencies.

"The younger generation doesn't have the old-fashioned idea of climbing up the greasy pole and a one-company existence," Bainsfair says. "I don't want to over-stress that, because advertising has always been a more mobile industry. But even the older, more traditional agencies are struggling to find people from within, because they're moving around more and more."

Of course, not all agencies are on the chief executive merry-go-round. Some have relatively long-serving chief executives, such as Leo Burnett's Bruce Haines or Grant Duncan at Publicis. Then there are the rare London agencies renowned for skilful succession management.

Any management changes have been smoothly conducted, leaving agency credibility intact. Abbott Mead Vickers BBDO is famous for its seamless transition from chief executive to chief executive, through Michael Baulk, Cilla Snowball and now Farah Ramzan Golant.

When Bartle Bogle Hegarty recently lost its UK managing director, Derek Robson, it immediately announced his replacement - the agency's regional chief executive of Asia-Pacific, the BBH graduate trainee Ben Fennell. Fennell, at 34, believes creating the right opportunities and setting clear targets for ambitious employees creates a "virtuous circle".

Certainly, promoting from within can deliver ambitious and committed leadership from young talents that other agencies would find hard to identify from outside.

Other homegrown BBH leaders include Charles Wrigley, the chairman of BBH in Singapore, and Gwyn Jones, the chief executive of the agency's US operation. "We're interested in developing someone's career, picking good people and giving them opportunities in different jobs and in different countries," the BBH group chief executive, Nigel Bogle, says. "It's a very long way from the hired gun, where someone is brought in to make changes."

Of course, for some agencies, the hired gun is the preferred option, as it gives them the chance to employ someone with a track record at the right level, often to turn the agency around. It can, however, be a high-risk strategy.

Garry Lace was brought into Grey to inject a new creative vim, but he made a premature exit. IPG then hoped he would work some new-business magic at the ailing Lowe London, but the agency lost its flagship Tesco account and Lace was put under investigation before leaving in May.

There is arguably more pressure on chief executives who are brought in from outside to move an agency on. Results are generally expected speedily. "What's hard is that you have to prove yourself by winning new business," Hammersley says. "Success is apparently down to your place on the back page of Campaign. If you don't pick up new business, you're buggered." He argues that it would be quite legitimate to say, for example, that instead of chasing new accounts, you want to focus on growing business organically.

All this coming and going doesn't seem to happen as much at the media agencies, where there has been relative stability at top management level. One of the few unplanned changes this year was Tess Alps leaving PHD to take charge of Thinkbox, but even she left that agency with a strong management team - including two of the original founders - still in place.

At ZenithOptimedia, the former managing director, Gerry Boyle, has replaced the UK chief executive, Antony Young. Universal McCann may have made changes at European level, but Andy Jones remains as its UK chief executive. Group M has restructured its management, but without any significant talent exports or imports. Mark Craze joined Media Planning Group this time last year to share the chief executive's role with Marc Mendoza, after spending 17 years diligently climbing the greasy pole at Carat.

Kelly Clark, the chief executive of Group M for Europe, the Middle East and Africa, says: "A lot of the best and brightest in ad agencies have left to launch their own agencies or to join start-ups. Launching a media business is more difficult in some ways and can require significantly more capital. This has meant that some talented entrepreneurs have risen to important leadership roles in big media agencies, with the consequent rewards."

"There is a lot of homegrown talent inside the best media agencies and this shows in the consistent performance of some of those businesses year after year," he adds.

Underlying this is the fact that media is a young industry, and has been growing consistently over the past couple of decades. Neither is there the same need to find a wizard who will reinvent an agency brand to distinguish it from the pack. Media is more about scale and volume than the less tangible positioning of creative agencies. Chief executives need to run a steady ship, ideally for a reliably long tenure.

This pattern has led to an emphasis on identifying and investing in future senior managers.

At MindShare, Clark can point to the appointment of his replacement as chief executive of MindShare UK, Jed Glanvill. Glanvill joined MindShare in 2000 to head its digital and futures divisions, moving to managing director in 2004. On his promotion to chief executive at the end of last year, Glanvill's insider status was seen as a definite plus. Nigel Sharrocks, the chief executive of Aegis Media UK & Ireland, attributes the stability in media to the more consolidated make-up of the business. "There are relatively few big media agencies, so few big jobs come up," he says.

Sharrocks, though himself an appointment from outside, believes in the importance of bringing on leaders. He indicates the recent internal promotion of Neil Jones to managing director of Carat UK, a move seen as a sensible, steadying appointment.

However, Colin Gottlieb, the chief executive of the Omnicom Media Group across Europe, believes the days of this golden era are numbered.

"Media companies will go through similar growing pains to those the creative agencies are faced with today," he says. "The challenge for the media fraternity is where will media go and how this fits within larger groups. Ironically, it is an exciting time to be a creative agency head because they need to reinvent themselves. The climate change in media is unstoppable."

TWO YEARS IN ADLAND: 15 NEW CHIEF EXECUTIVES

Paul Hammersley had to wrestle with his conscience before deciding to leave DDB after less than two years in the top job to join Sir Frank Lowe's The Red Brick Road. While most felt he'd done a great job turning the agency around, all agreed he left plenty still to be done. Hammersley joined in February 2004, replacing Chris Cowpe, who moved to the role of vice-chairman.

Mark Cadman (pictured) surprised the business by spurning The Red Brick Road for the chief executive's job at Euro RSCG London in February 2006, filling a six-month gap without a leader created when Ben Langdon departed following David Jones' appointment as the network's chief executive.

Oops, he did it again! Lowe London is without a chief executive after Garry Lace eventually left in May 2006 after an investigation into allegations that he had had dealings with Sir Frank Lowe. Brimming with his trademark brio, he reacted to the news of his suspension in March with lunch at The Ivy, but has yet to surface in a new role. He had joined the agency in January 2005 as a replacement for Matthew Bull, who moved to the role of chairman.

Tamara Ingram stepped into the breach at Grey London in May 2005 when she was parachuted in from the WPP research division Added Value to fill the gap left by Garry Lace's exit in March 2004. Lace, who joined the agency in 2002, spent 16 months in charge before the infamous e-mail scandal precipitated his departure.

Jim Kelly and Robert Campbell were reunited in January this year as the joint managing partners at the newly renamed United London, their commitment assured by contracts that saw them each pay £8,025 to secure a 12 per cent stake in the business. The pair replaced Nick Howarth (pictured), who left in September last year to become the group chief executive at Clemmow Hornby Inge, and Jonathan Burley, who later joined Leo Burnett. Howarth had been in the top job for just six months: in March 2005, he was promoted after Lee Daley, HHCL's worldwide chief executive, left at the end of 2004.

JWT chose a relative unknown (in the UK at least) when it picked Alison Burns, the former head of Fallon New York, as its London chief executive in February 2006. She's maintained a fairly low profile since, as befits a JWT London head. Burns replaced the equally reserved Simon Bolton, who moved in December 2005 to take the top job at WPP's branding business Enterprise IG.

The chief executive's role at Ogilvy & Mather was vacated in February 2006, when Paul Jackson (pictured) was moved to become the managing director of client services on the network's global American Express business. Jackson had failed to give the London office the new business and creative boost it needed and Gary Leih, the Ogilvy Group UK chief executive and chairman, is now looking to bolster the agency's senior management - although he may not hire a direct replacement.

When James Murphy (pictured), the managing director of Rainey Kelly Campbell Roalfe/Y&R, was promoted to chief executive in October 2004 to replace Jim Kelly and MT Rainey, plenty doubted his ability to step up to the plate. But since then, he's brought in talented management and proved his doubters wrong - and he'll be hoping the network's new chief, Hamish McLennan, continues the hands-off approach to the London office favoured by his predecessors.

For those who have forgotten him, the McCann Erickson chief executive is Stephen Whyte (pictured). This client services expert has all but managed to move on from a dark period in charge at Leo Burnett since he joined McCann in April 2004 as part of the new regime installed by the agency's chairman, Rupert Howell. The previous chief executive, Chris Hunton (now the managing director at Lowe London), left in the same month without a job to go to.

Matt Shepherd-Smith was finally promoted in February to the vacant chief executive's role at TBWA\London, following a nine-month search for a replacement for Andrew McGuinness (who left the agency with Trevor Beattie and Bil Bungay to set up the eponymous Beattie McGuinness Bungay). McGuinness had been in the job since October 2002, when he was promoted to replace Garry Lace.

Nigel Jones returned to above-the-line advertising in August 2005 when he took the helm at FCB London in August 2005, leaving Claydon Heeley, the direct marketing agency he helped to found. FCB had been without a chief executive since July that year, when its previous chairman and chief executive, John Banks, stepped down after 40 years in the business.

Compared with many of his peers, Lee Daley has been in charge at Saatchi & Saatchi for a relatively long period - since October 2004, to be exact, when he was brought in to replace Kevin Dundas, who became the worldwide strategy director. Since then, Daley has launched a number of new divisions, but core advertising new-business wins have been thin on the ground.

Farah Ramzan Golant's (pictured) future somewhere within the BBDO network - possibly at the head of the New York office - looks secure after a whole 21 months as the chief executive of Abbott Mead Vickers BBDO. In a rare example of good succession management, the UK's largest ad agency promoted Ramzan Golant in November 2004 when Cilla Snowball was moved to chairman.

In March 2004, M&C Saatchi got ready for a planned flotation on the London Stock Exchange by instigating a management reshuffle that saw the joint chief executives, Nick Hurrell and Moray MacLennan, appointed chairmen and Tim Duffy promoted from managing director to sole chief executive.

A restructure that waved goodbye to the WCRS managing partner, Jeremy Bowles, after just six months also made Debbie Klein the sole chief executive in April 2005 after she played a lead part in the agency's buyout from Havas. Klein, who has been at the agency for nine years, has since been working on building its identity as an independent.

TWO YEARS IN MEDIA: STRONG SUCCESSION MANAGEMENT

Nigel Sharrocks has been in charge at Aegis since April 2004, when he returned to the business after five years in Hollywood circles as the managing director of Warner Brothers Pictures. He replaced Mark Craze, who left after 17 years when he was passed over for the network's European chief executive job.

Though not strictly a chief executive, Tess Alps (pictured) was a key part of PHD's management before she left her role as chairman in April to become the first chief executive of the TV marketing body Thinkbox. PHD has no UK-specific chief executive, but is still run by two of its founders, David Pattison, the chief executive of the PHD network, and Jonathan Durden, its president.

Linda Smith, the ex-commercial director of GCap Media, joined Starcom in January this year as chief executive to replace Iain Jacob, who had been promoted the previous November to head the EMEA region. Jacob filled the gap left when Mark Cranmer departed.

Good succession management at ZenithOptimedia, where Gerry Boyle was last month promoted to chief executive after Antony Young (pictured) took over as the head of Optimedia USA. Young had been in charge for three years, while Boyle had been the agency's managing director since September 2003.

In June 2005, Mark Craze resurfaced after a year in the media wilderness at Media Planning Group, to partner Marc Mendoza as a joint managing partner. Since then, the pair have brought in Universal McCann's Martyn Stokes as the strategy director and Jim McDonald as the head of broadcast.

At Universal McCann, the unplanned changes have been at European level: Graham Duff (pictured) joined in February this year as the EMEA president five months after leaving ITV Sales. Chris Shaw, the previous incumbent, had departed the previous month. A month after Duff joined, Andy Jones was made the sole UK chief executive, while the joint UK chief executive Damian Blackden was moved to a Europe-wide digital position.

At MindShare, the baby-faced Jed Glanvill was rewarded for five years' service with a promotion to chief executive in October 2005, after Kelly Clark was made the head of MindShare's Group M across Europe. Ita Murphy was also promoted internally to the managing director's role.

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