Misalignment Among Senior Leaders Led to Current Problems at Porter Novelli

Parent Omnicom Group Says It's Committed to Rehabilitating the Shop

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Once-premier PR shop Porter Novelli now finds itself beset by client losses and a round of executive departures that has left the Omnicom agency essentially rudderless.

In the matter of a single month, the agency lost its chief marketing officer, president and chief financial officer, and in a major blow, its CEO. It's a stark contrast from sibling agency Ketchum, which last week announced a new CEO after two years of planning a smooth succession.

Omnicom, batting away rumors that it might fold the agency into a healthier unit, said it plans to right the ship. "We will not be merging [Porter Novelli] with any other agency inside or outside of Omnicom. It's absolutely important that we have three healthy global PR networks. Our goal is to make Porter Novelli as healthy as Ketchum and Fleishman-Hillard are," Tom Harrison , chairman of Omnicom's Diversified Agency Services unit, told Ad Age . "That's what we're doing."

But that will take time: no permanent successors have been announced to fill the executive positions and both staff and observers are wondering how the company plans to instill a sense of confidence about the stability of the agency.

Porter Novelli's management team shakeup is just part of a bigger story about the agency's recent setbacks, however. Once lauded as a well-rounded PR shop at the top of its game in all of its practice groups from tech to healthcare, it has lost core clients as well as a good deal of talent.

In 2010, the firm ranked as No. 9 on Ad Age 's list of the biggest PR shops by revenue, and a year later it slipped two notches to 11, with about $88 million in U.S. revenue. Globally it has $136.6 million in revenue for 2011, according to Ad Age 's DataCenter, but that includes the additional revenue of an acquisition made by the firm last year of Voce Communications. According to people close to the agency, that 's a far cry from where Porter Novelli a decade ago had forecast its growth to be; the goal, said one of those people, was for the agency to be bringing in close to $200 million in revenue by now.

The nature of the agency business is to win and lose business in waves, but the slew of bad news that 's struck Porter Novelli in such a short period of time is unusual. Insiders and industry observers tell Ad Age that at the root of its problems were personality clashes between senior leaders and hiring decisions.

Starting at the top, a number of executives familiar with the firm -- including Mr. Harrison -- noted that departing CEO Gary Stockman, despite his strong pedigree as a PR professional, was probably not the best fit for the role.

Mr. Stockman declined to comment for this story. But his peers in the industry acknowledged Mr. Stockman's strengths in strategic thinking and planning. They also noted that many of his strengths as a PR executive are rooted in the technology sector, as Copithorne & Bellows, his former employer, specialized in technology. (Porter Novelli merged with Copithorne & Bellows' in 2000.)

"Ultimately I'm the person who put Gary in his role, and not only because he came very highly recommended by the previous [leaders] of the company. It seemed like a perfect transition," said Mr. Harrison .

But something about his installation as global CEO in 2009 just didn't take.

According to Mr. Harrison , "at the end of the day it might not have been best decision for everyone involved -- the executive committee and clients and all. It seemed like maybe the agency needed a different type of a leader at that time. We're cognizant now of what that agency needs. Gary is a very strong leader, but he might not have been the perfect leader for that agency at that time."

Though a CEO is in large part responsible for a company's success, the top role is just one part of the equation.

Multiple executives who spoke with Ad Age on the condition of anonymity stated that the firm's most recent three leaders -- Mr. Stockman; global president Julie Winksie, who left in January; and CFO and global president Anthony Viceroy, who is also stepping down -- shared a high level of intelligence and respect for each other, but their personalities never quite gelled.

Reflecting on that sentiment, Mr. Harrison agreed, stating, "the chemistry between the individuals just didn't sync up." But he also added that in all his meetings with the executive committee, he witnessed "a group of people dedicated to running and growing the business."

From the perspective of Mr. Viceroy, who has since accepted a new position at Westmed Practice Partners as CFO, it had little to do with personalities: "It's not about [not] gelling. It's about having different strategic views. Success in the agency world is about adding value to your clients and getting the right level of results for your agency. You should be able to have profitable growth. That's what I stood for forever. How you go about achieving that is based on strategy and that 's where there was misalignment."

That tension that brewed at the top of Porter Novelli trickled down to the regional leaders. Without a strong corporate team, the various regions began operating independently, almost like separate companies, noted various executives.

Since there wasn't a feeling of a cohesive culture at the shop, an erosion of morale began to take hold for many staffers, people familiar with the agency said.

Amidst the turmoil, there have been a few pockets of success. A number of individual offices and practice groups -- for example, those under leaders like Brad McAfee in Atlanta and Kiki McLean in D.C. -- have been thriving. And the firm has managed to win smaller pieces of business here and there. It won LG Mobile as well as the Dun & Bradstreet account.

But unfortunately for Porter Novelli and for Omnicom, these individual successes have not been enough to signal that it remains a go-to agency for best-in-class PR service for clients.

Case in point: After more than 20 years, Gillette last year decided to shift its business to Porter sibling Ketchum. Prior to the shift, a handful of the leaders on the Gillette account had left the firm. The once-strong New York office and top accounts, like Hewlett-Packard, have shrunk. The firm's healthcare group, once a top offering, has also lost some luster.

As it sets the course for a new stable of leaders, the company is keen on leaving the past in the past.

With Karen van Bergen charged with overseeing the New York office, the office is shaping up, said Mr. Harrison . "Health care has not performed as well as we would have liked. It's been a leaky bucket in terms of talent, but Karen is laser-focused on that right now," he said. "There are no more holes in the bucket."

He added that the group has narrowed its CEO search down to "a manageable few" and expects to have someone in place before the end of the year. The priorities are to find an agency chief who is collaborative and willing to work closely with other Omnicom agencies, someone who is "comfortable dealing with clients" and "someone who can command the respect of the executive committee," Mr. Harrison said.

It also plans to announce a new chief financial officer in the near-term, filling the void recently left by Mr. Viceroy.

Porter's former president, Ms. Winskie, is among the folks who are rooting for the agency to rise once again. "I worked for Jack Porter and Bill Novelli," she said. "They founded the agency on this idea of trying to do unique things ahead of their time and achieved that in my opinion. I think [global director] Michael Ramah was an extraordinary choice of interim leadership. He carries a lot of that original passion with him. If they can build on that legacy for future success, that 's the way forward for Porter Novelliā€¦ I'd love to see them really finally fulfill this mission of getting back on track of what Bill created."

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