Saatchi battles exodus, morale issues

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Saatchi & Saatchi has a morale problem. Fresh on the heels of the recent very public orchestrated mass defection came a very public internal expression of employee dissatisfaction.

A hacker broke into the agency's e-mail system and sent a companywide derogatory response to a March 8 missive issued by Saatchi Worldwide Creative Director Bob Isherwood. "...It is not bad enough that [Worldwide CEO] Kevin Roberts uses Saatchi & Saatchi as his personal promotional device while the company's reputation and credibility declines under his leadership, but now we are obligated to stroke the ego of every man-child that runs this company?...Signed, Drone 1-344."

Management response? A quick vow to investigate and punish the culprit, thus further demoralizing a staff already despondent about a workplace suddenly defined by gossip and closed-door meetings with lawyers.

Thrust into the spotlight at the Publicis Groupe agency are Mary Baglivo and Tony Granger, the leadership duo that only last September joined as CEO and chief creative director, respectively, of the 400-person office.

Ms. Baglivo said recent events have created an "electric" atmosphere that's brought employees together. "In some ways, this has expedited the time required for new leadership to penetrate an organization." She credits many of the remaining team members on General Mills with taking on new responsibilities, and points to internal promotions and hirings unveiled last week (see QwikFIND aaq41r).

"The departures were a shock," Mr. Granger said. "But they're also a great opportunity."

The management issues Ms. Baglivo and Mr. Granger face would challenge even the most seasoned hand. When 25-year-agency veteran Mike Burns, who headed the global General Mills business, resigned last month, he was followed three days later by 17 of his former subordinates. That provoked speculation that Saatchi would soon lose "the Mills," a major revenue-generating, top-three $460 million account, ending an 80-year agency-client relationship. Although General Mills has publicly supported the agency, privately the package-goods giant has expressed anger that Saatchi management allowed the situation to occur.


"It is a tightrope," said John Steiber, senior consultant, Hagberg Consulting Group, San Mateo, Calif. "To restore confidence and credibility, they've got to be honest about what happened. But at the same time, they've got to provide clear direction, let their clients and employees know that this is not a sinking ship."

Adding to an already delicate situation, 10 days ago Saatchi sued Mr. Burns, charging him with breach of fiduciary duty and duty of loyalty as well as bad-mouthing the agency to his subordinates and to General Mills. Saatchi, in many ways, is in a bind.

"They don't really have a choice but to sue," said Doug Bartman, partner at Cleveland law firm Kahn Kleinman, in order to demonstrate that they are protecting their interests. But it is a major risk. "You really hate to put one of your clients in the middle and make them a witness. It just doesn't do good things for business."

At the same time Ms. Baglivo and Mr. Granger must prove to General Mills that the agency can recover from the loss of the departed employees, many of whom were senior-level, well-respected executives, they must also keep a steady eye on other clients and motivate remaining staff. The hiring last week of Joe Belmonte, most recently president of a consultancy specializing in client-agency relationships, as senior account director is a first step.

But the reinvention of Saatchi requires a careful touch. One of the issues that provoked the 17 to depart in so public a manner, said executives familiar with the matter, was frustration shared by others in the company with Saatchi's senior-most leaders. Those close to the 17 report they felt their contributions on pitches and campaigns were unappreciated and unrecognized. Since they left, Mr. Roberts has been taking credit for bringing in business the departed executives won and worked on, said executives close to the agency. He's also viewed as a leader more concerned with his pet projects than with the work the rest of the agency was doing.

Mr. Roberts defended his involvement in projects such as Peak Performance management product as above board. As for those who left, "they're 17 out of 500 people. [The departures] are not remotely as dramatic as it sounds."

Ms. Baglivo and Mr. Granger believe they are addressing employees' concerns. "Morale is affected by the work. If work is going through, it boosts morale. That's what we do. It pales next to everything else," Mr. Granger said.


* In February, Burns and 17 others on General Mills account leave

* Baglivo says that, in a way, the exodus brought remaining employees together

* Saatchi sues Burns

* Top priority now is reassuring General Mills that remaining team can handle job

* 'Drone 1-344' hacks e-mail system and blasts management

* Baglivo, Granger must restore confidence, be honest and provide clear direction for employees and clients

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