A new board member, former British Petroleum Executive Chairman Sir Peter Walters, is heading up the exercise, working closely with Saatchi Chief Executive Charles Scott.
A Saatchi spokesman declined to give details. Sir Peter didn't return phone calls.
Sir Peter will survey Saatchi's operations and compare them to the best practices in the industry, much like U.S. auto companies measured themselves against Japanese carmakers in the 1980s in search of greater efficiency. WPP Group did a similar review recently.
But the appointment is undoubtedly a response to lackluster 1993 financial results Saatchi will announce March 15 and probably more bad news about the company's expected lack of growth in 1994.
"It's not getting any better," said a London analyst. "We had been led to expect some improvement, and it hasn't really happened."
The benchmarking exercise won't affect company strategy, which is set by the board. The effort also doesn't affect the role of Chairman Maurice Saatchi. Although not involved in running day-to-day operations, Mr. Saatchi is involved with bringing in new business and works with key clients.
The appointment of Sir Peter to Saatchi's board in January is part of a shift to recruit more independent, outside business executives.
Sir Peter retired from British Petroleum in 1990 and now serves as deputy chairman of entertainment group Thorn EMI, chairman of the Midland Bank and deputy chairman of Midland parent HSBC Holdings.
In December, analysts downgraded 1993 pre-tax profit forecasts for Saatchi by about 19%, to about $30 million, after Saatchi warned of flat revenue and client losses, including Helene Curtis Industries and Chrysler Corp. in the U.S.
Analysts also slashed 1994 forecasts by 14% to about $48 million, a long way from Saatchi's record year of pre-tax profits of $207 million in 1988.
"I'm getting more pessimistic about this year," the London analyst said.
Saatchi's worst problems are in the U.S., an area Chief Executive Charles
Scott is spending more time on (AA, Dec 13). He has transplanted U.K. managers to New York to run Backer Spielvogel Bates Worldwide and its creative department, and last month Robert Kennedy, chairman-ceo of Saatchi & Saatchi North America and president-chief operating officer of Saatchi & Saatchi Advertising Worldwide, left the agency.
Saatchi denied Mr. Kennedy's payoff was as high as $6 million, to be paid over a number of years, but analysts said Saatchi told them the figure is about right. As a longtime Saatchi employee, Mr. Kennedy had the kind of generous employment contract the company no longer offers.
Now, Mr. Scott is sending a top Saatchi media executive, Derrick Southon, to the U.S. for three months to study the group's agency media departments and recommend changes.
Mr. Scott will use the findings to decide whether to set up Saatchi's Zenith Media centralized media buying unit in the U.S., a move the U.S. agencies have so far resisted.
Mr. Southon, chairman of Zenith U.K. and chief executive of Zenith Europe, will report directly to Mr. Scott on the media issue.
Mr. Southon's mission is related to Saatchi's biggest U.S. problem, its inability to win new business and sometimes even to keep existing clients.
In the media area alone in the past 18 months, Saatchi has lost buying assignments for Mars Inc. and Miller Brewing Co. to D'Arcy Masius Benton & Bowles, New York, and lost a pitch for Procter & Gamble Co. media buying business, also to D'Arcy.
John Perriss, chairman of Zenith Worldwide, acknowledged the problems.
"The whole drive behind [Mr. Southon's assignment is] we want to find ways of improving the media product," Mr. Perriss said.