POSITIONING

A COMMUNICATIONS MANAGEMENT NEWSLETTER

Fall 1997                                                                                                                                                     VOL. 9 NO. 1

Retention Looms as PR Management Concern

Not so long ago, a public relations firm in Manhattan known for its "revolving door" policy would earmark about 10% of its workforce - just before the Christmas holidays - for oblivion. "Pruning the shrubs," as one executive liked to put it, would allow the agency to start the new year off "leaner and meaner."

More recently, in the early and mid-1990’s, many corporate communications professionals held on tightly to their seats, hoping they wouldn’t be swept away in the rush to downsize departments, in some cases virtually out of existence.

Today, the job market situation has shifted 180 degrees. Long suffering employees, once content to retain their jobs, suddenly find themselves holding the cards.

"I had several interviews recently with an impressive candidate to fill a high level role," says the director of recruitment at a large Manhattan PR agency. "I eventually offered her the job with the knowledge that if her present company counteroffered, she would decline my offer." Several days later, the recruiter received a call from the prospective employee saying that her company had indeed given her the extra money she sought. "I was directly responsible for her 20% pay increase," he chuckles. "You would think she would at least send me a thank you note."

Both corporations and agencies say they pull out all the stops in retaining quality employees. That’s hardly surprising in light of the economic reality that says that losing a top employee can be an expensive proposition. According to the Hay Group, the cost may exceed as much as 60% of the departed employee’s annual compensation due to training time, lost productivity and other factors.

Small, entrepreneurial companies feel the pain even more when employees leave. A recent study by the Small Business Administration found that companies with under 100 employees suffered annual turnover of over 15% compared to 9% for larger firms.

"The PR business is booming," says Lori Kafafian, Partner, Global Human Resources at Ketchum Public Relations in Manhattan. "But retaining employees is more important than recruiting new hires because there are more employees than openings. The shrinking talent pool demands that employers take good care of employees...Only the most progressive companies will survive."

David Maister, a consultant to professional service firms and author of Managing The Professional Services Firm, writes, "An important part of any firm’s strategy for dealing with the people crisis will be to reduce its need for new hires by doing a better job of retaining its existing staff."

Companies most fear the loss of senior-level executives, with replacements becoming increasingly difficult to find. "Our biggest challenge is at the supervisory levels," says Eileen Benwitt, Senior Vice President, Human Resources at Porter Novelli in New York. "Given that these people are in such high demand, it is critical that employers understand what employees are seeking in the way of motivation and challenge in order to keep them."

For agency rainmakers and top corporate guns, bidding wars are not uncommon between present and potential employers. One’s area of specialization can also dictate demand, regardless of experience. "Relatively inexperienced account executives with only two or three years in the business, but with a specialization in an area like health care, are now being offered $40,000 and even more," says Patrice Tanaka, President of Patrice Tanaka & Associates in New York City.

Maister sees the reason for the shift in power as part of a demographic change, a simple case of supply and demand that has been fueled by a strong economy and a tight labor market. "Today there are fewer younger educated people than there used to be," he says. "We’re living through the ‘baby bust’ years."

Public relations appears to be a profession where attention to retention has not kept pace with growth. "The field continues to grow yearly and there just aren’t enough people to fill all the slots," says Miriam Coleman, Executive Vice President, Human Resources Worldwide at Manning, Selvage & Lee. "There needs to be more promoting of the public relations industry on the college level as a career choice."

The advent of globalization may have also played a role. "Companies are expanding all over the world and new positions are being created every day," says Dave Samson, Vice President, Global Communications at Levi Strauss & Company in San Francisco (which, contrary to the present climate, recently announced a massive downsizing). "Technology has also created more opportunities."

Many employees, says Tanaka, have "grown cynical towards employers who use downsizing to drive corporate profits and share price to absurdly unrealistic levels, thus destroying the employee-employer bond." Others point to a different corporate culture inspired by Generation Xers. "The graduates of the last few years have a different focus than many of us did when we first started out," says Porter Novelli’s Benwitt. "Today, the newer prospective employee’s mind-set of ‘What will the company do for me?’ is more concerned with balancing between personal time and work."

Mike Sullivan, an international management consultant from Doylestown, Pennsylvania, perceives younger people as being more assertive than the previous generation. "They appear to learn so much quicker, are more confident and, therefore, more demanding," he says. "They move up the ranks quicker than past generations."

Many companies have chosen to address the needs of employees before they get the itch to move on. This includes, in some cases, the adoption of preventive philosophies rather than reactive responses (i.e. counteroffers). "I think there’s a growing interest in empowering employees, but I don’t think it’s at the expense of the employer," says Harry Clark, Managing Partner and co-founder of Clark & Weinstock in New York City. "Human resource research has concluded that empowered employees tend to be more loyal and productive."

A substantial salary increase may retain a wavering employee but for how long until the next offer? "Unless employees have been grossly underpaid, money is usually not the real issue," said Richard Pinsker, an executive-selection consultant from Saratoga, California, in a recent article in Inc. magazine. Personality conflicts with direct supervisors or a perceived lack of opportunity, he added, are more likely to drive employees in search of greener pastures. Throwing money at an employee to keep him or her can also cause a dangerous precedent. "You don’t want to be bombarded by employees saying, ‘I’ve got another offer, match it,’" said Pinsker.

According to author/consultant Maister, companies lure away employees who no longer feel they are learning and growing. "Most people want a career - not a job," says Maister. "If employers see to it that employees are always learning, they have a better chance of keeping them."

Notorious for neglecting to engender company loyalty, PR firms now seem to be listening. GCI, for example, recently enacted the GCI Academy, a training and development program for employees. "We hold workshops led by consultants, executive vice presidents and senior vice presidents," says Dan Relton, Director of Recruitment, Training and Development at GCI. "Every employee is encouraged to attend."

Ketchum College, established in 1990 to provide Ketchum employees with professional development training, offers classes run by leaders in their respective industries. Employee satisfaction surveys and "career tracks" also address the needs of Ketchum’s employees. "Career tracks offer employees opportunities to work for the company in any of our 23 offices worldwide," says Kafafian. "It’s critical to an organization that employees feel they have professional growth and expansion opportunities, in addition to feeling important."

Professional development is only one hot button companies push. Some have enacted or sweetened such employee-friendly policies as flex time, signing bonuses, casual dress, job sharing and 401K and other financial plans.

Equity in the company seems to foster employee loyalty. According to a study by the National Center for Employee Ownership, a nonprofit organization based in Oakland, California, a strong correlation exists between the amount of money a company puts into its stock plan and employee retention. It found that workers are even less likely to resign if the stock vests over several years, requiring them to forfeit significant sums if they depart.

To boost retention, many companies have also begun offering mentoring programs in the hope that having a "coach" will keep employees from jumping ship. AlliedSignal, located in Morristown, New Jersey, for example, recently launched a mentoring program for about a thousand of its recent college recruits, pairing them with senior managers who take them to meetings or lunch on a regular basis.

"Managers recognize that they have to be more creative to accommodate employees," says Frank Parisi, Vice President, Communications at Cowles Media Company in Minneapolis. Parisi recalls a previous job where his employer had to play competitive hardball to retain employees. "I worked at a major oil company that was losing its employees to an independent competitor," he says. "The competitor promised its engineers and geophysicists 1% of any new oil they found. Our management’s response was to offer our employees loans for up to two years of their annual salary. The loan was forgiven 20% for every year they stayed with the company. The result was that many stayed a full five years."

When a top-performing employee has decided to make him or herself "available," there is little an employer can do outside of matching the salary, offering a promotion and/or getting a corner office ready. "Once someone has gone through the interview process and is standing in your office with an offer letter, they’re gone and they’ve been gone for a long time," said Kathy Ericksen, President of Capso, a $26 million electronics distributor in Sunnyvale, California, in an Inc. article.

Gary Grates, President and Partner at Boxenbaum Grates, a New York City PR firm, agrees. "There comes a point when people want to move on," he says. "It’s human nature. There’s nothing you can do to keep an ambitious and capable person from seeking higher ground."

Public relations is experiencing change not only at a rapid pace, but at an accelerating one. It’s not a profession for the faint of heart.

I recognize that I run the risk of being taken for an old fogey who longs for the "good old days." However, I assure you that I don’t have a particular fondness for the way things used to be; to the contrary, I’m fascinated by the way the profession is evolving and changing.

Let’s take a look at the sweeping changes that are taking place right now in the wider world, the global workplace. Let me start with a few zingers from a riveting little book by Price Pritchett entitled New Work Habits for a Radically Changing World. I think you’ll find them interesting.

Where once, in the early 1900s, 85 percent of our workers were in agriculture, today agriculture involves less than three percent of the workforce. A half century ago, 73 percent of U.S. employees worked in production or manufacturing, now less than 15 percent do. By the year 2000, the U.S. Department of Labor estimates that at least 44 percent of all workers will be in data services - gathering, processing, retrieving or analyzing information.

In 1991, nearly one out of three American workers had been with their employer for less than a year, and almost two out of three for less than five years. By the beginning of the 21st century, the author believes less than half the workforce will be holding conventional full-time jobs. Constant training, retraining, job-hopping, and even career-hopping will become the norm.

I think public relations has always been ahead of the curve in this aspect of career modeling. Even in the late 1960s, when accountants, engineers and financial people were joining corporate giants with the expectation of staying in one company for a whole career, it was relatively rare for a public relations person to be blessed with a similar career outlook. We tended to change jobs more often even then.

The technological revolution has transformed not only the workplace but the entire civilized world. Columnist Bill Husted quotes from two of the most celebrated technocrats of this century: Thomas Watson, Chairman of IBM, and Ken Olson, Founder of Digital Equipment Corporation. In 1943, Mr. Watson said, "I think there is a world market for maybe five computers." Thirty-four years later, Mr. Olson said, "There is no reason anyone would want a computer in their home."

These men were brilliant visionaries in their own time. But they failed to see the vast explosion that was about to take place - an explosion that both of their companies helped bring about within very short years of their amazingly shortsighted statements.

When I was a cub reporter, I can remember sitting with a telephone receiver at my ear, typing away furiously as our Washington correspondent dictated his copy for the next morning’s paper. We had teletypes in those days, but the Washington bureau didn’t like to use them. Fax machines existed too, but only banks and brokerage firms had them, and a really fast fax machine took six minutes per page.

Thirty years later, I used an IBM Selectric that could even correct mistakes. My employer at that time did have a word processing department that could take marked-up, edited copy and only 24 hours later have flawlessly typed copy for my news releases, speeches or correspondence.

According to Price Pritchett’s book once again, there has been more information produced in the last 30 years than the previous 5,000. A weekend edition of The New York Times contains more information than the average person in 17th century England was likely to come across in a lifetime. Today’s average consumers wear more computing power on their wrists than existed in the entire world before 1961. Computer power is 8,000 times less expensive than it was 30 years ago.

Two constants must remain unmolested in the practice of public relations if this profession is to keep pace with the radical changes we’ll see in the next quarter-century: PR practitioners must never lose their ability to communicate clearly through the use of the written word. Writing skills, if anything, should become more critical in the coming age of media ambiguity and communications overlap. Practitioners must retain the standard of ethical performance that has long been the backbone of the profession. The temptation to indulge in hyperbole and mendacity is great. If ethical standards should be allowed to slide, the consequences for the profession would be disastrous. Credibility is everything.