PR 컨설팅의 경쟁력에 대하여
이번 이슈는 약간 일반적이지 못한 이슈입니다.
국내에서 PR컨설팅을 하시는 극소수의 분들께 국제적인 PR컨설팅의 경쟁력에 대하여 큰 그림을 보여드리려 이 이슈를 준비하였습니다.
요즘 몇몇 단체에서 PR 과정들을 잇달아 열고 있읍니다. 그많큼 PR에 대한 사회적인 관심이 커지고 있다는 의미겠지요.
사실 저는 현재가 PR의 Identity Crisis라고 보는 사람들 중의 하나입니다.
현재 우리 PR인들(독립 에이젼시)이 아웃소싱의 파도속에서 전문인으로 인정받을수 있는 길은 엄청난 자신에 대한 직업적 투자가 있어야 할 것입니다. 그리고 업무상 더이상 보도자료등을 충실히(?) 배포하는 “단순 용역”의 일상업무에 만족해서는 않되겠습니다. 많은 인하우스분들이 일부 PR에이젼시들을 비딩이라는 명목하에 가격 경쟁을 시키고, 그 시도에 또 충실히도 디스카운트 경쟁을 벌이는 우리 에이젼시들을 보면서, 이 PR 산업이 과연 우리나라에서 얼마나 이어질수 있을까 하는 의문이 듭니다.
요즘에는 PR컨설팅이라는 말이 또 업계에 일반화 되고 있습니다.
물론 우리 업계가 살아남을수 있는 고부가가치의 비지니스 섹터가 되겠지만,
우리나라 같이 지적 서비스에 대해 값을 쳐주지 않는 분위기와 그의 빌미가 되는 에이젼시 인력들의 평균적인 비전문성이(물론 저를 포함합니다.) 이러한 업계 비젼을 암울하게 합니다.
그래도 나름대로 열심히 연구하시고,현 업무에 적용 시도하시는 여러 젊고 패기있는 우리PR적 형제들께 더욱 분발하자고, 지난주 추석 때 유럽의 알프스 근처에서 열린 세계 PR에이젼시 사장님들의 컨퍼런스 중 세계적 PR에이젼시 케쳠의 CEO인 David Drobis씨의 연설을 싣습니다.
그는 우리 PR업계가 점점더 경쟁적이어만 가는 시장에서 살아 남을수 있는 길을 제시하셨습니다. 인하우스 분들도 귀담아 들어야 하는 부분이 매우 많습니다. 현재 PR컨설팅을 수행하시며, 많은 벽에 부닥치시는 모든 동료분들께 이글을 소개해 드리고 싶어 이렇게 공개해 드립니다.
힘냅시다.
PR컨설팅의 경쟁력 편에서 말씀드린 연설문입니다. 홍보~~
************************************************************
Setting Standards to Move Us Ahead – A Significant Opportunity
Remarks by David R. Drobis, Senior Partner/CEO, Ketchum
Good morning. It is great to be here in the beautiful Swiss Alps with so many people at the top of the public relations profession and at a time when the public relations business is also moving to great heights.
I’m honored to be part of this historic meeting certainly the first time so many of the world’s leading consultancies have gathered to assess the state of the business of public relations as we look into the 21st century. For this pioneering meeting I want to congratulate ICO and, particularly, Peter Hehir and Jean-Leopold Schuybroek for their vision, perseverance and hard work.
As we prepare to enter the new millennium, globalization and technology are changing business and, certainly, the business of public relations. As the digital economy moves into high gear, our businesses are being transformed to the point that today we may not even recognize who we will be tomorrow.
This Summit gives us the opportunity to work together to shape our future… to determine how our industry will adapt to the world around us… to define our markets and to set new standards for our success.
There are two reasons why this is so important.
First, public relations is becoming big business on a global scale at least four billion dollars this year. If we are to continue growing at fifteen to twenty percent, we must learn to interact across our languages, cultures and time zones. We need to move towards more common ways of doing things so that we gain greater awareness and understanding for the universal importance and value of what we do.
The second reason is that other professional services also recognize the value of communications and relationships in an information economy and are challenging us like never before. Management consultants, accountants, lawyers and even executive recruiters will seek to diminish our role with clients?relegating public relations professionals to implementers of some far removed strategy developed by other business counselors.
We’re already seeing this in the advertising world. Management consultants have taken over marketing strategy discussions that were once the domain of the agencies. Now we’re seeing firms like PriceWaterhouseCoopers offering reputation awareness services. And the HR consultants like Towers Perrin are building communications strategy practices. All appear to take dead aim at public relations.
Yes, our industry faces a whole new range of competitors. But, just like us, our competition is equally exposed to shifting business trends. And their threats are our opportunities. We are quite capable of protecting our status and even expanding our sphere of influence with clients. We don’t need to overreact to this encroachment on our business.
What do we need to do?
That’s what this summit is designed to do. And I’d like to help set the stage by examining how other business advisors particularly management consultants match up against the public relations business. Let’s see what we can learn from their best practices… and from their failures. And then we have to decide what standards we should set forth to fortify our core business and to expand our market share of the professional services industry.
For this presentation we looked at four categories of standards critical to successful professional services firms. They are:
Professional Development. How do others go about attracting and developing talented individuals? And once aboard, what types of career paths exist?
Business Practices. What is expected by the clients in service agreements in new business engagements? What are they really paying for?
Process and Measurement. How good of a job do we do at measuring our “success” compared with management consultants? Can we or should we validate our results with more numbers and statistics? How do we standardize our services and still retain our creativity?
And, finally
Ethics and Public Service. Do other professional services have different ethical standards, either through regulation or professional codes? Is the public relations industry more susceptible to ethical challenges?
As we studied these four categories, it became quite apparent that professional development drove the standards of the other three. That’s not surprising because we’re all in the people business. The talents we bring to the client are the real product of professional services. Later several speakers will talk in greater detail about recruiting and professional development, but I want to set the stage with a few observations.
Qualification standards and recruitment are perhaps the most significant points of departure between public relations and other professional services. All have better defined academic credentials or professional accreditation for entry. Consider, for example, that lawyers and accountants can move into public relations without meeting defined professional standards, which public relations professionals would need to satisfy if they moved in the opposite direction. Even management consultants, who have no accreditation requirements, have made the MBA an essential qualification.
And the major consulting firms have perfected the art of college and university recruiting. Andersen Consulting will hire roughly thirteen thousand college graduates this year. And McKinsey & Company remains the most preferred employer among business-school graduates, according to a recent survey by a Swedish university research company.
We’ve heard the stories about how the consultants cater to graduates, wooing them with six-figure salaries and sizable signing bonuses. Some of it is true. Some of it is hype. On average, consultants do offer better compensation packages than public relations. But more importantly, management consultants have made campus recruiting a top priority across the entire organization.
We may not compete with management consultants on quantity and salary today, but certainly we can compete on quality of life and excitement and creativity of assignments. Consultants are already losing some of their money-motivated talent pool to business start-ups and other “dot com” companies.
Consider where we are at the forefront of communications and technology. We can offer college and business school graduates equally exciting opportunities the ability to effect change through communications. We are in a terrific position to offer young people opportunities they’re looking for to influence the way companies operate in the public arena, while also satisfying their idealistic nature. Public relations encourages social responsibility and contributions to the public interest in a way management consultants cannot.
The key is exposing people early to the challenging business of public relations. That means expanding our internship opportunities, nurturing students as they continue their studies, and expanding our visibility on campuses.
And now our training programs are beginning to rival those of the large management consulting and accounting firms. Within the past five years, most of the major public relations consultancies have made substantial commitments to training. As an industry it would now be useful for us to consider training standards that we can all agree to and then implement as needed within our organizations.
The next area I want to look at is business practices. This is another defining measure of professional service firms, particularly management consulting which, like public relations, is basically an unregulated industry. The marketplace, not some government agency, defines good business practices. New ideas create new opportunities. That’s the way it should be.
Like management consultancies, many public relations firms have started to define their services along industry or practice groups that emulate their clients’ business. But we have a long way to go to create the industry and specialty knowledge base of the McKinsey’s and Andersen’s that will give us the authoritative position they enjoy.
This commitment to research and process gives management consultants tremendous competitive advantages. It promises the opportunity to counsel a broader array of entities within a corporation, choosing the client with the stature, power and budget to work with for each engagement. It increases pricing of services and facilitates selling new business.
Each of the major management consulting firms and most of the minors ones have invested millions of dollars in knowledge sharing systems. The objective is the same: consultants “dump” core knowledge into best-practice databases. Remember that most of these firms have adopted an industry focus. These databases reflect that same structure.
The power of such knowledge is far-reaching. Tapping into past case studies allows consultants to “get smart” on different industries quite rapidly professionals are billable from day one and they use their industry knowledge to grow their business with clients.
In new business development, the major management consulting firms take a very pragmatic approach: thirty percent of new business should come from existing clients what we all call “sell through” business. Another forty percent should come from direct client referrals. The remaining thirty percent can be characterized as true “new” business development. Management consultants rightly believe that concentrating most of their business development on satisfied customers leads to higher profitability. It’s simple but true.
Cost-of-sale remains the most difficult measure in professional services and most firms will pay an exorbitant price to get new business. But they will not give away strategic counsel.
PricewaterhouseCoopers has embarked on a “global relationship” selling effort. The goal is to make PwC the professional services firm of choice for Fortune 50 companies. PwC expects at least $75 million a year in fees from these clients. And they’re investing heavily to get it.
The point is: professional service firms in the future won’t just walk away when an engagement ends. From day one, they will aggressively pursue new opportunities with existing clients.
We’re now seeing other innovations in selling new services. Ernst & Young launched its popular “Ernie” online consulting service two years ago. The premise is fairly straightforward: Ernie targets mid-sized companies that wouldn’t normally buy E&Y’s higher-cost consulting services. For a flat rate of about $20,000/yr, clients can “ask Ernie” anything about their business or industry: What’s the best leasing arrangement for office space in New York? How do we expand our distribution channels in Germany? The list goes on.
A core group of consultants use technology to pull answers from E&Y’s existing knowledge base. Tougher questions are posted to 21,000 E&Y advisors accountants, consultants, everybody. Answers are delivered via email in two days or less. Resources on best industry practices are archived on a members-only web site.
The business generates a few million dollars a year. More importantly, Ernie allows potential clients to sample E&Y’s brainpower. Some Ernie clients will ultimately buy higher-value and higher-margin consulting services. The rest are quite satisfied with their “consultants on call.”
E&Y has figured out a way of turning some of the marketing costs back onto the client. It’s a novel form of up-selling. Even better, E&Y is able to tap an otherwise inaccessible market mid-sized companies by leveraging technology and knowledge.
The public relations industry needs to devise more aggressive solutions to deliver value while still maintaining profitability. As we all know, value is perception the “eye of the beholder.” We can increase our value by defining our processes better, showing clients we have a formula for success and a way for measuring our success.
Management consultants have an advantage in this area. Figuring dollars-gained to dollars-spent is simpler in the cost-cutting business. Consultants wrap results around exclusive processes. Five forces. Re-engineering. Value-based management. Some of the larger consulting firms spend millions of dollars showcasing their processes and thought leadership.
The McKinsey Quarterly often challenges Harvard Business Review in presenting leading management theories. Seven of the top ten consulting firms publish journals that directly address clients’ needs.
Public relations can be equally thought provoking. But outsiders perceive public relations as not having a defined process, a commitment to research, or a standard measure of results. We certainly need to correct that perception. We should be promoting our own industry’s ability to solve crucial business problems. Research on management communications needs to demonstrate linkages to business performance and stock price defined by process tools that we brand. This goes to our third area process and measurement. Certainly we need to standardize our measurement processes.
More importantly, public relations firms must commit to measuring results, whether the client pays for it or not. Despite all the current discussion about measurement, this is not a new issue. My colleague, Dr. Walter Lindenmann, has written extensively on measurement tools for public relations. The highly respected textbook, Effective Public Relations, by Scott M. Cutlip and Allen H. Center first published in 1952 covers the topic.
In the U.S., the Institute for Public Relations established a Commission on Measurement comprised of the leaders of PR research in corporations, agencies, academia and research firms. Our industry also benefited greatly when the IPR, PRCA and PR Week took the leadership in the U.K. with the public relations research and evaluation tool kit.
Measurement tools aren’t lacking; commitment is and, so, to a degree, is funding. Many consultancies, on their own, and a few corporations, individually, have already allocated funds to begin to build models for PR measurement. But for greater credibility in our field, this needs to be done as an industry. We, as an industry, need to explore ways to raise funds so we can develop truly credible public relations measurement models that we can all support.
Calculating success must be meaningful to the client. Management consultants have perfected the art of value creation. My management consulting friends impress clients with heady return-on-investment ratios of one hundred to one for every dollar spent on consulting, clients will realize one hundred dollars in revenue or profitability.
Ridiculous? Not when you back up your claims with results. The examples are numerous:
Bain & Company has compiled the “Bain Index,” which measures the stock performance of current and past clients.
Andersen Consulting delivers nearly a 150% increase in supply chain process improvement for worldwide retailer Best Buy. If Andersen fails, the firm immediately knocks 20% off its fees.
Cambridge Management Consulting will instantly offer prospective clients at least 32 specific case studiesacross multiple industries that detail millions of dollars in cost savings or revenue increases.
Public relations should be able to make comparable dollar comparisons.
Now let’s talk about pricing our services.
The ability to derive value has a direct effect on pricing for our services. All too often, the public relations industry gives away its most valuable asset knowledge and experience. Our strategic advice shouldn’t be perceived as an add-on to our implementation services.
We’ve set up our business in a way that clients pay about the same rates for vastly different products. Crisis communications strategy versus product announcements. We charge the same hourly rates yet these are hardly interchangeable services. Executive recruiters grouse about the same problem. Their percentage-of-salary fee for executive placements rewards transactions, not advice. It’s frustrating, particularly for high-end recruiters like Spencer Stuart, who counsel CEOs and senior executives every day.
To combat the problem, Spencer Stuart recently launched a stand-alone research and advisory service that helps CEOs and boards measure executive leadership compatibility within proposed mergers. It works on retainer.
We need to take a page from other professional advisors. We should separate our services implementation from strategy, knowledge development, creativity and charge accordingly. Management consultants compete on price for commodity services. But most will not discount for significant strategic advice. It devalues the service ?and the advisor.
In the Internet age, brands are precious. And we’re at the center of brand management and awareness.
We help clients sustain their reputation. And we are at the heart of relationship building the foundation of public relations.
What is the value of the third party endorsement we bring to communications? This is the area of the communications business we own. Our business is built largely on influencing infomediaries so our messages are delivered more credibly.
What’s that worth? Let’s stop leaving it up to our clients to guess.
Finally, I want to turn to ethics and the ethical standards that can really define our profession and enhance its credibility. A recent survey by the U.S. trade publication, Inside PR, noted that ethics is being taken very seriously among the major firms with most including ethics training in their professional development programs and with many requiring their employees to sign codes of ethics. There are many ramifications of ethics from client service issues to client conflict issues to human resources initiatives and actions.
But, as editor Paul Holmes points out, the practice of public relations our goal to help organizations understand their publics and then align themselves with the public good is ethical in and of itself and sets us far apart from other professional disciplines. Our commitment to openness and accuracy in the media is no less high than journalism’s ethic.
Other professional services are struggling with ethical debates. The executive recruiting industry is a good example. Four years ago, the Association of Executive Search Consultants the headhunter’s best-known trade group set out to rewrite its ethical code. The old charter mixed business practices and philosophies, creating an archaic “do’s and don’ts” list that didn’t reflect the times.
After an eighteen-month study, the group adopted a separate, high-minded code of ethics, and another, narrowly focused set of “best” business practices. It was a compromise that acknowledged reality. The group lost a couple of members who thought the two-pronged approach skirted firm ethical boundaries. Others wondered how far a trade association should go in telling members how to run their businesses.
The public relations industry doesn’t even need to go that far.
Professional services like executive recruiting, management consulting and public relations should be self-regulating industries. No single trade group can or should impose ethical standards or best practices over the entire industry. We’re a business-to-business industry. We have to police ourselves. Our industry’s morality is based on how we operate, not what we say.
That’s why I’m not advocating a worldwide code of ethics, an accreditation or “quality” program or enforcement “courts of law,” which would be chaotic for the public relations business. What we do need to do as an industry is to agree on the value of promulgating and enforcing ethical behavior within our organizations and making sure that ethical self-regulation is a major differentiator for us. We need to make sure that each of our firms has a written code that our employees know about, understand and agree to. It is not enough just to say that our people all know ethics is important. They don’t know it unless they see it, live and breathe it as part of the culture.
We’ve talked a lot about other professional services today. How we compare as an industry, how we can learn from others. Looking to the future, we asked our closest competitors the management consultants the same question that we are attempting to answer: What is the greatest threat facing your industry, as well as the greatest opportunity?
For management consultants, the dizzying pace of technological change is the most vital concern. Three years ago the term “e-business” would draw a blank stare. Now everyone is clamoring to claim the “e-guru” mantle.
On a grander scale, many consultants agree a sudden drop-off in the talent pipeline concurrent with a drastic increase in size is probably the biggest threat facing their industry. Some of these larger consulting firms rival their clients in size Andersen Consulting will likely surpass $10 billion in revenues next year. Building additional services to drive growth will prove taxing and, perhaps, self-defeating. Sophisticated buyers will demand superior not just adequate services.
Consulting firms must also like us address work-life issues and develop career paths at all levels to control turnover. Even a five-percent decrease in incoming consultants would severely affect the business. And retention can’t be ignored. Fifteen to twenty percent attrition is healthy ?more than that can be painful.
You’ll be seeing more consulting firms go public as a way to compete with the dot.coms and investment bankers for limited talent. Stock options may prove attractive, but the quarterly pressures of public ownership present its own problems.
As far as opportunity, that’s a loaded question. Management consultants thrive on change, and we’re certainly living in chaotic times. As one managing partner pointed out, “we’re in the solutions business; demand is unlimited because there are always problems to solve.” While management consultants see a continuing need for their counsel, they also recognize the requirement to complement that counsel with strong execution. And this is why they are beginning to develop more communications services.
That’s good news and bad news for public relations. It means we have more competition, but it also means the value of our services should rise as those who are used to far higher pricing structures provide them.
Our future depends on increasing the value of our services and credibility of our business so we can attract better people, pay them better and keep them in public relations.
And now is a good time for us to accomplish that. Technology and the Internet specifically offers us unlimited possibilities in the way we run our agencies as well as the way we practice public relations. Communicating during organizational change and crises has become a highly valued management discipline that we own and must continue to own.
How do we take advantage of this opportunity?
We need to provide exciting and rewarding challenges for highly talented individuals, develop recruiting programs to attract them, and invest heavily in professional development to help them throughout their careers.
We need to invest in the development of business processes and consistent measurement protocols and commit to them. We need to be valuing and pricing our services differently. We are giving too much away in the process of generating business. It is devaluing the strategic and very important advice we deliver.
We should make ethics a competitive advantage, built into the cultures of each of our organizations so that ethical behavior is known as a key value in our business.
And, finally, we need to understand that our vulnerability lies in complacency, that it’s in our hands to fail꿳ot the market, or the media, or our competitors, or our clients.
I’ve seen our profession and the business of public relations evolve in many ways over the last three decades.
Perhaps the lines between professional services were a bit more distinct back then. Maybe we recognized our boundaries too much boundaries between public relations counselors and management consultants, boundaries between international markets.
This is no longer a U.S. business or a U.K. business or a European or Asian business. It is a global business that can be very rewarding for all of our firms and the people within them. And it is no longer a business that has any disadvantages in competing for a larger share of the professional services market. The 21st century should be an exciting one for all of us if we make it so. And if we do it together.