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Monday, July 29, 2013

The Down Side Of The Publicis Omnicom Merger


I thought I would post this morning, while this news is still fresh and on everyone's mind.

As a recruiter, I can say this merger is terrible for talent.  Since employees of one holding company are not allowed to go to another agency owned by that same holding company, it certainly further limits peoples’ choices.

I have always thought that the prohibition of moving between two agencies owned by the same holding company is probably in restraint of trade.  But the prohibition of moving between the same clients at different agencies or holding companies is definitely in restraint of trade.  This means that if someone is on Coca-cola at one of the IPG agencies, they can no longer go to any agency owned by Publicis or Omnicom.

The holding companies are pretty good at moving very senior talent among their shops – Omnicom does it all the time.  But very senior is defined as probably EVP and higher.  This leaves out the 95% of employees making under $250,000 or so.  In fact, despite the fact that the holding companies all have human resources departments, there really is no mechanism for moving an account executive, writer, art director or media planner among their agencies.  And, the rules being the rules, a writer at DDB, for instance, cannot be employed and then move to BBDO without all kinds of permissions.

While there is a policy in place which allows such moves at many of the holding companies, the rigmarole and paper work makes it both difficult and dangerous to approach management to affect such a move.  This merger only serves to limit the possibilities even further.

I think David Jones, CEO of Havas, put it very well when he said this is bad for clients and employees. (Go to the link to see his full comment.  However, this merger isn’t good   for creativity, it isn’t good for competition.  It will not produce greater marketing thinking.  But, it will be good for the bottom line of the combined company. It will save, according to the various articles, about $500 million.  That is, about a 3% savings for stockholders, which is certainly not a huge; it will hardly affect the bottom line of the combined company. I honestly believe that over the next 18 months, the revenues lost due to conflicts and unhappy clients will more than offset these savings.

The worst part of this whole thing is that I believe it will result in panic buying and merging of the remaining holding companies. Pretty soon there will only be two or three holding companies.

14 comments:

  1. Hi Paul - you should check your facts on policies regarding empoyee movements between agencies of the same holding company - I can tell you there is no such 'prohibition' at my company. It is encouraged - in that it is better to keep someone 'in the family' then lose them completely.

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    1. @ Anonymous: I would like to know who you are and which company you work for. This is news to me. I am not aware of a single holding company that encourages movement of talent between its agencies. I am sure my readers would like to know as well.

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    2. I can speak for Interpublic. No moving between companies.

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  2. Publicis Healthcare Communications within Publicis has an internal mobility policy, and encourages movement of talent between our 10 brands globally.

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  3. Publicis Groupe has a global internal mobility /job posting board available to all employees across our agencies. We recognize that in order to retain top talent, in addition to developing it, you must encourage and support internal mobility.

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    1. That is nice to know, Aimee. I was unaware of this policy. However, there is a huge fear factor among employees who are unhappy and see something posted at another agency within the holding company. They are afraid that their supervisors will find out and they will get fired. And, mostly, recruiters are not allowed to move people within the same company. It is a conundrum.

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  4. Two quick upside thoughts on this merger ... 1) WPP, IPG, Havas, Dentsu, MDC, et al, will have a windfall of top talents or candidates available to them once Omnicom and Publicis merge and purge redundant agency brands; client services; and staff. 2) Smaller independent agencies will have an easier time recruiting top talents heretofore unavailable to them.

    That said, at some point not too far down the road, I also fully expect to see JP Morgan Chase’s Jamie Dimon buying the new Publicis Omnicom (OMC), since OMC is now the largest global “bank” in adland. LOL but not really, Bill Crandall

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  5. What Paul said... whether or not moving between agency brands is allowed within a holding company, the fear factor among employees who are unhappy and simply trying to find a new gig is high. This is bad for talent. Long live independent agencies.

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  6. It's not that recruiters aren't allowed to move people within the same company, but generally you would work on behalf of one of these holding companies and they're hardly going to pay you for finding someone who already works for them, even if they might be the best choice. It does limit options for recruiters certainly but for junior account handlers and creative it changes little.

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  7. @Anonymous: Huh? I cannot speak for other recruiters, but I work for my clients (I have to do a good job for my candidates as well) because they pay me. I always try to find the best person for the job. Until the holding companies have a mechanism for moving people from one of their companies to another in a confidential and safe manner, they are limiting their choices for "best". How about paying recruiters a reduced fee to do this? Candidates at another one of your agencies may work for you, but you don't know them and can't find them. We can.

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  8. I work for a WPP agency and am mid-level (Director but not Partner or Sr) and can say that movement within the agency, while allowed, is certainly not encouraged.

    The process of informing your manager and our internal HR before contacting the hiring agency places the employee at risk. It is uncomfortable to announce to your manager that you are interested in moving before you know if the other agency is interested.

    It is because of this policy, in part, that our external turnover is near 30% annually and less than 2% internal transfers.

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    1. Thank you Anonymous. This is exactly my observation and is the point of my commentary.

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  9. Anonymous (3) speaks truth, I have experienced. It is not prohibited (that would probably be illegal as we are mostly employees-at-will) but is effectively discouraged by the need to include all parties involved. In a climate of job insecurity, few will want to test the turbulent waters.

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  10. Man, am I so glad I left this BS decades ago (to go independent). No doubt this merger will prompt scores of others to do the same.

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I would welcome your comments, suggestions or anything you would like to share with me or my readers.

 
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