Procurement Has Become The Bane Of The Ad Agency Business

I was startled recently, to learn that Procter and Gamble made news by posting on NASA’s web site that they were looking for ways to cut production costs and they would take ideas from anywhere, hence NASA.   A P&G spokesperson said that the entire production process had not changed in fifty years. He is, of course, correct. Clearly, P&G is desperate to find ways of cutting the cost of  print, television, video and content production. 

Procurement has now invaded all aspects of the advertising agency world.  Certainly, they have become involved with staffing, time and profitability. Now they are very much into the creative process.  I can’t help but think that while cost control has become a central part of every kind of business, it is particularly onerous in the advertising business - which should be about intellectual property and creativity.   

Unfortunately, ad agencies must share some of the blame for procurement becoming involved with creative and production.

In my advertising career, as an account guy I was helpless to prevent my various agencies from using the most expensive production suppliers. It was one area where account people really had no say in most agencies, even the most account driven shops.  Controlling costs was not part of an account person’s job.  When estimates appeared to be too high, occasionally if an account person was trusted by his or her creatives, he or she could negotiate for lower costs, but this was rare.  Creative directors, for the most part, insisted on using suppliers they knew, usually the most expensive photographers, directors and other production suppliers, all in the name of creativity and quality.  Clients, however, did exert some control and often pushed back when confronted with estimates that they thought were high.  This process still exists today.

I have written that we are seeing more and more of the advertising process being outsourced by clients or even brought in-house.  Today, clients are starting to outsource production to save money.  WPP, smartly, has Hogarth as its production shop. And while there is some push-back by the WPP creative agencies, more and more of WPP’s clients are mandating the use of Hogarth.  And Hogarth is also being used by non-WPP clients as well, because they believe that they are doing a good job of maintaining quality, while lowering costs.  The other holding companies are attempting to do the same thing.

P&G is correct in that the process has not changed in decades.  It is time that agencies take a leadership position.  My fear is that if they do not get ahead of the trend, it will get worse and ad agencies will lose complete control of the creative process.

Exit Interviews: What They Are And What They Could Be

When people leave a company, either voluntarily or not, all companies should conduct an exit interview.  The purpose of that interview should be educational and constructive on the part of the company.  It is a chance for an employee to give unfettered and objective feedback on the nature of the company and the things that caused the person to leave.

Unfortunately, many companies, especially ad agencies, miss this opportunity to learn and correct.  Many exit interviews are poorly conducted, few go into enough depth and, even when good information is gathered, no action is taken about what is learned. 

Hearing bad news can be difficult. And in many companies, there is no real mechanism to report the information learned from a departing employee.  Most exit interviews are, at best, perfunctory. In talking to my friends in human resources, they tell me that the principle reason people tell them they are leaving is for money, title or other kinds of advancement. That information is often as far as the exit interview goes; but these  answers only touch the surface and are rarely what actually drove the person to leave.

Recruiters tend to speak to employees who are actively looking or who have recently left a company.  The things they tell us are not necessarily the things they tell the company, especially during exit interviews..  Why?  Often, the departing employee feels disconnected and believes that the company doesn’t really care.  As a result, the employee feels powerless to affect change and rather than leave on a negative note, they simply choose to give simplistic answers.  This is often true of very senior executives as well. Their sense is that the company really doesn’t want to know or act upon its real issues.  And, besides, they tell me, the interviewer rarely probes deeper during an exit interview than a few perfunctory questions.  Most people tell me that their exit interviews, if at all, only last about ten to fifteen minutes and cover the basics like where they are going, for what title and what salary. One departing employee told me that the thing the person who interviewed them really wanted to know was whether there was an executive recruiter involved and who he or she was. Like it really matters.  In some ways, all of this information is none of the company's business.

There is a missed opportunity in poor exit interviews.

Most companies, certainly ad agencies, rarely probe to find out what they could have done better, how they could improve their culture, working environment or processes.  And even if they do ask about these things, the responses rarely get passed to senior management.  They may be written up, but are placed somewhere in a file drawer.

Given the high cost of employee turnover, management should be apprised of the information learned during exit interviews.  It should be analyzed and amalgamated over time. Sometimes, senior management is totally unaware of employee perceptions of the culture and style of the company. They may not even be aware of bad managers.  The information learned during exit interviews could be useful and might even lower turnover if it is properly analyzed and acted upon. 

All too often, I speak with senior management people who brag about their Friday afternoon open bar and they honestly believe that the institution of this very nice perk is the answer to an unhappy culture.  (The open bar or well stocked cafeteria are niceties, but do not compensate for more serious problems.)  

We know that the real reason why people leave companies has little to do with money, but the inability to get a proper salary increase can go a long way towards driving an employee away.  Ad agencies are always having wage freezes, which most employees understand can be thawed if they get a competitive job offer; unfortunately, more often than not, once an employee gets another offer, they become committed to leaving.

But mostly, people leave for reasons of environment, stimulation and career path advancement.  And these are things which should be discovered, probed and reported as a result of an exit interview. Employees who are recognized and feel empowered and valued don’t leave. 

And employees who go through exit interviews and do not tell the absolute truth as they perceive it are doing both themselves and their former company a disservice. 

Exit interviews can be a very powerful tool if used properly.