Today’s guest post is by Michael Dresner, CEO of Brand Squared, a Division of Peppercomm.

The RepMan blog from June 20th chronicled the financial wizardry of blue chip brand firms, who leverage their might and mandate 120, 150 or 180 day payment terms from their agencies.  Why do that?  To preserve cash flow?  To exercise customer power?  To ensure that only financially stable agencies are on the roster?  To manage the slow payment terms of your own customers? Or, is it simply to cover up the occasional dysfunction of corporate accounts payable?

I had a client last year that was 100 days past due on a sizeable invoice, whose answer was “none of us here really know how to get invoices paid.”  Right.

For all corporate purchasers that created this new SOP in agency management, congratulations on showing your might.  But here’s the problem.  It’s going to cost you.  Lest that sounds illogical, let me play this out.  Your purchasing team introduces the new payment terms that stretch into the distant future.  Your account leaders will say “whatever it takes.  We’re your partner.  We’re here to make this relationship work.”  And they will.  Because if clients keep their money for 4-6 months at a time, agencies (large and small) will borrow at a low interest rate to keep the lights on and staff paid.  No bank will worry too much about P&G or Mars not paying for work complete.  Let’s say their ongoing bank charges a few points (probably less).  The agency will simply bake that interest charge into the cost of service fees right back to you.  And shocking as this may seem, agencies will add a point for good measure.  Why not profit on this?  It’s a client directive.

For all clients reading this, please don’t think YOUR agency is the exception.  One of my professional colleagues is a CFO at a major holding company and lauded herself with accepting all major clients’ new payment terms.  I laughed and asked how much money her agency is now making off of interest.  She said “you don’t even want to know.”

So – who earns money from this new, client progressive model?  Agencies and their banks.  Who loses?  Clients.  Clients will pay higher fees.  They can argue the extra 5-6% now added to service fees, if they even notice.  Agencies will mention higher complexity in last year’s service offerings.  Name three marketing people on the client side who would even be willing to fight that.  I can’t think of one.

Clients lose on other levels too:  incumbent agencies WILL invest resources in making themselves financially whole – time, energy, labor hours – and those resources will inevitably come from a finite pool attributed to said client.  If I were on the client side, I would want the agency spending those resources on how to grow my brand.  Clients will also lose out on small agencies that spun off from the large holding companies, the small agencies with the most creative ideas, with the most innovative thinking and eliminated bureaucracy, which cannot operate on six month payment cycles because they’re new companies.   Those smaller agencies won’t go out of business. They will simply eschew the Fortune 500 and find more collaborative clients.  And ultimately, those smaller agencies will represent the larger truth that small business has and will always be the engine that drives industrial and economic growth.

So – for all of those purchasing managers insisting on 4-6 month terms – ask around.  Get an unofficial view from an agency friend.  See how easy it is for a vendor to borrow money at low rates in lieu of paid invoices and make you pay that interest in some fashion.  See if your new mantra precludes marketers from using independent shops with hard-working, inventive experts in their field, who swallow their pride and work with an easier customer base.   Are you really winning by holding onto the check owed for services already rendered?

Good luck with that.

Today’s guest post is by Peppercommer Chris Piedmont.

The College of Charleston (CofC) is known for many things including its beautiful architecture, long history, and location in America’s top city. However, the past six months, when I served as student body vice-president was filled with crisis after crisis. First there was the battle over a possible merger with the Medical University of South Carolina. Then, came the debate over whether the SC General Assembly would cut the College’s funding for selecting Fun Home, a book with LGBT themes, for the annual campus-wide reading program. Lastly, there was the outcry over the Board of Trustees selection of former SC Lt. Gov. (and confederate reenactor) Glenn McConnell as the 22nd President of the College of Charleston.

While these crises were stressful, they taught me three valuable crisis communication lessons that apply to many situations.

Say something
Respond to stakeholders’ concerns in a timely manner
When a crisis occurs, be quick with a strategic response. You don’t have to say much, but you must say something. Not commenting leads to a communication vacuum that will be filled. If you’re not sharing your brand’s views on the issue, then those hitting you will fill the void.  The College’s administration did not address many of these issues with students and it left a vacuum that was filled by inaccurate information and magnified the crises.

Think before you send
All too often this important lesson is forgotten. When facing a crisis, it can be tempting to quickly fire off a full-throated defense of company practices. A powerful defense is fine, but ensure that this is the best strategic response before hitting send. One SC representative didn’t think before hitting send and he caused himself and his wife, a CofC Board of Trustees member, a lot of headaches.  When I reached out on behalf of the CofC Student Government Association urging the legislature to restore our cut funding, he fired back a harsh response within ten minutes. When shared with members of the Student Senate, his response was forwarded to local media outlets that picked it up and ran with the harsh words. Waiting a few minutes before hitting send would have been a much smarter idea.

Reputation is a long game
It takes years to build a reputation but all of that built up goodwill can be change quickly by a series of crises. Respond in a timely and strategic way and your brand can weather most storms.

CofC has had some big hits the past few months, but hopefully the institution will bounce back better than ever with a few lessons learned. During the times of crises, my mantra was the College of Charleston is bigger than one issue, one book or one president. Well, so too is every other brand. With a good communication team responding appropriately, a brand can survive almost anything.

There’s a fascinating Advertising Age feature that shines the spotlight on Brown-Forman’s new workplace policies.

If the company name doesn’t sound familiar, it should.

Brown-Forman is the Louisville-based distiller of Jack Daniels, and other major liquor brands.

So, what’s so novel about B-F’s new workplace program? It’s centered on making teetotaling employees feel included in the company’s social programs!

So, for example, while the average cafeteria menu in the company’s Bourbon Street Cafe includes Old Forrester marinated flank steak and a cocktail make from Woodford Reserve, Southern Comfort and orange and pineapple juices, there are also non-alcoholic beverages from which to choose (BTW, how could anyone possibly function after a lunch of flank steak and Jack?).

The teetotalers program is part of an overall Employee Resource Group diversity program that’s aimed at making various B-F work groups feel more at home. Those groups include:

– Boomers (Stop the presses! I’m finally a member of a minority!)
– LGBT
– Veterans
– Women
– Young professionals
– Non-drinkers

This is a noble cause for which B-F deserves a ton of credit. But, it also begs the question: Why would a teetotaler work for a liquor marketer in the first place? Talk about entering the belly of the beast. It’s akin to:

– An atheist working at the Vatican
– A Yankee fan selling cotton candy at Fenway Park
– Yours truly serving as Sir Martin Sorrell’s aide-de-camp

I’m all for inclusiveness and diversity in the workplace. But, I’m not sure I agree with the lemonade and ginger ale lunchtime options for non-drinkers at a liquor manufacturing company. That’s one toke over the line (to mix metaphors).

If the non-drinking cohort refuses to imbibe, I honestly think they should find employment elsewhere.

There are enlightened workplace cultures and then there’s Brown-Forman’s. In my mind, I’d simply let employees know they’re expected to consume their employer’s product. Period.

There are plenty of other employers in the greater Louisville area and I, for one, would want employees who use my product, and will feel comfortable serving as brand ambassadors in social situations. That’s tough to do when one refuses to even sip a Jack & Coke.

I don’t know about you. But, this is one example of political correctness gone very, very wrong.

Regardless of your feelings, though, let’s all raise our drinks and salute B-F for their other progressive efforts at diversity (especially the one earmarking Baby Boomers an important minority).

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Note: Repman will be spending the majority of next week attacking northern Maine’s rugged Mt. Katahdin and cliff climbing along Bar Harbor’s Otter Cliffs. In my absence, various colleagues will be contributing guest columns. And do post comments about their blogs. We’ve got some real beauts scheduled for your reading pleasure.  

Today’s post is dedicated to Mike Herman and Roger Friedensen.

I’ve decided to learn how to play the guitar. I’m not sure when, or why, I made this decision, but it’s been a long time coming.

I think it began in grammar school when I noticed that two types of guys got the hottest women:

– football players
– guitar players

The desire re-surfaced decades later when I began attending the annual PRSA Counselors Academy Spring Conferences.

I watched with jaw agape as two of my peers, Mike Herman and Roger Friedensen, not only made magic on their guitars but brought their own unique interpretations to well-worn standards.

I’ve never told them this, but I was incredibly impressed that these top PR professionals also happened to play the sh*t out of a guitar.

And, then, I began to perform stand-up comedy which, truth be told, requires a very different kind of talent. Successful comedians have a knack for observing, and relating, things we all see and experience. But, they put an unusually insightful and funny spin on it. That’s a gift to be sure, but I’d never rank Louis C.K. alongside, say, Eric Clapton or Tom Petty as truly gifted artists.

And, so as I looked at what I’ve accomplished to date and have yet to accomplish, I decided I needed to learn the guitar. But, because I’m an incredibly competitive person, learning a few strings from, say, ‘Paint It Black’ or ‘Crazy Train’ simply just won’t cut it.

I have two goals:

– Play lead guitar with my instructor’s band, the Barbarians, one year from today
– Play alongside Mike and Roger at some future Counselors Academy shindig (if they’ll have me).

I’d go on, but I need to memorize the opening riffs to Donovan’s ‘Rikki Tiki Tavi.’ My second lesson is tomorrow, and I need to be ready.

I don’t like people who present problems without suggesting solutions. So, I realize I owe poor Steve Barrett, editor of PR Week, an apology since I did just that in yesterday’s blog.

In my column, I decried PR Week’s increasing obsession with all things global, namely the holding companies and the intergalactic corporations they represent. Perhaps most disturbing of all, though, was PR Week’s recent decision to name WPP’s Sir Martin Sorrell as our industry’s most powerful person. Naming Sorrell, who never spent a day practicing PR, our field’s top dude is akin to declaring A-Rod the winner of the Emily Post Annual Etiquette Award.

Ah, but I have a solution to PR Week’s obsessive compulsive behavior: Create a spin-off publication aimed at start-ups, boutiques, small and midsized agencies. Call it PR Week, Jr.

Just think of what PR Week, Jr. could contain:
– Organization charts that don’t depict Ford Motor Company’s labyrinth-like dotted and straight lines but, rather Bob & Ray’s Deli management structure. At long last, we’ll learn whether bologna does, in fact, report to the CCO.

– An awards program in which FH, Weber, Edelman and Ketchum aren’t nominated for 27 awards each AND don’t have three finalists each in seven different categories.

– A cover story on the trials and tribulations of the CMO of a Boulder-based, Series A-funded technology start-up. That would be so relevant and refreshing in comparison to, say, the laugh out loud funny profile a few years back of Yahoo’s top PR guy in which he boasted, “I want the people at Google waking up each day and wondering what Yahoo’s up to, and not vice versa.” How’d that one work out for you, buddy?

Let the record show I’d be delighted to contribute an occasional PR Week, Jr. by-liner or engage in a heated debate about the future of satellite media tours. I’d even consider shelling out bucks for a print ad.

It seems to me PR Week has reached a tipping point: the content is becoming more and more elitist, and less and less relevant. And, here’s the larger problem: for all of their bravado about covering what’s new and next, Barrett & Co. are completely overlooking the engine of America’s recovery, small business.

PR Week, Jr. could fill that void, and champion the Burson-Marstellers, Golins and FHs of tomorrow. But, they won’t. Why fix what they don’t think is broken?

Ah, but one can dream. And, right now, I’ve got my sights set on being named PR Week, Jr’s. Most Powerful Person of the Year 2020. And, unlike Sir Martin, I’ll be able to say I actually practiced public relations.

One final note: I’d be delighted to play host to any PR Week representative who’s willing to debate this very real, and very serious, problem on RepTV, my highly acclaimed, if seldom viewed, web series. Any takers?

Did you know the monthly edition of PR Week just named Sir Martin Sorrell THE most powerful man in PR? That’s akin to The Rock & Roll Hall of Fame naming Ringo Starr the greatest guitarist in rock history.

Why? Because Sir Martin is a bean counter, who has never, ever practiced the art and science of PR (note: While Ringo no doubt plucked a guitar chord or two, I don’t think he ever jeopardized the reputations of Jimmy Page, Eric Clapton or Jimi Hendrix).

Ah, but the current editorial staff of PR Week is in the midst of a serious, long-term crush on Sir Martin, global holding companies and the international corporations they represent. As a result, when an ersatz list such as this most recent one is concocted, it’s almost completely dominated by the top kicks at GE, Ford, IBM, WPP, Omnicom, Publicis and Interpublic.

And, that’s OK if, by powerful, PR Week means controlling the purse strings of multi-mega dollar companies. The men and women of the PR Week 50 no doubt manage 90 percent of the total monies spent on public relations programs. That may very well make them powerful, but it most assuredly does NOT make them:

– Influential
– Innovative
– Or, fun people with whom to toss back a few drinks at the end of the day.

For those qualities, I’d turn to people such as Daryl McCullough, Lynn Casey, Janet Tyler and Elise Mitchell. That particular Fab Four has accomplished something 90 percent of the PR Week Power 50 have NOT done: they’ve built their own businesses and weathered good times and bad to emerge as serious players in the PR world.

So, PR Week can continue its parochial, hagiographic coverage of the people who control budgets. Those in the know know that, while Sir Martin may be the Machiavelli of marketing, he is most assuredly NOT the Leonardo.

To find examples of the latter, please check the PR Week glossary for: ‘midsized’ ‘small’ and ’boutique’ agencies while cross-referencing the words ‘future’ and ‘innovative.’

I recently interviewed three different entrepreneurs for my Inc.com column. The subject was, ‘New techniques for attracting and retaining top talent.’

You’ll have to read my column for the full report, but all three executives shared the same belief: small, start-ups run rings around larger competitors because there’s no compartmentalizing at the former. Hence employees can learn ALL aspects of the business.

Entrepreneurs expect their employees to wear multiple hats, perform simultaneous tasks and uniformly bask in the heady glow of success or learn from a failure.

Each entrepreneur told me their single biggest hiring mistake was recruiting someone from a larger competitor. Why? Because the slower-moving, bureaucratic-dependent hires expected other employees to do their bidding.

They also came fully equipped with inter-office political backstabbing skills that wreaked havoc in the smaller cultures.

I can relate. We’ve made the mistake of hiring employees from, say, Hill & Knowlton, FH or Edelman and, almost without exception, the employees have flamed out because they were highly compartmentalized.

For example, they may have been great at managing a large group of people, but we incorrectly assumed the big agency managers would also be comfortable enough to pick up their own phone, roll up their sleeves or, gulp, produce a bead of sweat from working hard.

My favorite example of big agency compartmentalization came a few weeks after we’d hired a ‘Burson Person.’

We seemed to hit it off in the interview so, ‘Mary’ turned to me for questions during her first week of employment at Peppercomm.

On her second day, she called me and asked: “Say, Steve, I have a question. Neither the organization chart nor the phone directory lists a head of research. Can you tell me her name?”

After digesting that question, I responded by saying, “You’re speaking to her!”

There was a long, pregnant pause, followed by this astute observation, “You mean you run the agency AND the research department?”

I told her everyone ran the agency and the research department. In fact, everyone did everything else too.

This brave, new work world didn’t sit well with the Burson person. “Look, I want to do the best job possible, and I need a support structure to enable me to do that,” she stated.

I chuckled, and sighed, “Mary, I think the two of us made a big mistake.” And, sure enough, good ol’ Mary was gone within a month.

Like the three entrepreneurs I interviewed for Inc.com, I don’t stress when it comes to attracting, and retaining, talent (indeed, 41 percent of our 100-plus employees have been with us five years or more!).

Great entrepreneurial shops such as Coyne, PadillaCRT and Airfoil provide exponentially more career opportunities than our aircraft-carrier sized holding company competitors (a story that PR Week’s Steve Barrett and The Holmes Report’s Paul Holmes always seem to overlook for some reason).

On, and guess what? Peppercomm has grown so much in the past few years that we now DO have a research department. I’d like to think wherever she is,  Mary would be relieved to know that.