“It was one of the best things that ever happened to us,” says Ron Rogers, president of Los Angeles public relations agency Rogers & Associates. “It had an amazingly positive effect on our people, because it sent a message about the kind of agency we all wanted this to be. And it opened up new business opportunities for us and helped us grow.”
The seminal event that Rogers is talking about is not a restructuring, or a new hire, or a major client win. It is the decision, made earlier this year, to bid farewell to one of the agency’s most prominent accounts, American Suzuki.
Rogers is one of a handful of PR firm executives who has recently made what may be the most difficult decision in an entrepreneur’s life. Privately, most agency entrepreneurs acknowledge that they have at least one or two difficult clients, clients that show little respect for the agency’s work or its staff. Until recently, however, few had been prepared to do anything about it.
They are doing so more often for a couple of reasons. One, clearly, is that in the current business climate they are confident that they can replace the lost business. But the other, far more important, is that good people are incredibly difficult to come by—more difficult, it seems, than good clients—and agencies need to do everything they can hold on to their star employees. Anything that has a detrimental effect on the work environment is just too costly.
“Nothing is more important than the morale of your people,” says Patrice Tanaka, whose agency decided to end one of its largest client relationships earlier this year. “You can’t allow them to be abused and demoralized. If people really are our greatest assets, we have to treat them that way.”
Like several others interviewed for this story, Tanaka declined to identify the client involved, but she did say that it represented a significant amount of revenue. “The client was treating us in a very diminishing way,” she says. “It wasn’t just one person on the client side, it was rife within the whole department. When the person at the top acts that way, it sends a signal to everyone.” The client has also adopted a position on an issue that Tanaka did not feel her agency could defend.
Rich Jernstedt, president of Golin/Harris, recounts a very similar set of experience with the second largest client in the agency’s Los Angeles office. “We had people who were fearful that they would be assigned to the account,” he says. “It was even beginning to effect our ability to recruit.” So when L.A. general manager Fred Cook said he wanted to resign the business, Jernstedt supported the decision wholeheartedly.
Everyone we spoke with said they had made the decision to resign the business regretfully.
“It was very difficult,” says Tanaka, whose agency is employee owned and who involved employees in the decision. “We had a lot of conversations in the finance committee about what this would mean, and whether we thought we could replace the revenue. We asked ourselves whether there was anything more we could do to salvage the situation. In the end, though, it was a unanimous decision, even thought it meant that we sacrificed growth for the year.”
Sheri Benjamin, founder and president of The Benjamin Group, one of Silicon Valley’s hottest high-tech agencies, decided earlier this year to part company with a $1 million client after the relationship began to sour. After two years of good work, she says, market conditions changed and the company’s CEO began to take out his frustration on those around him, including the public relations team.
“It was not a tough decision for me personally, because I value the sanity of my employees more than I value the revenue from any one client,” says Benjamin. “The revenue stream can always be replaced. Some of our people were concerned. We had five people working on the account full-time and I needed to sit down with them and make sure they understood why we were doing what we were doing. I also wanted to let them know that we planned to replace the business, and that we were not going to lay people off.”
For Ron Rogers, the biggest source of regret was the end of a relationship that had once been among the best his agency has ever enjoyed. In its early years in the U.S., Suzuki turned to Rogers & Associates to help it fight charges that the only model on sale in this country was unsafe. Without Rogers’ contribution, Suzuki might have been driven out of the U.S. market, and that created an emotional bond between the auto maker and its agency that Rogers was loathe to break.
In the end, he took his problem to a lawyer friend and sometime business advisor, and explained the difficulties in the relationship. “He asked me one question,” says Rogers. “He knew we had standards for the kind of new clients we took on, and he asked me whether Suzuki would meet those standards if it came to us today. The answer was, it wouldn’t.”
Rogers said that when he told other members of the management committee what he was thinking of doing, “some of them thought I was crazy. But in the end we decided it was something we had to do.”
Like everyone else interviewed for this article, Rogers found that the decision was immediately and immensely beneficial.
“The response throughout the agency was amazing,” says Benjamin. “People focused their energies on bringing in new business to replace the business we lost, including a lot of people who didn’t have any previous new business experience. And I got a lot of e-mail from people, saying basically ‘right on, sister’ and thanking me for walking the talk.”
Cook, too, says Golin was quick to make up the lost business, and the benefits have been “enormous. Our lives just changed. The morale of the whole agency improved. It wasn’t just the people who worked on the account. The decision sent a wonderful message to the rest of the staff that while we are in business to serve out clients, the quality of life that our people enjoy is important to us too.”
Cook says he has even had potential recruits tell him that one of the reasons they were attracted to Golin/Harris was because they had heard about its decision to part company with a difficult client.
At Rogers & Associates, meanwhile, the pay off was more immediate. Not only did staff respond positively, but the agency found other automotive clients beating a path to its door.
“We had done great work in the automotive category,” says Rogers. “One of our concerns was that our reputation among the automotive press was beginning to suffer. But we were confident based on the work we had done that we could find another client and that the team would not have to be broken up.”
Rogers quickly added a project for Hyundai, and then won the American Honda business in partnership with Washington, D.C., public affairs firm The Hawthorn Group. It not only replaced the fees and kept the account team in place, it added a strategic partner. No wonder calls the decision to end the Suzuki relationship “the best decision we ever made.”