Billing. It starts “with a capital ‘B,’ And it rhymes with ‘bilking’ and that stands for fraud!” (Apologies to the “Music Man)
…trouble right here in PR city. …what, if anything, can we do about it…
In today’s Los Angeles Times, we learn:
“A former Fleishman-Hillard employee … testified she padded bills to the city on orders from her former bosses … (she) admitted Wednesday to making misstatements to investigators, but held firm to her basic story of fraud by the international public relations firm (Fleishman-Hillard).”
The Los Angeles Daily News reports:
“The former head of Fleishman-Hillard’s Los Angeles office was told in a 2003 meeting that Department of Water and Power bills were being inflated but did not stop it, a former colleague testified Tuesday.”
and… “Under questioning by Assistant U.S. Attorney Adam Kamenstein, (Monique) Moret said (Doug) Dowie didn’t tell anyone at the meeting that the process ‘has to stop.'”
Now, contrast these accusations with the following:
From Todd Defren, we learn of Fleishman-Hillard’s statement of “Principles” where they claim “Quality service is first and foremost in everything we do.”
“To make ourselves as valuable to our clients as they are to us.”® We live out this goal by adhering to the following ten basic principles:
1. Respect for the individual
2. Teamwork is everything
3. Quality service is first and foremost in everything we do
4. New business drives the firm
5. Results make us grow
6. Existing clients come first
7. Fleishman-Hillard requires a personal commitment
8. Entrepreneurship is a way of life
9. Personal success is measurable and attainable
10. We are committed to the highest ethical standards
Source: Fleishman-Hillard’s statement of “Principles”
So, I’m just sayin’ an’ paraphrasin’…
Well, either you’re closing your eyes
To a situation you do not wish to acknowledge
Or you are not aware of the caliber of disaster indicated
By the presence of PR conglomerates in our community.
Ya got trouble, my friend, right here,
I say, trouble right here in PR City.
(More apologies to the “Music Man) In fairness, we must remember, the case is in progress. There are only allegations. Nothing has been proven, yet.
Hey, lot’s of people are saying it. PR Week has been reporting on it, too. (Subscription required)
“These bills are quite long, aren’t they, Miss Moret?” asked Stodder’s attorney Jan Handzlik, resuming his line of witness questioning cut short by Tuesday’s end-of-workday recess.
Collected, and dressed in a sophisticated black business suit for her initial day on the stand, Moret, witness for the prosecution, described her role in preparing monthly invoices on behalf of the firm’s lucrative LA Department of Water and Power (LA DWP) account. After employees entered their billable hours in a computer program called PeopleSoft, she explained, a billing worksheet would be generated in Fleishman’s St. Louis headquarters. That sheet, Moret said, would be used by her and her assistant to prepare a detailed activity and project-code report to be sent to the client for payment.
It was after the ‘first run’ of the billing worksheets when allegedly fraudulently worked hours would be added, Moret explained. Under the direction of her supervisor, John Stodder, Moret said she would add hours to various employees’ entries, then re-submit to St. Louis before compiling invoices.”
O’Dwyer’s PR/Marcom even went so far as to allow an anonymous character blogger to write an article about it (Subscription required). That is something they have never done before, and stated they likely never will again. (Thank goodness.)
Allow me to make this clear. I like agencies. I like agency practitioners. They have certainly been nice to us in our blogging activities. I’m just offering my own version of clarification here. If you think I’m wrong, please tell me. (Like you wouldn’t anyway?)
I want to write about this story from several angles in days to come, but I’m starting with the two aspects that bother me the most (after the alleged overbilling, of course). I’ll try and deal with it from (1) a personal practitioner (or student) standpoint and (2) what this scandal may mean to public relations overall.
First of all, let us deal with the issue and how it relates to students about to join the world of PR. Some – note that I’ve said some, please – of you will go into agency/corporate public relations practice. For you, an important rule of thumb is to beware and steady yourself. (We actually do talk about this in classes, by the way.) You may well be asked to do something by a client or supervisor that is unethical, dishonest or even illegal. I know you are stunned.
So, “just say no” is the simple answer and advice, right? But, is it really that simple?
No, of course not.
It gets difficult. Out of school things seem to flow in many directions, like these…
You get a job. Then, maybe you get married. Oh, then comes the house. Ooops! Children. How’d that happen? So, as you can see the responsibilities and the ties keep accumulating that may keep you from feeling so free to say, “(Manager), I’m not comfortable with doing that.” Or, when supervisors are pushing you to meet your quotas, can you really feel comfortable saying “I will not lie to my clients.” You want to keep your job. You have car payments, mortgage payments, saving for the kid’s college and on, and on…
Not everyone is strong enough to take the stand and say something they may be penalized for, think bonuses and promotions, or even fired for down the line. Sad, yes, but true. I hope we see you leave the comfort of college with the steel it takes to say no. In fact, we hope you will be the change agents for a segment of the profession (probably less than 1/4 of the overall practice, actually) that causes some harm to the overall reputation of PR. We’ll talk more about this one, later. Maybe our readers will see this and offer their suggestions about how you can deal with the situation, should it arise.
Also, I am not certain that overbilling is rampant in agency PR. So far, to be fair, the evidence is anecdotal. Hey, it may be happening a lot, but there isn’t any significant public evidence to prove it. Know of some? Please share. Remember, there are a lot of firms.
Second, it seems that there is a perception that over-billing is rampant in the world of PR overall – not just in corporate and conglomerate owned PR agencies. Unfortunately, the claim often comes in a statement like this, “PR overbills all the time.” The generic PR statement is important and it bothers me.
…most PR practice, in my opinion, is local or regional at best, just like politics…
In my first post on this issue, I want to cover some simple thoughts about what PR is, or better stated, “Is conglomerate PR, or agency PR, representative of the entire industry?”
My feelling is no. It is not representative of the industry as a whole and, in fact, does not make up the majority of practitioners. You see, most PR practitioners don’t bill. Yeah, that’s right. Most likely don’t do time sheets and fill out billing reports. Most are salaried and it just doesn’t relate to their jobs.
Now, corporate/agency PR may account for a tremendous percentage of the billings that do take place. For instance, the top 10 independent firms accounted for $1.7 billion of the revenue out of the 135 firms in 2005. (Source: O’Dwyer’s PR)
The Economist reports (Jan 19th 2006) that PR spending in the U.S. has reached $3.7 billion (compared to $475 billion for advertising). The article also reports, “Many of the big PR firms have been consolidated into the giant groups that now dominate the advertising industry. Two of these are American: Interpublic owns GolinHarris and Weber Shandwick, and Omnicom owns Fleishman-Hillard and Ketchum. Britain’s WPP owns Hill & Knowlton and Burson-Marsteller.”
Don’t you just love WPP? “‘WPP’ stands for ‘Wire and Plastic Products.’” Ah, and here you are — our future “Graduate(s).” Is big time agency PR (those bonuses and promotions) your Mrs. Robinson? It may be trying to seduce you. Will you be asked to compromise your ethics to get ahead? It could happen.
But, back to the real story, are revenues really the key factor in determining where PR practice is taking place? Is agency PR where the real excitement and fun is found? No, of course it isn’t.
That same article in The Economist reports:
Of course, not all PR people are selling products or services. Indeed, marketing PR—or “brand communications” as it is sometimes called—is still considered by some in the industry as something of a Cinderella business. A recent study in Britain by the Centre for Economics and Business Research found the PR industry there employs 48,000 people. More than 80% were working “in-house”, for companies or other organisations. Just over half of Britain’s in-house PRs work for the public sector, health organisations and charities. These organisations are also the biggest users of PR consultancies.
In the U.S., I believe the percentages are similar. Still looking for those numbers, so please bear with me.
My point? Perspective, please. Do not take this story about one trial about one conglomerate’s practice and apply the perception to all of PR. It isn’t fair. It isn’t valid. And, it is foolish. May we all, when referring to this case, not make the blanket “PR” statements, please.
And, story teasers and headlines like these may serve to perpetuate the misconceptions.
“…Overbilling is rife in the PR biz because it’s getting pretty tough to feed the corporate monster..” O’Dwyer’s PR
“PR Overbilling Case Heads To Court” Center for Media and Democracy … Why not Fleishman-Hillard Overbilling… (OK, that’s being picky.)
Next time, we may talk about possible solutions to the problem. Hey, I can at least try. Certainly management needs to change. Congomerates need to clean up or break up. But, to truly change this culture, someone – a lot of someones – do need to say no.
Also see Ethics on Demand, by Mark Johnston, at FPRA Blog Week. (Hat tip to Jeremy Pepper at the Blog Run for the link.)