PR Week’s front page story on the CIPR finances is a little disturbing. The statement on the CIPR web-site is not much more reassuring. I have been critical in the past of some of the stances the organisation has taken, but it is one of the two bodies that is supposed to represent our industry and does a lot of good in terms of basic training. According to PR Week it is scheduled to make a loss of £700,000 this year of which £500,000 is a one-off charge related to moving headquarters. The problem for the CIPR is that many of its members will be very good managers of small businesses and will be looking at this development with some surprise and little sympathy. Having a good view of revenues and keeping costs in line are the first two financial skills of anyone in the PR agency world. I bet most agency owner CIPR members can tell you to within pennies what their revenues will be for the next few months and probably sign all the cheques that go out of the business themselves. And these people will be asking:
* What scale of revenue drop could see the organisation plunge into a £200,000 trading loss (netting out the one-off move costs from what sounds like
an extraordinary sequence of events with their landlord)?
* How frequent and how accurate is the revenue forecasting? “At no point did we forsee a loss of that magnitude”, said Kevin Taylor. Why not?
* How quickly did the organisation go into cost cutting and containment mode?
* How many people (surely the highest cost with PRCA) have had pay cuts and how many have already been made redundant?
* When will the CIPR return to profit and if this is not within the next couple of months, please see above point. “We would hope that next year we
would return to profit”, said Kevin Taylor. Hope! How many CIPR members running offices of multinationals would dare tell their bosses they “hoped”
to be in profit next year?
If this seems a harsh post it is because this industry’s ability to manage itself well is a necessary basis for its credibility. We have to be able to run our own businesses to be taken seriously by our clients and colleagues if we want a place at the table where they manage theirs. And we have done so much better this recession than last. The PR companies in the listed advertising agency groups are often the sparkling financial performers (look at exceptionally well-run Weber Shandwick in the dreadful mess that is IPG). The UK listed firms Chime and Huntsworth have produced good results in the downturn and we all benefit when their experienced and eloquent business leaders talk about how they manage for growth and for profit on a grown-up financial stage. This news seems a throwback to the eighties when the industry had much less business acumen and agencies would pop up and then go bust hurting clients, employees and business partners.
I know the CIPR is not in business to make a profit, but it has to be run in a business-like manner to be taken seriously. My advice to the CIPR is get advice from your members who run their own PR businesses, because you need to fix this problem fast for the sake of all of our reputations and “hoping” to be in profit next year is not exactly a stretch target.