Flexibility Rules in PR Compensation

There is no place for Jim Young at my shop. Who? He is hands down my favorite character from the must-see movie Boiler Room about the ugly underside of chop shop stock brokerages.

Here are a couple of quotes from Jim – expertly played by Ben Affleck – as he attempts to woo a few twenty-somethings to join the firm as broker trainees:

“You become an employee of this firm, you will make your first million within three years. I'm gonna repeat that - you will make a million dollars….You want details? Fine. I drive a Ferrari, 355 Cabriolet, What's up? I have a ridiculous house in the South Fork. I have every toy you could possibly imagine. And best of all kids, I am liquid…They say money can't buy happiness? Look at the smile on my face. Ear to ear, baby.”

As the great recession marches on, public relations, digital marketing, advertising and social media agencies of all sizes get frothy at the hint of new business. Clients know it and they are extracting lots of freebies from firms desperate for consideration. Fair enough…it’s reflects the current market environment.

What is unfortunate is the whipping that typically continues when it is time to negotiate compensation for the selected firm. “We are looking for an agency to invest in our success,” was a comment thrown my way recently. Or, how about this one: “With your track record I am sure you would be more than happy with a pay for performance relationship.”

Fair compensation for a public relations agency has long been and remains a work in progress. In fact, I have found the traditional monthly retainer model fails both the client and the agency.

From the client’s perspective, they assume all of the risk. No strategic counsel. No creative thinking. No results. Too bad…the agency still gets paid in full.

The flip side is a PR shop desperate to manage scope creep while demanding unsustainable work levels from its staff.

What are the two client complaints most often heard about PR consultancies: inexperienced mid and junior-level staff and employee turnover. Hello…that is a direct result of the retainer model.

At Strategic Communications Group (Strategic), the lone conclusion we have reached is the importance of flexibility in the structure of compensation. Our suggested methodology is a time and materials relationship with a monthly ceiling, based on an agreed upon scope of work and performance metrics.

However, we often work in a project environment and are comfortable structuring shared success relationships. What is most important to us is that the process of defining compensation be collaborative and that the client demonstrates a commitment to the success of the program.

When you make “great work for great clients” your benchmark and stand firm in a desire to earn a fair profit, then the financial structure of the relationship tends to work out. Sorry, Jim Young. There’s no room for you at Strategic.