In Compensation We Trust

Ironically, the critical component of a performance-based compensation plan happens to be the most elusive – mutual trust between negotiating parties.

Consider the tumultuous relationship between Washington, DC public school chancellor Michelle Rhee and the principals, administrators and teachers under her charge. Everyone affiliated with the District’s poor performing public school system agrees attracting and retaining top-notch teachers provides the foundation for an exceptional educational experience.

Rhee’s novel approach is to establish well defined performance benchmarks for teacher evaluation and then structure compensation accordingly. Teachers who score high will be paid above industry standards, while those who fall short will be out of a job.

Sounds good in theory. Yet, the lack of trust and respect between Rhee and the teachers’ union has railroaded the negotiation process and created a poisonous environment that further erodes the quality of service delivered by the District.

Does the same fate await advertisers like Procter & Gamble and Coca-Cola as they install a new performance-based compensation model for their ad shops?

My bet is “no.” Each party involved has too much at stake to let petty politics and grand-standing block what has the potential to be a more open, honest and productive relationship.

The ad agencies are putting their margins on the line and, accordingly, are in a better position to demand that their ideas and tactical approaches be implemented.

On the other side, advertisers no longer have to guess at the motivation of their creatives when reviewing work. Is this in the best interest of my company or merely designed to win awards?

I’ll be interested to see where this path leads and if this is the all-important first step to redefining how professional services firms are compensated.

Decline of US' Global Swagger

An attribute that has helped make the United States a global technical powerhouse is the cultural diversity of its workforce. Competing views, beliefs and experiences contribute to an environment in which creativity and innovation thrive.

As a result, the brightest and hardest work entrepreneurs, scientists, engineers and medical practitioners tagged the US as their destination of choice. We offered the best schools, access to multiple sources of capital and a support structure designed to nurture emerging growth companies.


They came…they created…and our economy reaped the rewards. The list of companies founded by immigrants to the US is stunning: Intel, Solectron, eBay, Yahoo and (yes) Google.

Then came the horror of 9/11. A protectionist mind-set swept through government and resulted in the clamp down on the number of technologists and students who were allowed to cultivate their craft in the United States. Concurrently, the accelerating globalization of business allowed emerging economies in Eastern Europe, the Middle East, India and China to develop more credible and higher quality education and technical infrastructures.

Today, the US is no longer the destination of choice for many would-be entrepreneurs. There is the perception that a comparable level of success can be achieved in expanding cities like Mumbai, Bangalore, Dubai, Shanghai, Tel Aviv and Belfast.

The inability to attract the world’s most talented entrepreneurs, engineers and technologists is one of the most significant threats facing the United States economy. Simply put, we have lost our global swagger.

We need to act quickly to solidify the US’ global leadership in technology. Immediate steps should include a scaling back on restrictions for H1B visas, as well as an aggressive promotional campaign to encourage enrollment of international students in undergraduate and graduate programs.

Let’s invite the world’s best, and then be gracious, supportive and thankful when they arrive.

I do recognize the arguments against throwing open the door. Foreign-born software developers, engineers, doctors, etc. will take jobs that would have otherwise been filled by domestic workers. True…this will most likely be a near-term outcome. Yet, the resulting company creation and innovation from sporting the most competitive workforce will lead to more opportunities (and wealth) for everyone.

There’s also the issue of homeland security and terrorist threats. This is certainly a risk and not one to be taken lightly. However, the positive economic impact and improvement in quality of life outweighs this potential danger.

Media's New Reality

The promise of online advertising revenue must have stirred up feelings of comfort and convenience among the publishing elite. Yet, a reliance on the familiar has led to a near complete break-down in the viability of newspapers, magazines and trade journals in every niche and sector of the market.

As dollars once destined for print ads, inserts, circulars and classifieds shifted to the Web, publishers responded with a desperate grab for eyeballs. Give away the content for free via the Web site and the run up in page views will help capture enough of the online spend to make up the difference, or so they rationalized.

It was an understandable decision. For more than a century, publishing had been predominantly dependent upon the cost per thousand mind-set of advertisers. Although the return is tough to measure, the visibility and brand recognition delivered by print advertising made it a necessary part of most corporate marketing campaigns.

Search changed this. Google, Yahoo and a host of other engines are the door-way for information seeking Web users. Their business model is advertising driven as well, however search engines deliver eyeballs with interest in a more measurable way. Plus, search engines are merely aggregators, bypassing the significant costs associated with developing content.

Print publishers face a new reality that demands a rapid evolution of their business model. A single revenue stream of advertising will no longer sustain the business. It’s time to change or die.

Here’s my take on the three steps publishers must take to get back on a solid financial footing:

1. Get skinny…get focused. Although the media industry has swooned due to multiple rounds of layoffs, publishers should go through the difficult evaluation of content development and reporting. The evaluation criteria: if we can’t be a market leader or have a compelling differentiation in a particular area of coverage, then it needs to be cut.

The Washington Post has been roundly criticized for its decision to drop sections like the Sunday Source and fold business/finance reporting into the main section. It’s a savvy move though, designed to allow the newspaper’s leadership to focus on more critical areas of coverage.

2. Demand that readers cut a check for print and online access. Yes…publications will realize a shrinking subscriber base and dwindling Web traffic from this decision, and that will negatively impact top line revenue. But, the readers who remain will be a more engaged and loyal lot.

Additionally, the notion of actually making customers pay will reinforce the value and quality of the content. Publishers such as Hearst Newspapers, The New York Times and Time, Inc. are already said to be considering fees for Web access.

3. Block Google, Yahoo and every other search spider scouring the Web. This too will reduce readership, yet will further enhance the value of the content which is, of course, a publications’ most important asset.

As I see it, the newspaper and magazine of the future will be smaller in page count with fewer readers and advertising. However, the accuracy and integrity of the content should stand tall among a seedy pool of non-peer reviewed blogs and trade rags.

And make no mistake, it’s the high quality content that a certain set of readers will gladly pay for.

Social Media: Intersection of PR and Direct Marketing

Earlier this month the Chicago chapter of the Business Marketing Association hosted an event that featured a key note address from Edmond Russ, the top marketer at accounting firm Grant Thornton. BtoB Magazine was on the spot with a recap of Russ’ presentation.

From a review of the BtoB article, it appears Russ dedicated much of his discussion to the importance of an ongoing investment in brand advertising and promotion to establish credibility with key audiences. I've heard the arguments before and agree that brand enhancement should be a goal of any external communications program.

Yet, the lack of measurability with traditional advertising and public relations activities has always troubled me.

PR/communications professionals often decry top level corporate brass for cutting back on brand promotion when budgets get tight. Op-eds spring up in trade journals like PR Week, PR News and BtoB that characterize the C-suite as simply not “getting it” when it comes to the value of communications.

Hmmm…I wonder if it is the PR and marketing folk who don’t get it. The understandable view from the office of the CEO is that an activity with a difficult to measure value proposition and ROI is simply not fundable in lean economic times.


I suspect Grant Thornton’s Russ may agree. Here's the content from the BtoB article I found of most interest:

(Russ photo courtesy of Marketplace Masters.)

"When speaking about effective marketing channels, Russ said public relations is successful in reaching out to prospects but has a low level of personal interaction. Direct marketing, on the other hand, is effective in both reaching out to prospects and having a high level of personal interaction, thus helping to build the brand, he said."

Perhaps I should begin to characterize social media as the intersection between public relations and direct marketing. It's about thought leadership content that engages, educates and entertains delivered to key audiences through a more direct and intimate channel.

The ROI can be measured in terms of brand visibility and positioning through search engine optimization (SEO), as well as via lead generation and sales support. Now that’s something the C-Suite will surely understand.

Three Phases of Social Media Maturation

At Strategic Communications Group (Strategic) we've been through the cycle.

From start-up to execution and now ROI evaluation, we have lived the maturation of social media and digital public relations programs. Our client work has also covered a broad spectrum of organizations, with representation of global firms like British Telecom (BT), Microsoft, Spirent Communications and BearingPoint, as well as emerging growth companies such as GovDelivery and Epok.

During the last few weeks I have made the swing visiting with clients to share the best practices and lessons learned we've picked up along this journey. It was during one of these discussions at a Starbucks tucked in a corner of a shopping mall in Washington, DC that a client helped define the three phases of a social media initiative.

Phase One: Pockets of Innovation

Strategic typically engages with a client in a pilot program environment, with the scope of work aligned with a funded requirement, such as a product launch, thought leadership campaign or industry conference. I assumed this pilot methodology was easily digested because it kept the budget (and risk) relatively modest.

While this is partly true, it's also apparent that certain individuals within an organization emerge as champions of social media. They may recognize that their customers and partners have become engaged in social networks and online communities. You have to fish where the fish are, right?

Or, perhaps it is a competitive threat in which an upstart has stolen away mindshare and momentum through their use of social media as a thought leadership platform.

Regardless of the reason, the social media champion correctly concludes that how companies position, brand, promote and identify leads has shifted. Their desire is to drive innovation in their communications program in a meaningful and measurable way.

During this initial phase, the social media program wins funding, a strategy is defined, an editorial content direction is agreed upon and tactics move to execution. The benchmark is to attract a community of readers, which is carefully tracked on an ongoing basis.

Phase Two: Bridging to Pervasive

There is a proverb that states success has many fathers, while failure is an orphan. This has proved to be spot on when it comes to a social media campaign.

As readership grows, the word spreads internally about the traction generated through social media tactics. There may even be instances in which direct sales and business development opportunities are identified through online channels. This resonates across multiple departments within a company, such as marketing, sales and product development.

This internal buzz stimulates action. Others in the company closely track the campaign and begin to invest more time engaging in their own social media activities. LinkedIn profiles are updated. Discussion groups are joined. Twitter feeds spring up.

For our social media champion, this second phase is about accelerating readership and encouraging dialogue. The editorial content strategy may evolve and multi-media elements -- such as video, podcasts, customer Q&As, etc. --are incorporated into the program. We also see a more consistent flow of comments, as well as other examples of readers reaching out to engage.

The promotion strategy to drive interest and among target audiences also becomes more effective and efficient. There is now a baseline. Readership and participation is measured with hot topics and themes fed to the sales organization as a form of real-time market intelligence.

Phase Three: The Last Mile

With the social media program now established and clicking along, our champion turns to the issue of ROI attached to measurable benchmarks.


At Strategic, we view community, conversation and awareness as merely the starting point. Is there an appropriate way to cross this last mile to identify members of our engaged community as sales leads, potential partners or new hires? (Image created by Ryan Schradin.)

It's in this phase that interaction with the organization's sales team becomes paramount. Thought leadership-based lead generation tactics -- such as educational Webinars -- combined with good old fashioned sales outreach must be defined and put in place.

Although we never stray from what's appropriate in social media participation, the last mile phase is all about justifying the spend to date and making a business case for continued investment.


What has your experience been with the implementation of social media programs? I welcome your comments to this blog post or you can add specific content to this article at this wiki:

Three Phases of Social Media Maturation

A Broader Perspective Revealed

Here is something most public relations agency heads will be loathe to acknowledge. I will never know a client’s business as well as the company’s executive and marketing leadership.

That’s because a client is hip deep in the issues, news, trends and gossip of their industry. As an external consultant, my time is allocated across a set of engagements. I bring market expertise to every relationship, yet often rely on the client for ongoing education and direction about the nuances of their business.

An agency’s most significant value derives from the broader perspective and context it is able to provide about how a client will potentially be impacted by macro-trends. How will a hot issue in the enterprise market possibly play out in the public sector? Are the social media tactics employed to promote an information security solution relevant to a purveyor of enterprise software?

It is our responsibility at Strategic Communications Group (Strategic) to provide this insight to assist in both strategic planning and tactical execution. It’s the difference between being a respected counselor versus a spinner of press releases.

Industry conferences present the ideal setting to visit with marketing leaders to discuss their thoughts on priorities and programs. These conversations contribute to my body of knowledge and, in turn, allow me to more successfully fill the counselor role.

Last month at the Satellite 2009 conference in Washington, DC, I spent time with Toni Lee Rudnicki (CMO at iDirect) and Joe Amor of Microspace Communications Corporation.

Here’s a link to a video with highlights from each interview:

Live at Satellite 2009 (three minutes)

While in different segments of the satellite industry, Toni Lee and Joe face a similar challenge: how to grow their addressable market through new applications of the company’s technology, while maintaining an intimate connection with existing customers.

I’m thinking quite a bit these days about this dilemma, how iDirect and Microspace are meeting the challenge head on, and, most important, what it means for Strategic’s clients.

Customers and the Crystal Ball

Last week I had lunch with one of the most successful software entrepreneurs in the country. Although he has amassed considerable wealth (i.e. the pleasure boat he sold last year sports a crew of eight), he’s back in technology as an investor and top executive at a software provider in the mobile management space.

While it was an informal get together, I was quick to hit him up for his thoughts on the market and, in particular, Strategic Communications Group’s (Strategic) business. I learned soon after founding Strategic nearly 15 years ago that the smart CEO is never shy about asking for advice.

So, what gem did I pick up at this lunch? The business you start is rarely the business that succeeds.

The lesson here is that it’s critical to talk to customers, each and every day. Rather than focusing on the now, ask and then listen about future needs. What do they anticipate their requirements to be in six months? Twelve months? That’s how you want to position your company.

Sounds simple enough, yet consider the high-quality companies run by proven management that fail to reinvent themselves. Digital Equipment Corporation (DEC) is one. Then there’s Compaq. And most recently it was SGI’s turn. What was once a $4B a year maker of high end computing servers was just sold off for a mere $25M.

I’d have shook my head in disbelief is someone told me three years ago that in 2009 nearly 75 percent of Strategic’s revenue would come from social media and digital marketing services. The shift in the market has been stunning and, admittedly, somewhat unexpected.

We’ve been fortunate to align ourselves with an exceptional set of clients in the technology and healthcare markets. And, make no mistake, I am talking to each of them on an ongoing basis.

Redefining the Employee/Employer Bond

It’s a shame that a shifting economic climate changes the dynamic of the employee – employer relationship.

When market conditions are pristine and employment is low, the power sits firmly with employees. Companies stressed to deliver on the goods and services sold increase compensation, deliver a broad array of benefits, and serve up promotions even if the title exceeds the employee’s competency.

Despite these lavish efforts to retain, employees are often quick to jump to a new opportunity even if it only modestly increases their take-home pay.

In today’s trying times, its management that stands in a position of strength. Those wonderful benefits? Tabled for budget reasons. Salaries? Frozen and, in some instances, reduced. All the while the specter of layoffs hangs across the organization.

In the past few months, I have read numerous articles and blog posts in which corporate executives suggest their employees should be thankful to simply be on the payroll.

Rather than defining this situation as dysfunctional, I will take it a step further and argue that there isn’t (nor should there be) a relationship between an employee and their employer.

Relationships involve intimate emotional connections that thrive even during periods of stress or turmoil. Personally, I have a relationship with my wife, my two children, my family and a select set of friends. I stand with them 100 percent…regardless of life’s variances.

With the people I employ at Strategic Communications Group (Strategic), my goal is to maintain a productive business agreement defined by shared interests and expectations. My responsibilities are straightforward:

--Maintain an environment in which they are set up for success
--Provide a reasonable level of support and resources
--Deliver an honest assessment of performance, even if it is not what they want to hear
--Strive to provide fair compensation

In return, I expect each member of the Strategic team to: embrace the organization’s core values and standards for performance; to represent themselves and the company in an acceptable manner; and, ultimately, to care about their development as a professional.

If I fall down on my part or the employee perceives that their needs extend beyond what Strategic can provide, then it’s understandable for them to seek other opportunities. In fact, I encourage it.

Yet, it’s also important for employees to recognize that difficult decisions often must be made based on the macro needs of the organization. Yes…I have fired people. And we’ve been forced to cut staff. It’s never personal.

No one at Strategic should ever be thankful they have a job. Their employment is well earned and, as long as they deliver on their responsibilities, my commitment to their professional success is resolute.

There’s no moral obligation about it. It’s simply a business agreement.