CIPD online membership research May 2007
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PRCA Membership Benchmarking Survey: Key Findings 2008 June 2008 Background 2 • Annual PR industry benchmarking survey undertaken by Russell Bell (independent research consultant) • 141 PRCA members contacted (incl. 10 new contacts after interviewing began) • Three elements in the survey: – 65 HR Director questionnaires – 73 MD/CEO questionnaires – 67 FD questionnaires • Four consultancy size bands defined by income: – Small: up to £850K – Medium: £851K - £2.5 million – Large: £2.51 - £5 million – Very large: greater than £5 million Russell Bell, Research Consultant russell@hadhamassociates.co.uk Finance Directors Industry growth - Small consultancies Figs in £000s Income £750 Net pre-tax profit +21% £609 £500 £505 £250 £113 £97 £0 2007 2006 Base: Q2 67 FDs Russell Bell, Research Consultant 4 russell@hadhamassociates.co.uk +16% Industry growth - Medium consultancies Figs in £000s Income £1,750 Net pre-tax profit £1,500 £1,484 £1,396 £1,250 +6% £1,000 £750 £500 £210 £208 £250 £0 2007 2006 Base: Q2 67 FDs Russell Bell, Research Consultant 5 russell@hadhamassociates.co.uk -1% Industry growth - Large consultancies Figs in £000s Income £4,500 Net pre-tax profit £4,000 +7% £3,500 £3,608 £3,372 £3,000 £2,500 £2,000 £1,500 £1,000 £609 £534 £500 £0 2006 2007 Base: Q2 67 FDs Russell Bell, Research Consultant 6 russell@hadhamassociates.co.uk +14% Industry growth – Very large consultancies Figs in £000s Income £10,000 Net pre-tax profit £8,000 £8,655 £8,110 +7% £6,000 £4,000 £2,000 £1,337 £1,347 £0 2007 2006 Base: Q2 67 FDs Russell Bell, Research Consultant 7 russell@hadhamassociates.co.uk +1% Operating margin Net pre-tax profit as % of total net income 20% 14% 15% 14% 14% 13% 10% 15% 15% 15% 2005 2006 2007 13% 12% 5% 0% 1999 2000 2001 2002 2003 2004 Sm: 19% Med: 14% Lar: 17% V Lar: 16% Russell Bell, Research Consultant 8 russell@hadhamassociates.co.uk Base: Q2, 67 FDs Reported growth over time Income Profit 50% 40% 30% 38% 25% 18% 20% 17% 21% 17% 10% 12% 10% 7% 4% 8% 0% -1% -2% 0% -10% -11% -20% -21% -30% 99-00 00-01 01-02 02-03 03-04 04-05 05-06 Base: Q2, 67 FDs 9 Russell Bell, Research Consultant russell@hadhamassociates.co.uk (NB – basket of consultancies changes each year) 06-07 Over-servicing rate 40% 30% 26% 27% 25% 22% 20% 22% 21% 21% 2000 2001 2002 24% 23% 10% 0% 2003 2004 Base: Q8, 67 FDs Russell Bell, Research Consultant 10 russell@hadhamassociates.co.uk 2005 2006 2007 2008 Offer payment by results/performance related pricing 40% 38% 36% 35% 30% 28% 29% 27% 20% 19% 10% 0% 2002 2003 2004 2005 Base: Q17, 67 FDs Russell Bell, Research Consultant 11 russell@hadhamassociates.co.uk 2006 2007 2008 HR Directors Churn by consultancy size 2007 2006 2005 37% 36% 33% 27% 27% 28% 27% 26% 24% 21% 24% 22% 24% 21% 14% Total Very large Large Base: Q2, 65 HRDs 13 Russell Bell, Research Consultant russell@hadhamassociates.co.uk M edium Small Churn by job level Churn in 2007 Churn in 2006 43% 39% 37% 33% 34% 32% 27% 27% 25% 24% 24% 19% 11%10% Board/ Partners Associate/ Div'l Directors Account Directors Account Managers Account Execs Base: Q2, 65 HRDs 14 Russell Bell, Research Consultant russell@hadhamassociates.co.uk Trainee Account Execs Support/ Admin Next career moves 41% M oved to new consultancy 42% 13% 16% M oved to in house position 7% Freelance/Consultant 5% 22% Complete career change Did not return from mat/pat leave 22% 2007 5% 7% Base: Q3, 65 HRDs 15 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2008 Staff retention strategies (past 12 months) 82% More training/ development 69% Salary increases for all staff 72% 57% 60% More focus on defined career path planning 55% Salaries up by more than cost of living 51% 43% 52% More flexible working 35% 25% More staff parties 31% 26% 23% Larger bonuses More sabbatical opportunities Encouraged parttime/reduced hours 14% 15% 9% 11% 2007 Q28 Base: 65 HRDs 16 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2008 Employment prospects: coming 12 months Likely to be recruiting junior staff 77% 83% Likely to be recruiting senior staff Reduce staff numbers through non-replacement Redundancies/staff cuts likely 54% 69% 5% 0 2% 2% 18% Not clear yet 8% Q29 Base: 65 HRDs 17 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2007 2008 Made redundancies in past 12 months 43% 29% 22% 17% 2002 2003 2004 17% 2005 Base: Q26, 65 HRDs 18 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 17% 2006 2007 Average salary increases over time 10% 9% 7% 7% 6% 5% 6% 5.5% 5% 1999 2000 2001 2002 2003 2004 Base: Q6, 65 HRDs 19 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2005 2006 2007 Average bonus as % of salary over time 8% 7% 6% 6% 5% 3% 1999 2000 2001 2002 2003 3% 2004 Base: Q6, 65 HRDs 20 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 3.5% 2005 2006 4% 2007 Financial benefits currently offered Pension contribution 77% Private medical insurance (PMI) 77% 54% Loans with low/no interest 48% PMI for other family members Sick pay scheme 46% Life assurance 37% Permanaent health insurance 35% Company car or = cash allowance 31% 22% Income protection insurance Petrol for private mileage Regular medical examination 14% 9% Q11 Base: 65 HRDs 21 Russell Bell, Research Consultant russell@hadhamassociates.co.uk Performance-related benefits currently offered Commission for new staff introduced 77% Performace bonus based on overall company performance 74% Commission for new business introduced 71% Staff personal performance bonuses 55% Share ownership/option schemes 45% Profits share 42% Q11 Base: 65 HRDs 22 Russell Bell, Research Consultant russell@hadhamassociates.co.uk Lifestyle-related benefits currently offered 78% Company mobile phones 74% Happy hour/free drinks sessions Company laptops 71% 49% Special days 31% Free fruit Alternative medicine/wellbeing programmes 26% 25% Gym membership Creche/nursery 5% Other lifestyle-related benefits 29% Q11 Base: 65 HRDs 23 Russell Bell, Research Consultant russell@hadhamassociates.co.uk Career-related benefits currently offered Subscriptions to professional bodies/journals 78% Further education sponsorship 63% 48% Sabbaticals Long service awards Secondments 34% 26% Q11 Base: 65 HRDs 24 Russell Bell, Research Consultant russell@hadhamassociates.co.uk MDs/CEOs Industry outlook for next 12 months 2008 8% 48% 5% 2006 2005 40% 52% 2% 2004 2003 37% 11% 2007 64% 3% 35% 14% Get worse Improve Q16 Base: 73 MDs 26 Russell Bell, Research Consultant russell@hadhamassociates.co.uk Top 7 threats to PR industry success 7.2 Economic slowdown 4.9 6.5 Shortage of skilled consultants 7.3 6.4 Clients exercising commercial pressure 6 5.2 5.4 Lack of evaluation Competitors buying business Increasing imp. of procurement professionals Other businesses encroaching on PR 5.2 4.9 2007 5.0 5.3 5.0 4.9 Q1 Base: 73 MDs 27 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2008 10 = very serious threat 1 = not a significant threat Client relationships: key drivers of success 51% Personal chemistry 56% 38% 39% Sector knowledge 34% Creativity 47% 33% Demonstrating ROI 24% 32% 33% Value for money Demonstrating success thru' evaluation 29% 19% % = proportion selecting as one of top three drivers 25% Trust 30% 19% 22% Measurable objectives Honesty / openness Regularity/ level of communication 18% 11% 14% 15% Q15 Base: 73 MDs 28 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2007 2008 Income growth forecast 2008 forecast 2007 2006 42% 28% 22% 20% 14% Total 27% 26% 14% 14% 11% Very large 19% 18% 11% 12% Large Base: Q3, 73 MDs 29 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 18% M edium Small Operating margin growth forecast 2007 vs 2006 2008 forecast 2007 2006 32% 25% 22% 24% 21% 21% 18% 19% 12% 11% Very large Large Base: Q4, 73 MDs 30 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 13% 7% 6% Total 18% 17% M edium Small Top 6 internal business issues 73% Client retention 63% Generating new business 66% 67% M aintaining profitability 66% 59% 53% 52% 52% 54% Quality of pitching Staff retention % = proportion selecting as ‘critical internal business issue’ 47% 49% Staff morale 45% Staff recruitment 58% 2007 Q2 Base: 73 MDs 31 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2008 New business leads and pitches - 42% reactive leads result in new business pitches - 31% proactive leads result in pitches Types of new business lead (past year) Re-pitching for retainer business 7% Organic/new projects for existing clients 27% Other 3% Reactive/ response to brief 32% Proactively sought 31% Qs 6,8,9 Base: 73 MDs 32 Russell Bell, Research Consultant russell@hadhamassociates.co.uk - 52% success rate with pitches following reactive leads - 43% success rate for pitches following proactive leads - 23% success rate with reactive leads - 13% success rate with proactive leads Reactions to current economic climate 90% M ore focus on stimulating new income/new business 91% 64% Exploiting existing relationships (e.g. cross-selling) 65% 56% 48% M ore focus on cost control Diversification/new service development* 15% 6% 2007 * Unprompted answer category (others are prompted) Q5 Base: 73 MDs 33 Russell Bell, Research Consultant russell@hadhamassociates.co.uk 2008 Income forecasts vs actual income growth Forecast in 2007 survey - MDs Actual growth in 2008 survey - FDs All : +28% All : +7% Small : +42% Small: +21% Medium: +26% Medium: +6% Large: +22% Large: +7% Very Large: +14% Very Large: +7% 34 Russell Bell, Research Consultant russell@hadhamassociates.co.uk End For more information, please contact: Russell Bell on 07747 194581 or +44 7867 531557 russell@hadhamassociates.co.uk
