Seifert’s Challenge

NEW YORK John Seifert, The Ogilvy Group’s new North American chairman, has been given the job of steering the agency through the turbulent economic times ahead. But he faces a far more daunting challenge: rescuing the network’s listing flagship, weighed down by what insiders describe as rock-bottom morale, political infighting and a lackluster new-business performance.

A venerable agency once the envy of competitors has become symbolic of the plight of big networks as they struggle for relevancy even as they reinvent themselves.

Seifert’s appointment last week put an end to a regional co-CEO arrangement set up four years ago. He replaces regional co-CEOs Bill Gray and Carla Hendra. Gray, 56, is now relegated to a vice chairman role, while Hendra, 52, remains regional CEO, although she’s now focused on the New York office, where she’s chairman. Both now report to Seifert.

The shifts are the first big executive moves from Ogilvy Group worldwide CEO Miles Young, under pressure to replicate the success he had in his previous role running the company’s fast-growing Asia-Pacific region. He acknowledged that the Seifert appointment ends “confusion” borne of a dual-leadership structure. (Read our Q&A with Miles Young.)

Young described North America as Ogilvy’s “most-important region.” It’s also one of the company’s most lackluster performers: Last year Ogilvy did not win or even reach the finals of new-business pitches representing nearly $275 million in major-media spending from Carnival Cruise Lines, Office Depot and Levi’s. Its most significant win — the $145 million Wachovia — evaporated after the teetering bank was acquired by Wells Fargo. Ogilvy won global creative duties on both Thomson Reuters and Stolichnaya and U.S. CRM duties on Sears/Kmart, but key clients like IBM and American Express slashed spending, said sources. And the new business draught goes back even earlier.

The Ogilvy culture, traditionally one of the industry’s strongest, has languished.

“Ogilvy really stood for something and now it doesn’t, and it sort of feels like that’s an indictment of the whole industry and, maybe, even big, global networks in general,” said a former Ogilvy executive. Still, he was quick to point out the specifics of what he believes went wrong at this WPP shop, starting with a leadership void, turf battles over the integration of multiple divisions and a lack of creative firepower, especially in emerging technology.

Morale was dealt another body blow earlier this month with more staffers cut primarily from the New York office. Some sources pegged that number at 300; others said the final count was half of that. It was the shop’s third staff cut since April 2007.

Some staffers are “pissed off,” while others are “sad” about what the agency has become, said the former exec. An story about the recent layoffs generated 37 comments, including many critical of top management.

Now it’s Seifert’s turn to turn the shop around. Colleagues described the 51-year-old, who previously was chairman of the global brand community, as collaborative, smart, buttoned-down and well connected with the likes of AmEx, BP, DuPont, Siemens and DHL. So, as some sources ask what happened to Ogilvy’s historically tight-knit, collegial culture, the 30-year agency veteran represents a potential return to such values.

That said, with oversight of 35 operating units (and 3,300 staffers), the challenge of pulling together myriad constituencies is formidable, to say the least. But it’s priority No. 1 in Young’s mind. “The assets-hard and soft in North America-are actually very good,” Young said. “But I think what we need is someone to put it together. … And to take it to market, package it, sell it on a North American basis. That’s my brief to him, really.”

After the layoffs, caustic criticism piled up on ad blogs. “It’s obviously painful stuff to read,” said Seifert. “I will not promise that we will not have to make tough decisions from time to time and that could inevitably lead to having to lay people off or fire somebody who may be popular. But … if you’re open and honest and transparent about the situation, what led to it, why you’re doing it, and you’re prepared to take any criticism or feedback that comes from that-and prepared to be open and listen and change or adapt as a result of that-then people give you the benefit of the doubt. It’s an ongoing leadership discipline to make sure all those things are happening.”