N.Y. Shops Pledge New Devotion To Diversity

The ongoing issue of the ad industry’s lack of diversity made headlines again last week, but with a fresh twist. For the first time, 11 agencies signed binding agreements, punishable by fines, to increase the number of minorities in their management ranks.

Though few doubt the sincerity of ad shops that say they will benefit from greater diversity, an immediate legal and public relations benefit was clear. The agencies that signed agreements will not have to testify at hearings before the New York City Human Rights Commission during Advertising Week Sept. 25-29.

That means the decision by four Omnicom shops not to sign settlement agreements will result in their executives appearing. “Any agency that has not signed an agreement with us will be obligated to appear before a hearing with us pursuant to the subpoena we issued in June,” said HRC deputy commissioner Avery Mehlman. “The two real issues are setting goals for a company on how they will handle diversity. The second is making their numbers transparent by reporting them.”

The agreements commit the agencies to establishing diversity hiring goals for minorities over a three-year period, which include advancing them to higher ranks. Each year, the shops must report their progress in writing to the HRC. Failure to meet the goals could result in further action and fines up to $250,000.

Specifically, the goals include the promotion, retention and recruitment of minorities and women, although the focus is on African-Americans, to professional and managerial positions, according to a copy of one of the agreements. In return, the HRC has agreed not to bring any new action against the agencies during the three-year period.

So far, 11 of the 16 shops that were subpoenaed in June have reached settlement agreements with the HRC, according to the commission. The New York IPG shops are Draft; Foote, Cone & Belding (now Draft FCB Group); Gotham and Avrett Free Ginsberg. Four WPP agencies signed: Young & Rubicam, G2 Direct, G2 Interactive and Ogilvy & Mather. Two Publicis Groupe shops signed, The Kaplan Thaler Group and Saatchi & Saatchi, as did Havas’ Euro RSCG.

Mehlman said he expected that Havas’ Arnold Worldwide would also sign.

The four Omnicom shops that did not sign are BBDO, DDB, Merkley + Partners and media shop PHD.

One executive familiar with the negotiations said the Omnicom shops objected to establishing goals and sought to resolve the issue by reaching a separate agreement with the New York City Council. “What Omnicom’s move was about was to try to get around the commission,” the source said. “But they overplayed their hand.”

In a Sept. 6 letter to the New York City Council by an Omnicom attorney, the separate agreement calls for establishing an advisory committee made up of “leading executives and human resource professionals of various Omnicom agencies and members appointed by the civil rights committee of the New York City Council working with members of respected civil rights organizations.” The deal also calls for paying $2.5 million over five years to promote diversity programs.

“We share the same goals as the commission,” said Pat Sloan, an Omnicom rep. “This program has immediate and significant commitment to people and money.”

Agencies that signed agreements said it made good business sense to do so. “We believe the signing . . . will take diversity efforts and minority hiring to the next level,” a Grey Global Group rep said in a statement. “It’s not just a social justice issue, it makes good business sense for a creative enterprise to reflect society.”

IPG, in a statement, said “Interpublic has been and will continue to make achieving an increasingly diverse workforce and transparency on this issue major corporate priorities across all our companies.”

What remains unclear is if New York City Council member Larry Seabrook, who has also said he would hold hearings on diversity issues, will require shops that signed agreements with the HRC to appear, but would allow Omnicom shop executives off the hook. Seabrook praised Omnicom at a session held by the Congressional Black Caucus Sept. 7. Seabrook could not be reached.

Some sources said the HRC, in retaliation against Omnicom for not agreeing to settlements, released specific figures to the press about hiring practices at Omnicom shops. On Friday, The New York Times printed employment statistics from shops like BBDO, DDB and Merkley, but no others.

The diversity-in-advertising issue dates back to the 1960s, when the HRC conducted a similar investigation. In 1999, the FCC issued a report accusing the industry of racism based on an internal memo that encouraged media buyers to avoid urban and Latino radio stations.

The issue gathered steam in 2000 when President Clinton signed an executive order requiring federal government agencies to award more contracts to minority-owned businesses. But the order has fallen flat in the Bush administration.

Asked why it has been so difficult for ad agencies and holding companies to add minorities to their ranks, one source said a big problem is “very few” African-Americans are “picking this industry. That’s the reality.”