Rules of Engagement

David Grey and Gerry Graf were puzzled. Their award-winning campaign for Snickers at BBDO brought countless unsolicited job offers—but not the one they really wanted. Encouraged by the attention they were getting from others, the pair decided to reach out to the two creative directors they considered living legends: Jeff Goodby and Rich Silverstein. Not only did they get an immediate response, they got an invitation to join Goodby, Silverstein & Partners.

The team informed BBDO brass of the offer, thinking that their bosses might cancel their trip to the 1997 International Advertising Festival in Cannes. Instead, they were told not to make any hasty decisions. “Go to Cannes, think about it and enjoy yourselves,” were their instructions from their boss, Charlie Miesmer. They obliged. Between parties on the Côte d’Azur, Grey and Graf decided to move to San Francisco for what they considered the “chance of a lifetime,” say sources.

Their decision ignited a firestorm.

Omnicom, the parent of Goodby and BBDO, has an unwritten but widely understood policy that controls the movement of employees around its network. Like similar policies at WPP and the Interpublic Group, the rules are designed to keep job hopping to a minimum and help maintain client confidentiality and consistency on accounts, say holding-company officials. They also prevent salaries from soaring by keeping sister shops from fueling bidding wars over talent. Those most affected by the restrictions are senior and experienced midlevel employees who are paid $175,000 and up, say sources. Among them are group creative directors, senior management supervisors and account planning and media directors.

BBDO managers, led by Ted Sann, cried foul over Grey and Graf’s job offer, complaining to Goodby executives and to Omnicom chairman Bruce Crawford. Grey and Graf’s fate remained undecided as the powers that be debated whether they could swap shops.

Eventually it was decided by Omnicom that if Goodby had actively recruited them, the deal would be squashed. If the “Snickers boys” had made the first move, it would be sanctioned. As luck would have it, Goodby never erased the voice message left by the creatives; it was submitted as evidence to Omnicom and BBDO officials, and Grey and Graf got the green light.

“There was kind of an official understanding among sister agencies at Omnicom that we were not supposed to approach each other’s people,” says Goodby. “So we didn’t approach them first.”

Grey and Graf declined to comment on their move.

Tom Watson, vice chairman and chief talent officer at Omnicom, says if an employee is aware of a job at a sister shop, he or she must be the one to make the first overture. The other two top holding companies have virtually the same policy.

“We do not encourage excessive movement” of staffers between agencies, says WPP CEO Martin Sorrell. “You can’t recruit from a sister company surreptitiously,” he adds.

IPG’s policy, officially put on the books by former CEO Phil Geier, mandates that “direct recruitment of personnel by one [IPG] agency from another is against company policy. An agency may occasionally have interest in an employee from another agency for a particular position, but before any discussion takes place with the potential transferee, clearance must be obtained from Interpublic.” Failure to seek that approval, says Geier, was grounds for dismissal. “Our reason was conflict concerns,” he says.

One downside of such guidelines is that managers are often unaware of jobs that open up at sister shops, and they end up looking elsewhere. Holding companies routinely advise headhunters to restrict their searches to outside agencies, say sources, with hot candidates at sister shops considered only as a last resort.

By erecting a set of bureaucratic hoops and hurdles, the holding companies lose experienced, restless talent to outsiders, and they may end up competing with—and even losing to—the same people they taught so well. As one recruiter puts it, they are “pissing away talent.”

Hans Ullmark, CEO of the former Anderson & Lembke, sees both sides. “I hated to see any of my good people go to another IPG agency,” he says. Holding-company executives have their reasons for keeping staffers from shifting among their shops, but Ullmark’s were purely emotional. He says it hurt his feelings when valued people turned their backs on him. “I felt if my shop couldn’t keep them, I’d rather see them go far, far away, outside the IPG family.” By the same token, Ullmark admits that because their parents didn’t fight to keep them, he was able to hire rising young stars from WPP and Omnicom.

But Ullmark eventually found himself hemmed in by the rules. When A&L was merged into the San Francisco office of McCann-Erickson in June 1999, Ullmark looked for other opportunities but found them to be scarce within the IPG network, despite his agency’s success with Microsoft. He accepted a lesser strategic post at Thunder House, McCann’s interactive subsidiary, but soon left to co-found integrated marketing agency Collaborate.

“When an agency needs to fill a spot, the talent pool is now basically limited to a few corporations,” says New York-based recruiter Susan Friedman. “The agency misses out on all the talent in its own network.”

To keep people from departing, some employment pros believe companies should create a confidential clearinghouse or knowledgeable in-house talent broker at the corporate level. “The big holding companies need people on staff with enough power and employee trust to serve and retain [key] employees,” says Kate Webster, a San Anselmo, Calif.-based recruiter who represents creative, account and planning executives.

There does appear to be movement in that direction. Omnicom’s Watson says he spent years getting to know people at BBDO and the Diversified Agency Services Group. As a result, employees and managers frequently come to him for help in placement or relocation. “Part of our formal structure is that staff has the ability to seek out jobs at other Omnicom companies without any negative impact on the employee of the sister company that may ultimately make a hire,” he says.

Brian Brooks, WPP’s former chief human resources officer, also served as a discreet and well-connected job broker before leaving the company a few months ago. His post made him keenly aware of the battle for talent among rivals. He himself was just at the center of such a dispute, when WPP filed a lawsuit to prevent him from joining IPG as evp of human resources. In addition to one year’s notice, his contract with WPP stipulated that he could not work for a competitor for two years following his departure from the holding company. After reaching an agreement, Brooks is set to join IPG in November.

Brooks’ successor at WPP is Beth Axelrod, a former McKinsey management consultant who co-authored the book War for Talent. Axelrod acknowledges that even though she is new to the agency business, managers sometimes come straight to her to find bigger challenges, a change in geography or a job switch within WPP.

The concept of a holding-company in-house talent czar, however, has its critics among some agency CEOs, who see it as just another layer of bureaucracy. “When your fiercest rivals for clients are your own sister agencies, you aren’t as interested in keeping talent in the family,” says one agency president. “You want to hire whoever you want to hire to win the clients you want to win. And let your sisters do the same.” That attitude prompts shops to bend the restrictions in whatever way they can, such as identifying “SWAT teams” who have permission to cross agency lines or even hiring recruiters on a stealth basis to find off-limits staffers, alert them to jobs and encourage them to make the first move.

Employees who feel stifled by the rules have their own strategies. Advisers such as New York attorney Rich Kurnit encourage ambitious managers to get “a viable offer from an outside agency and then use every opportunity to leverage that offer” to get a more lucrative position inside the family.

With independent shops now few and far between and holding companies controlling most of the industry’s jobs, some managers have begun to question whether the anti-poaching restrictions are fair. Are they a form of restraint of trade? Not exactly, says Kurnit. It would be extremely difficult for employees to make the claim that their rights are hampered by such constraints, he says. “Holding companies are seen as one [single] legal entity, and, as such, they can’t conspire against themselves” in restricting the rights of the workers, says Kurnit.

The giant loophole in the poaching policy is that employees are allowed to make the first move. In theory, the holding companies advise employees to confide in their agency CEOs about their ambitions or contact the human-resources departments of sister shops that interest them. But in reality, it’s tricky. If a new job doesn’t materialize, the job hunter is likely to be more vulnerable. And nearly everyone agrees that you can forget about confidentiality.

“HR departments of sister agencies talk to each other, and word gets around quickly. That’s just the way it is,” says an HR employee. He points to the case of an employee at an Omnicom agency who applied for a job at BBDO in New York and got a call back from DDB’s HR department about a job in Chicago.

Holding-company officials are not oblivious to the paradox. Although sibling CEOs compete for business, they’re supposed to play nice when a sister rival is negotiating to hire one of their employees. “This is the real world,” says Sorrell. “It’s kiss and punch, kiss and punch.”