CORPORATE DOWNSIZING: SOME GOOD NEWS FOR PR AGENCIES

The continuing nationwide trend toward corporate downsizing has resulted in a healthy shift for independent PR professionals and agencies seeing more special project work sent their way, according to two recent surveys.

The recent American Management Association 1996 survey on Downsizing, Job Elimination and Job Creation concluded that 48.9 percent of surveyed firms (1,441 human resources managers were queried) reported the elimination of jobs last year and 27 percent revealed workforce reductions. Both conclusions imply that more companies will look to agencies to head PR programs and direct corporate communication strategies, according to PR NEWS sources.

Executive recruiters Larry Marshall and Hugh McCandless, who head Marshall Consultants Inc., New York and Los Angeles, said that results of the AMA survey are indicative of the increasing number of corporate heads turning to independent PR executives as their in-house PR workforces continue to be pared down.

"We've been seeing, and looking at, corporations downsizing and trimming their staffs to the barebones at the same time we've been experiencing a pent-up demand for professional communicators," said Larry Marshall, president and CEO of Marshall Consultants.

Specifically, Marshall pointed to several AMA findings that speak of how more and more corporations are turning to PR consultants and agencies for outsourcing. They include:

Of the companies reporting job elimination, 82 percent cited organization restructuring, reengineering of business practices and improved staff utilization - what Marshall said points to "corporate doubling up," including the integration of PR programs with other corporate strategies;

Fifty-five percent of businesses reported an increase in the use of temporary or contingency workers;
and

Sixty percent of the American workforce is now made up of hourly workers - what the AMA calls a "pendulum swing" away from salaried employees and what Marshall said points to the increasing number of companies turning to PR practitioners on a contractual basis.

"Corporate America's use of PR agencies is much broader today than it was years ago," Marshall said. "PR counselors - these communication rabbis - are now handling programs that used to be taken care of internally."

McCandless concurred: "Corporate PR today is becoming far more transactional than long-term," he said. "More of the PR pie is going to PR agencies."

In fact, that shift is evident in an International Public Relations Exchange (IPREX) survey released last week. On average, according to IPREX, its member PR agencies reported a 27 percent increase in revenue growth in 1996.

"Although this is the first time we conducted this survey, our affiliates said their revenue growth in 1996 was phenomenal - the highest it's been in the past five years," said IPREX account associate JP Schuerman.

But in addition to the good news for PR agencies, Marshall said the survey is a kind of endorsement for the PR trade overall. "In the past, about 15 or 20 years ago, companies had corporate communications, but PR was seen as a kind of window dressing - what you had during the good times. It was the last to grow and the first to go...Today CEOs are scrutinizing the PR process and have had to recognize its critical importance to the survival of a company." (Marshall Consultants, 212/628-8400 and 310/456-0666; IPREX, JP Schuerman, 317/923-2300)

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