As PR agencies try to offset declining revenues, they're hiking the hourly rates charged to their corporate clients. That's one of the major conclusions in Spring Associates'
8th annual public relations and corporate communications compensation study. The report, which was released earlier this year, is compiled from the New York-based firm's database
containing job information on nearly 11,000 PR agency and corporate communications executives.
Despite a wobbly economy in 2003, base salaries for corporate PR execs rose 4.7% while salaries for agency execs increased 4.4%, according to the study. Dennis Spring, founder
of Spring Associates, who has been following PR salary trends since 1987 and has worked on executive search assignments for many Fortune 500 companies, says his corporate searches
were up 35% in 2003 for senior PR execs (ranging in salary from $85,000 to $175,000) while agency searches were up slightly, around 15%, (ranging in salary from $75,000 to
$125,000). Spring talked to PR NEWS about the findings in his latest report and the "bitter end" to working without raises.
PRN: Hourly rates of PR agencies of all sizes rose 16% compared in 2003 with 2002. Is this the only way agencies can play hardball with their corporate clients in terms of
maintaining their revenues? If so, do you see a potential for backlash to such a big increase?
Spring: No. For two reasons. One, agencies, for the most part in 2002 held back from increasing their hourly rates. In fact, their rates went down. [But] in trying to hold the
line and the bottom line, what they found is they couldn't hold their profit margins, so they had no choice but to raise their rates accordingly. Secondly, during the recession
agencies let go of a substantial number of people across-the-board due to a lack of business. The ones who were kept were asked to do double- and triple-duty. And in order to
retain these people and keep them happy, agencies had to in many cases slightly increase their salaries. So they had to make up the difference somewhere (by charging more for
hourly rates).
PRN: All we keep hearing about is how corporate clients are putting the fee squeeze on agencies, but there was a general salary increase of nearly 5% for PR agency executives.
There seems to be a disconnect.
Spring: Yes and no. Again, going back two years prior there was either little to no increase at all. What '03 showed us is that, for the most part, agencies started making up
for those last two years where there weren't any (salary) increases at all. Whether you're a company or an agency you can only wait so long where you're not issuing any kind of
salary increases. In our opinion, this is the bitter end. And these increase are peanuts compared to what was going on during the boom years when, in 1999, we were seeing salary
increases of 23% to 48%.
PRN: The report found that corporate-based bonuses have increased 37.3% since 2002. Are companies piling on the bonuses to PR execs to assuage slight growth in salaries?
Spring: Absolutely. It's a great way to reward your best performers and the people who you want to retain without adding to salary, which is year over year. Bonuses are a one-
time, discretionary way to retain your best people. We've all seen with what happened with options during the boom years, but with bonuses, it's cash and there's nothing like
handing one of your better employees a check for cash as an indication that you appreciate hard work. [Bonuses] can also be selective in the amount. It's a cautionary thing. We're
not seeing any clients - corporate or agency - increasing benefits package in terms of matching 401(k) contributions and no appreciable increase in long-term healthcare benefits.
PRN: If the economy keeps on growing at the current rate will the industry be able to restore most of those jobs lost in the recession?
Spring: PR is a labor-intensive business. No machine can handle it. As business picks up, revenues increase and the importance of PR comes back to the table, companies will
start to do more hiring. Those exact jobs (lost in the recession) may not come back but PR jobs will, just in different forms. Now, people are being asked to bring more to the
table than just one specialty, including knowledge in marketing, advertising and jobs promotion. More depth of experience will be required.
PRN: Aside from healthcare and investor relations, what are the hot areas for PR salaries? What's just below the radar right now or should most people who plan on a future in
PR major in healthcare adminstration with a minor in finance?
Spring: That's still the mantra out there: healthcare, biotech, pharmaceutical, finance (in different forms) as well as IR. The consumer, b-to-b and internal communications
areas are still alive and well but don't have the traction related to the growth industries.
PRN: Are more senior PR execs requesting less salary for more flextime? What are some of the "trade-offs" you're finding in hiring trends?
Spring: People who were laid off after the boom and are now freelancing have learned to make due, even though they would prefer a full-time job. They're finding out that high-
paying job may not be as important anymore; having a steady income and other personal perks - psychic income - is definitely on the upswing. People want more out of their jobs,
not just in dollars but profit sharing, enhanced healthcare benefits and more flextime. They're telling us that they don't want to get themselves into a situation where they're
making the kind of money they think they should be earning but hating every minute of the job.