Patient Capital
Charting the future of public relations
Holmes Report
President/Editor-in-Chief

Patient Capital

APCO founder and CEO Margery Kraus believes the firm's patient approach to growth, backed by private equity investment, will ultimately reap rewards.

Arun Sudhaman

After launching APCO in Washington DC in 1984, Margery Kraus has steered the firm to $120m in fee income, making it the world’s second largest independent PR agency. Along the way APCO has broken new ground in various ways — pioneering the global public affairs model, investing heavily in research, buying itself back from WPP and successfully handling private equity investment.

Kraus recently sat down with the Holmes Report for a rare interview ahead of her appearance at the ICCO Summit, where she discussed the continued low proportion of women at the top of the PR industry. Read on to see her views on this issue and many more.

Do you worry about the representation of women at senior levels in the PR industry?

Sure. I have a stat that is rather interesting. In 2006, the pay disparity between men and women in the industry was something like 67 percent. In 2010, it’s 60 percent. That’s not good. It’s not just the positions, it’s the way in which they are compensated. And some of that falls on women. They just respond differently. Men’s reactions to having opportunities is different and I think they are better advocates for some of their own personal benefits.

Does the agency model need to change to better accommodate women’s career paths?

The nature of consulting means you have to be available. But we’ve managed through a lot of women who have given birth to multiple children and still have wonderful relationships with clients. Because we have depth in the account team and we have a flexible way of doing it. If you have really good staff then you have to be flexible in accommodating their life issues. It’s about the way in which you value your employees, it’s not just about men and women.

I think the models are going to have to be much more accommodating anyway, with this millennial generation. I think that if you’re going to take full advantage of people, you have to be able to match what the needs are for the company with what the skillsets are for the individual.

I built this company having three children and 10 grandchildren. I’ve made a lot of sacrifices along the way. I just don’t believe that you have to have these rigid ways of dealing with these things. People are people. In my first job I had to lie about being pregnant or I would have lost my job. For my second child, I was giving a banquet speech when I went into labour, and I was on the phone the next day. We have to be able to accommodate the different needs of different people in the workforce.

APCO is partly-owned by private equity firm Wind River (now APCO Capital). How have you made that work, given the problems other PR firms have faced with private equity investment?

We had a very clear idea of what our needs were and what our expectations were. We didn’t just go for money. The key things are minority ownership and no easy exit. Another thing is patient capital. There’s a shared value to that. They shared a commitment to some divestment to other employees. We set aside quite a chunk of equity for other employees. I had all this as a mental checklist.

Everybody’s circumstances are different. APCO has a very specific culture — people tend to stay here for a very long time. You want people to feel like they can have a career here. For us [selling a majority] would not have worked very well. I wanted to make sure that we could have enough stability so that we could grow the business the way we wanted to grow. We wanted people to make judgments based on circumstances.

APCO’s fee income grew by just one percent in 2012. Does that disappoint you?

We do a lot of project work. And there was at least about $15m of projects that had completed. The growth number is a net number, so in order to grow you have to replace a substantial amount of income and then grow. We traded in one-off very large projects for a lot more sustainable business — things that will continue to grow and propel APCO into the future.

We also used it to make some smart investment decisions for the future. After almost 28 years of solid growth, except for 2009, you sometimes have to take a deep breath and take some decisions that are strategic. We launched Champion Brand, did a lot of digital. I think it will take probably through this year to start seeing the results next year. I think APCO will have a very strong year next year. You see good growth, solid growth, but sustainable growth.

One of the things we wanted to do will be a new design for the industry we are in. The way in which we charge clients and the way in which we do our work is also changing. When you have these companies that do this global expansion into places they are not so certain about. This idea of being able to go in, put in a team, operate, train people and then transfer it — it’s a really great service. That was Mongolia [where APCO worked for Rio Tinto], and it was Malaysia [where APCO handled a major government project].

We have to find a way to talk about this as an industry that doesn’t look like something bad happened. It’s actually very good. In the Middle East right now, we are doing a lot of this. A lot of these companies didn’t have the capacity. They really like having teams embedded — at some point you will reduce your scope of work and move on to something else.

That’s been one of the areas that we want to do more of. We think this is the wave of the future especially in some of these less developed markets. It’s a way for some of these companies to justify upgrading their capacity without outsourcing everything.

comments powered by Disqus