Joining me on this week’s episode is Darryl Salerno, the owner of Second Quadrant Solutions, which has helped more than a hundred small, mid-sized and large clients to improve their performance and profitability. He’s a former senior agency executive and CEO, has a passion for stand-up comedy, time sheets and the English language.
He discusses a number of key ethics issues, including:
Why don’t you start off by telling us a little bit more about yourself and your career?
I’ve been in the public relations industry for many decades at this point. I started actually, ironically, as the petty cash officer at Burson Marsteller, just to get a job while I was going to graduate school. I was there for about 18 years. During that period of time, I ran their creative services group for a while, I was on the public relations side, running some major campaigns, worked on the Merrill Lynch account and Johnson Wax and a number of other ones. Then I wound up working in the business affairs group, and I left the agency as the chief administrative officer in the New York office after 18 years there.
From there, I was also CFO at both Ruder Finn and at Edelman, and then became CEO at what is now Havas PR. At the time we, it was called Magnet Communications, and I was there for a number of years as well. But for the last 18 years or so, I have focused my attention on small to mid-sized agencies, helping them become more profitable, focusing on their systems, how they manage people, how they manage client relationships, how they price their product, and importantly, how they monitor the time that they spend against clients. I even have developed a software package that allows us, in our industry, in the PR industry, to monitor our client budgets appropriately and allocate staff appropriately.
I feel very fortunate that I had many different jobs within the industry that allowed me to see all sides of our business, and I think everything I’ve done in my career at agencies has actually made it possible for me to do what I do today.
Many years ago, we had a major seven-figure client, and the client contact was asking our account person to buy things for him and invoice his company. And the account person complied. The account person did it several times on some items, not that they were an outrageous amount of money, but conceptually, obviously, that was fraud and not something that was permissible.
My staff uncovered the problem and brought it to me. And although it was a small amount, especially in relation to the size of the account, we had many discussions, “Are we going to bring this to management? What’s going to be our recommendation in terms of the actions that management should take?” Etc. Because the risk might be to lose a client that was worth well over a million dollars.
We recommended that they take action with the employee, and we also recommended that they talk to the management of the client above the client contact, even though the relationships were not as strong above the client contact that was doing this. And it was a huge risk. We kind of forced the issue within the agency to make sure we did this. It was a big risk that, in fact, we could lose the account.
Instead, the agency did the right thing. The account person actually was fired. The client contact was fired. And not only did we keep the account, but management at the client was so impressed that we would take the steps that we did, that it actually strengthened the relationship, and the account grew even more over the course of the next few years. So it was one of those things, I think, that you got to figure out, you got to do what the right thing is. You got to take the chance and take the risk to make sure you’re doing what is correct, both legally and ethically.
When you’re talking about asking them to buy things and then invoice the company, are we talking about supplies that will be used in PR, or are we talking about Porsches?
Well, neither Porsches nor supplies. They were things like a television set or things along those lines, and then to bury it in the invoice to the client. The client contact was basically asking his company to pay without knowing for things for his own house or apartment.
In my day, I’ve come across several people on the finance side who have padded their own pockets, if you will. I don’t consider those ethical dilemmas, because there was nothing at risk. Obviously, you take the action, you do what you have to do to uncover it and take the actions that are necessary. The only reason that this was any kind of an ethical dilemma is the agency that I worked for was basically putting the ethics of this above the possibility of losing the account. Because we didn’t know what kind of reaction we’d get from the client.
So how did you work through this?
Well, the first thing I did was discuss it within the management team in my department, which was the business affairs and finance group, to make sure that we were rock solid in terms of what we uncovered. I then took it to my immediate boss, who actually was extremely high up in the organization, and from there he brought in his boss, and the three of us had a conversation and discussion about what kind of actions needed to be taken. It was pretty clear.
Listen, I will tell you it was no more difficult for them, a very ethical group of individuals, and we just wanted to weigh the possibilities. I can even remember my boss saying, “Well, if we lose the account, we lose the account, but we have to alert them to what’s going,” because our own employee was complicit in the action that was taken. We knew it was a risk, but it didn’t require anybody having to have their arms twisted to make that decision.
Beyond that instance, you’ve advised hundreds of agencies and helped them…What are you seeing as some of the key PR ethics challenges for today and tomorrow?
I am kind of a stickler when it comes to the sanctity of the time sheet. I think there have been many instances in the past that I’ve been aware of, not from agencies that I was at, but many instances where the time sheet was manipulated, if you will. I believe that time must be logged exactly the way it was spent. Even on the software that I have, we don’t allow managers to approve the time sheet before they go in, which I know a lot of systems do, because there is a tendency to not want to go over budget, not want to seem like we are managing the business incorrectly. So there is this desire to move time from a budget that may be going over to a budget that has room on it. Even within the same client, that’s not right. If one budget goes over and one budget is under, that’s the way it is.
I give a lot of sessions with the PR Council and Counselor’s Academy and many, many presentations on finance within agencies across all of the Americas. And in every one, the point I always drive home is every hour must be logged exactly the way it was spent. In fact, what I used to say when I was running my own agency was when I gave that speech and I gave that sentiment, I would actually then say, “And if anybody ever tells you differently, let me know because I will fire them on the spot.”
To me, the sanctity of the accuracy of the information that goes into the system, it is critically important in terms of the fairness to the client, critically important in terms of employees getting credit for the time that they work. You have to learn and understand the dynamics and the information in order to be able to run your business as a business.
Interestingly enough, those issues are the same issues that they were back in the 70s, so that hasn’t changed. I think that that will always be a primary concern and a primary issue.
Let’s dig a little deeper into that. I tell folks I need the accurate information to make accurate decisions. If we’re lying about it, then any modeling I’m doing is built on a house of sand. But what’s your advice for somebody that has a manager that asks them to manipulate time sheets?
That’s a great question. It’s hard to push back unless you know that top management within the company has a point of view on this. It’s very easy for the folks at the very top of the organization to have the same point of view that you and I have, because it is in the best interests of the organization. Where the problems come up is when a manager feels that their career may be somewhat at risk if they blow a budget or something along those lines, or they look bad, etc. And that’s where the problem comes in. I think it’s important for top management to make it clear to the employees at all levels that that’s not acceptable behavior.
I also think there’s another thing. I haven’t gotten to your question yet, specifically, but I want to try to address it this way. There’s also another aspect of this, and that’s agencies have to be very careful about how they articulate problems with over-servicing and things like that. If you are harping all the time or giving someone a hard time about blowing a budget, there is going to be blowback from that. What’s going to happen is some time won’t get logged because people are afraid that they’re going to look bad.
I think you have to accept the fact that there are many causes for us to be over budget or under budget, because it’s not a science, it’s an art. And I think you have to have the mindset like you just said, which is, “Listen, I need to know, I need to understand, I need to get a handle on why we went over budget in order to not repeat those mistakes going forward.”
So if I’m at the top of the management chain, I want my managers to understand that I get it if you go over budget. Let’s work together and figure out how to solve the problem, rather than point fingers or blame or things along those lines, and I think you have a much better chance. Those managers should go to their employees, and you can’t say to an employee, “Listen, I gave you 30 hours to work on this this month,” because if you tell them you gave them 30 hours, they’re going to only log 30 hours or something along those lines.
But if you say to them, “Listen, I gave you 30 hours to work on this this month, but I may be wrong, you may need more than that. If you do, just let me know.” That’s a matter of language, but it’s a whole different way that the employee has now been given permission to do what they need to do for the client, which is really what’s most critical, and to be able to log it and spend the time on it.
In terms of your specific question, if I have a manager that has a problem like that, I have to figure out whether this is an issue I can take to, let’s say human resources or some other avenue that would allow me to make this information known in a safe environment. I can’t comment on whether or not that might blow up in someone’s face if HR is not doing the job that they’re supposed to be doing, etc. But in my mind, every agency needs to give their employees an avenue around their particular bosses if there’s a problem. That’s why I’m in favor of 360 performance evaluations and things like that, allowing employees to articulate what issues they might be having with their direct managers, etc.
I’ve also run a lot of focus groups on those kinds of things, because I think that from a cultural standpoint, it’s really, really important that you, as senior management, really understand the tenor of the culture that your middle managers are creating and allowing to have happen within your organization.
Beyond time sheets, are there other areas you’re concerned about regarding ethics?
One that I think has started to rear its ugly head, and I’m not an expert in this area, but I think with social media, there are some real concerns about what we do on behalf of clients, what kind of postings we do on our personal accounts, etc. I remember hearing a couple of presentations from experts from Davis and Gilbert about the risks associated with saying positive things, for example, about your clients on social media postings without full disclosure that you’re affiliated with them, that there’s a financial reward being given for those kinds of comments.
If I were running an agency today, I would make sure that I talked to experts from a law firm like Davis and Gilbert or whatever, where they have a specialty in this area and you know what your limitations are, because the risks could be significant.
Note: I actually interviewed Michael Lasky a few months ago for Ethical Voices. He had a lot of great insight to share.
What is the best piece of ethics advice you were ever given?
I knew you were going to ask me that question. That’s a very hard one, because I can’t pinpoint the one piece of advice but I can pinpoint the person. It was my mother.
The way I was raised was always, “Listen, you have to set up ideals. You have to have standards of behavior, and you have to always act within those standards of behavior, regardless of the outcome.”
I have tried to live that way always. The old cliché is you don’t want to do anything that you wouldn’t want to see in print in the New York Times, or that you’d want your family to know about. And those are all true. But basically, I think what really matters is you have to go into everything you do saying, “I wouldn’t want to be treated that way, so I’m not going to treat someone else that way.” If that’s do unto others, maybe that’s what it is.
In other words, I think what’s legal is legal. That’s for the courts to decide. But what’s ethical is ethical, and that very often goes far beyond the legality. In other words, you can do something that’s legal and still not be ethical.
I believe that you have to hold yourself to a higher standard. Simple as that.
And I think I have to give my mother credit for that, because I think that’s the way I was raised, that’s the way I was brought up, and that’s what I’ve always tried to live by.
Any final thoughts or anything else you wanted to add, Darryl?
Every human being is put on the planet to help others. That’s what we’re there for. And that guides a lot of how I think people should behave and how I think people should perform. So never should you want to try to harm someone else, but as often as you can, you should try to help them. That also goes to how you manage people within your organization. It goes to how you treat your client relationships and your family relationships and things like that. The goal should always be, “Can I improve that individual? Can I improve the way they live, the way they act? Can I make them happier? Can I do something positive?”
And I find when you do that, it enhances your own life as well.
Listen to the full interview, with bonus content, here: