When Stanley Ulchaker decided seven years ago to step down from his position as chairman and CEO of Edward Howard Co. at the end of 1999, he fully realized the danger involved in the transition.
Although the oldest independent PR firm in the United States had twice before survived management changes, this was different. The industry was in the midst of heavy consolidation, marked by PR powerhouses acquiring scores of mid-sized firms similar to the one Ulchaker had called home since 1963.
“Traditionally, what happens with PR firms is they have a strong entrepreneur that is very good, attracts very good people to him and does very well,” explains Ulchaker. “The good people then decide to go out on their own and leave. When it’s the end of the career for the entrepreneur, he either folds the tent or sells it to another company.”
That was the scenario Ulchaker wanted to steer Edward Howard away from at all costs. If the company’s philosophy and heritage were to continue, he realized he would have to prepare the firm not only to carry on, but to thrive after his departure. Over the next seven years, he painstakingly set the groundwork for the transition that looms just two months away.
Give employees an emotional stake
Rapid turnover is both a menace to and the reality of the PR industry. Ulchaker knew that and looked for ways to ensure Edward Howard would not fall victim to the trend.
In 1967, the firm’s upper management was offered an ownership stake in the company. Ulchaker himself extended that opportunity to other company officers in 1987.
Finally, in 1993, the employee stock ownership plan was offered to any employee with three or more years of service in the firm. A year later, the stock-sharing plan — modeled after traditional profit-sharing plans — was integrated as part of the company’s year-end compensation package for every employee who had worked more than 1,000 hours during the previous 12 months.
In the six years the program has been in place, it has generated much interest, with many employees setting aside a portion of each paycheck to invest in the company.
One effect is a stronger sense of loyalty. The average account executive at Edward Howard has been there 11 years. Other employees’ tenure averages about seven years.
“It’s a more rewarding experience,” says Kathleen A. Obert, who will become president and CEO on March 1. “It helps us reduce turnover, which is incredibly important. For us hiring people, there is a lot of competition out there and a lot of good competition for our people, and we want them to stay. We do have a much lower turnover than other PR firms of any size, anywhere.”
Openly share information
After employees were offered an ownership stake, Ulchaker disseminated information about the company’s performance. If employees were truly going to buy into the stock-sharing plan, he knew there could be no secrets within the company’s walls.
For Edward Howard, that means not just annual reports, but quarterly, monthly and even weekly updates on the company’s performance. The only information not shared is individual compensation and bonuses. Everything else is fair game.
“It demands the willingness to share information,” says Ulchaker. “If you are going to be a shareholder and invest your money, you might like to know what’s going on . . . That information sharing is a very critical component of making something like this work.”
Identify your successors early
Once the details of the stock-sharing plan were finalized, Ulchaker identified the leaders who would guide Edward Howard after his retirement. He learned early in his career the importance of choosing one’s successor, and knew it was one of the biggest decisions a CEO faces.
“One of my first clients was the chief executive of a $300 million company,” he recalls. “He said his number one job was to find his replacement.”
Three years ago, Obert and soon-to-be executive vice presidents Wayne R. Hill, Nora C. Jacobs and Daniel G. Stanowick, who also start their new positions March 1, were selected as Edward Howard’s new management team. They were seated on a long-range planning committee that met regularly with Ulchaker and the company’s consulting firms to prepare for the transition.
“We have tried to give them as much background information as we can so that they have every advantage and won’t wake up one day and say, ‘My God! I’m running a firm,’” Ulchaker explains. “You can’t do that by throwing a light switch.”
Don’t be an ostrich
One solid piece of advice Ulchaker gives other business executives facing the same issue is to start planning the transition as early as possible.
The seven years Ulchaker spent readying Edward Howard for the change were filled with constant tweaking. Not everything is going to work on the first try, he cautions, and the only real mistake is burying your head in the sand and avoiding the problem altogether.
“The best thing I can say is don’t be an ostrich,” says Ulchaker. “You’ve got to deal with the issue, and the sooner you deal with it, the more effective you’re going to be. Maybe this system that has been wonderful for us won’t work for the next guy, and that’s OK. He finds his own method. But you’ve got to deal with it.”
How to reach: Edward Howard Co. (216) 781-2400
Jim Vickers ([email protected]) is an associate editor at SBN.