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- BUSINESS, Page 42MANAGEMENTToo Much Flak Downs a Flack
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- Public relations powerhouse Hill & Knowlton boots its overbearing
- boss in a bid to restore its own sullied image
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- By RICHARD BEHAR
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- It was the beginning of the end for Robert Dilenschneider
- when the Hill & Knowlton chief executive rose to give a pep
- talk to his 30 senior executives at New York City's Lotos Club
- last winter. "Our women," declared the boss of the largest U.S.
- public relations firm, had been insulted by bad language used
- by an executive from McDonald's, a prospective client. As a
- result, Dilenschneider boasted, he refused to accept the
- fast-food giant's business, even though he was awarded the
- account. "We didn't know whether to laugh or cry," recalls a top
- official who attended the dinner. "It simply wasn't true. We had
- placed third in a recent bidding for the account. Bob lied
- straight to our faces."
-
- Five months later, Dilenschneider, 47, was stripped of his
- day-to-day duties at Hill & Knowlton, whose list of blue-chip
- clients ranges from Pepsi to Procter & Gamble. Last week he
- suddenly resigned as chief executive, still denying reports that
- he had been shoved out. For Dilenschneider, it was a
- heartbreaking fall, 24 years after he began to climb the company
- ladder. The man seemed to have a tragic flaw: the more powerful
- he became, the more he believed in his own greatness.
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- Long known as a genteel giant, Hill & Knowlton rarely had
- to hunt for clients. They simply came knocking and stayed
- aboard for decades, as did the firm's employees. That atmosphere
- changed when Dilenschneider took charge in 1986 and began to buy
- up 10 smaller companies. Revenues rose from $77 million in 1985
- to $197 million last year. Dilenschneider's goal was to
- supplant the British firm Shandwick (1990 revenues: $211
- million) as the world's largest p.r. firm by creating a one-stop
- supermarket for clients seeking everything from lobbying and
- management consulting to research, direct-mail campaigns and
- traditional public relations.
-
- But his dream got derailed. The recession pared spending
- by the firm's traditional clients; both sales and earnings are
- likely to drop in 1991. Yet the pressure for profits has been
- escalating since 1987, when British magnate Martin Sorrell
- bought Hill & Knowlton's parent company, the J. Walter Thompson
- ad agency. Hill & Knowlton is also alienating a growing number
- of clients, sometimes by overcharging them for mediocre work.
- "It got to a point where we were trying to sell products to
- clients whether they needed them or not," says Peter Osgood, a
- vice chairman who quit earlier this year. "It was a revenue
- game."
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- Morale at the firm is so bad that more than 50 top
- executives have left since 1989. Current and former staff
- members place much of the blame on Dilenschneider. They describe
- him as a Machiavellian leader with an oversize ego, a brilliant
- yet cunning bully who compulsively lied and reneged on promises.
- Insiders say he was so mistrustful of underlings that he rarely
- delegated, slept little and was often overextended. "One of his
- bad habits was not showing up for appointments," complains a
- leading industry consultant, Edward Gottlieb. "This was an
- indication of the problems he had keeping the huge firm
- together." Dilenschneider couldn't be reached for comment.
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- His obsession with growth at any cost sometimes infuriated
- important clients. In 1987 he persuaded chemical conglomerate
- Monsanto to scrap its entire in-house p.r. staff and turn the
- work over to Hill & Knowlton. The move ultimately failed after
- causing severe dissension inside Monsanto. Meanwhile, rival Du
- Pont, a Hill & Knowlton client for decades, was so irate at the
- conflict of interest that it pulled its account.
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- Dilenschneider's reign may be remembered most for the long
- list of dubious and controversial clients he took on, from
- China and Kuwait to the U.S. Conference of Catholic Bishops and
- its antiabortion campaign. One of his biggest clients, the
- Church of Scientology, paid the p.r. firm more than $5 million
- since 1987. Hill & Knowlton canned the account following a TIME
- cover story last May on the notorious money cult.
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- Yet perhaps Hill & Knowlton's most infamous relationship
- was with the Bank of Credit & Commerce International, which
- began after the bank's indictment for money laundering in 1988.
- The firm and its client got so close that top Hill & Knowlton
- official Robert Gray became a director at B.C.C.I.-controlled
- First American Bank in Washington. At a Senate hearing in
- August, former Customs Service Commissioner William von Raab
- said U.S. officials failed to pursue B.C.C.I. more aggressively
- because of the "incredible pounding that they were taking by the
- influence peddlers in Washington."
-
- The new man in charge at Hill & Knowlton is Thomas Eidson,
- 47, a well-respected insider who knows that any p.r. firm worth
- its salt does not try to draw unnecessary attention to itself.
- One of his first tasks will be to improve the firm's public
- image by avoiding bad associations. "Our client list is the most
- precious asset we possess," he says. "We should only take
- clients that the people of Hill & Knowlton can be proud of."
- That would go a long way toward boosting in-house spirits as
- well.
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- PROMINENT CLIENTS . . .
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- American Airlines
- Atlantic Richfield
- Boeing
- First Boston
- Georgia-Pacific
- IBM
- Johnson & Johnson
- Mazda
- Monsanto
- Procter & Gamble
- U.S. Catholic Conference of Bishops
- Warner-Lambert
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- AND FORMER ONES . . .
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- Bank of Credit & Commerce
- Church of Scientology
- Du Pont
- ITT
- Kellogg
- Lockheed
- McDonnell Douglas
- RJR Nabisco
- Stanford University
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