Posted by Amanda Chapel
Can PR's overbilling problem be cured?
Dowie Trial Begins; Alston now in the Spotlight
Cured? Ummm... That's like asking Marcy if she can stick to her diet. Not that she even needs to but she's always talking about it. She always promising herself and always in the end breaking her self-imposed commitments. Marcy's got a surreptitious pack with society to be a size 4. I've tried to talk to her. A size 4 is just not something she'll ever be. But sadly, it's just not something that she can let go.
Yesterday, the trial began for former Fleishman-Hillard executives Doug Dowie and John Stodder on federal conspiracy and wire fraud charges in Los Angeles. Dowie has pleaded not guilty to the 16-count indictment returned June 2. Stodder pleaded not guilty to 11 wire fraud counts in an earlier indictment, as well as to one conspiracy charge. The federal conspiracy and wire fraud charges allege they bilked the Los Angeles Department of Water and Power to the tune of $300,000. (Sidebar: Discovery includes more than 1 million e-mails and other documents, including billing records and work sheets. In the words of Tony "The Nose" Giovanni, "They're goin' to college.")
Okay. Old news really. Everyone with a pulse, which by some estimates is about 87 percent of the PR Industry, already knows this. And we've already done our Industry hand wringing and mea culpas. "Not me!," the choir protests. Well, that's crap. I have; I admit it. I had a boss once who used to brag that there "wasn't an unlimited budget that Amanda could not exceed." If the budget were $40,000 a month, I'd surely land on around 60 and convince that client that this is normal and necessary. This got me many a "that a girl" from the Managing Director and senior most management in New York.
But today with transparency, Sarbox and the like, the party is over. Now the chances of getting caught are pretty high, well this is unless your client is brain dead or of course you've got those compromising photos.
Just last week the Illinois Auditor General, William Holland, released his analysis of the contract between Illinois Department of Transportation and Danielle Ashley Communications. He questions $390,201 in charges. Oops. Apparently, IDOT lacked invoices or receipts and the PR firms services appeared to go well beyond the scope of its state contract.
Tracey Alston, president of firm, called the report "a blatant lie" and denied that her firm grossly inflated the undocumented billings. Alston Wednesday told the Chicago Sun-Times that her company overcharged the state by only $7,790. She said those overcharges have since been "resolved."
Oh. Well. I hear Britney Spears: Oops!...I did it again I played with your heart, got lost in the game Oh baby, baby Oops!...You think I'm in love That I'm sent from above I'm not that innocent Oops!...I did it again
Truth is, it will happen again. It is happening throughout the Industry today. Why the recidivism? Here's 5 reasons why:
1. It's due in part to the fact that most firms today are owned by huge conglomerates that are at the mercy of Wall Street's demand for quarterly numbers. The edict from the mountain top is to increase profit. The direct way of course is to increase billings. Of course increasing your margins is key. But today, as margins have gotten so paper thin, we've gotten a little creative to try to "feed the monster."
2. On the satellite office level, the Managing Director is under intense and constant pressure to meet his/her numbers. As such, he relies on his immediate reports to easy the burden. I definitely do my part. See my confession above. I was/am a billing machine. I was and remain his pet.
3. And damn that 29-hours-per-week rule! Industry standard. For those not in the business, that's how many hours in a week you've got to bill to be considered fully billable. Two problems:
First, there's the economic theory regarding "basements." If you set a price, the market will inflate to meet that price point. Simple, if the account doesn't realistically justify that kind of billing, you're going to make it work.
Secondly, as I was/am the MD's pet, the AE's also just wanna be loved by there immediate supervisors. AE suck-ups and brownnosers aim to please. The phrase "bill 'til you puke" is the modus operandi of the kids. And if you want to get promoted, you had better embrace it.
4. Senior level pressure to refill the pipeline with new business eclipses their ability to fulfil their requirement to do billable work. I cannot count how many times a senior-level person has asked me to just add hours for them to a client's bill on their behalf. I was at first flabbergasted. Now I've come to expect it, monthly.
5. Lastly, eyeball pricing. Did that release take 3 hours to write or ten? Did that placement take a 10 minute phone call of 2 days? I see a minimum of 26 hours of billable time there.
Can it be cured? I don't know. I'd like to think so. I'd also like to think that my little dog Jingles, who ran away when I was 12, is coming back. My therapist and I are working on it. I am coming to terms.
Anyway, I've got to close this here. I've got billable work to do.
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If the client is paying you for results, does it matter whether it takes ten minutes or ten hours?
It matters, in that 10 minutes may cost but a fraction of the agency/individual's hourly rate, while ten hours would cost him considerably more. Clients pay for time spent driving results (the latter of which is less easily measured than the former).
This problem can be cured, but only if we, as ethical PR practitioners, continue to act ethically, and in the best of interests of our clients. There are still many in this business who are willing to do anything for a dollar, whether it be to line their own pockets, or to meet the unrealistic demands of some schmoe high up on the food chain of the holding company conglomerate. However, I would like to believe that the majority of us are principled, ethical professionals, and when confronted with temptation, we do the right thing...