Monday, September 11, 2006

Essay 1056



Omnicom Flies Solo on Diversity Hiring Issue

Holding Company Splits with Rivals, Could Still Face NYC Public Hearings

By Matthew Creamer and Lisa Sanders

NEW YORK ( -- A landmark agreement to improve diversity on Madison Avenue could shunt the potentially embarrassing issue into the background for everyone but the industry’s largest player -- Omnicom Group.

Of the 16 agencies originally subpoenaed by the New York City Human Rights Commission, four are owned by Omnicom: DDB, BBDO, PHD and Merkley & Partners.

Conspicuously absent
Omnicom, the No. 1 holding company, was conspicuously absent from a series of agreements -- first reported by -- that agency holding companies made with the New York City Human Rights Commission to ramp up initiatives to hire more minority executives. Rather than sign on with WPP Group, Interpublic Group of Cos. and Publicis Groupe, Omnicom went its own way, pledging more than $2 million for diversity initiatives, including the establishment of an advertising, media and marketing curriculum at the historically black Medgar Evers College.

No good deed, of course, goes unpunished. Despite offering more concrete plans than anyone else, Omnicom still faces the specter of public hearings that are scheduled to coincide with Advertising Week this month. Underwhelming racial statistics for two of its largest units were trotted out in a front-page New York Times article Sept. 8. And the commission invoked the name of one of Omnicom’s largest clients, PepsiCo, in describing how it arrived at the new procedures.

The pacts
Of the 16 agencies originally subpoenaed, four are owned by Omnicom: DDB, BBDO, PHD and Merkley & Partners. (Arnold, owned by Havas, has not yet signed but is expected to.) Omnicom, according to executives familiar with the situation, was reluctant to agree to terms that involved monitoring its progress. An Omnicom spokeswoman declined to comment.

Eleven agencies signed pacts to improve minority hiring, pledging to diversify by setting goals for the hiring, promotion and retention of minority talent. The agencies did not agree to quotas, but instead will set their own hiring goals and report their progress to the commission. Failure to meet the objectives will require the agencies hire outside consultants, but it won’t result in financial penalties.

Detailed work-force report
“The agencies have agreed to tell us whether they’re living up to the goals they’ve set and to give us a detailed report on how their work force is comprised” said Avery Mehlman, deputy commissioner of the HRC’s law-enforcement bureau.

While Omnicom isn’t off the hook as far as the commission’s hearings go, it is in the good graces of another outspoken advocate for diversity: New York City Councilman Larry Seabrook, who brokered the deal.

“We went to Omnicom and we kicked ass,” said Mr. Seabrook, speaking at the annual legislative meeting of the Congressional Black Caucus in Washington on Sept. 7. “But they came to the table. Omnicom put their money where their mouth is.”

Continuing threat of public hearings
Mr. Seabrook said he intends to hold his own Advertising Week hearings that could include agencies or their clients if the agencies don't also reach a settlement with him.

Mr. Mehlman said the agreements were modeled on diversity programs used by corporations such as Pepsi. For instance, agency CEOs will have their compensation tied to progress on the diversity goals. Patricia Gatling, chairwoman of the commission, said at the caucus, “Approximately 2% of the individuals who create in us a desire to buy at the 16 agencies we examined are black,” adding, “Here we are in 2006 -- also a half century after the civil-rights movement began -- and we have still been unable to break and excel in this industry.”

She said that while 22% of the 8,000 employees of 16 agencies it examined earned over $100,000, only 2.5% of those were African-American.

Ira Teinowitz contributed to this report.

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