8525: Is Ogilvy Run By Cultural Crooks…?

Advertising Age reported on the latest scandal at Ogilvy in New York. Read the story quickly—then check out the MultiCultClassics perspective immediately following.

Seifert on Overbilling Lawsuit: IBM ‘Considers the Matter Closed’

Ogilvy North America Chairman Sends Memo to Staff About Employee Complaint

By Rupal Parekh

A labor complaint filed on behalf of an OgilvyNeo employee in New York federal court last week that alleged IBM was overbilled by the WPP agency doesn’t appear to have ruffled the feathers of the technology giant, one of Ogilvy’s most important clients.

IBM did not return calls to Ad Age yesterday asking about the lawsuit, and Ogilvy yesterday released only a short statement declaring the lawsuit “without merit.”

But the situation seems to have attracted enough attention that John Seifert, chairman of Ogilvy North America, felt it necessary to today send a note to the agency’s staff noting that “IBM has told us they don’t believe they were intentionally overcharged in this situation, and they consider the matter closed.”

Here’s the memo:

All North America Employees:

Yesterday several sources reported of an employee complaint regarding a billing situation between Neo@Ogilvy, a business unit of Ogilvy & Mather, and IBM.

I want to personally update all of you on this matter.

Neo@Ogilvy provides digital media buying services for many of our clients. In the case of IBM, in September 2009, we learned of some pricing discrepancies that we believed resulted from misunderstanding of contract rates for specialty creative units in various digital media sites.

After careful review of the contracts and a review of historical practices, we and another media partner brought the concern regarding the interpretation of pricing these units to IBM’s attention. This led to several agreed actions:

1. We conducted a comprehensive audit of all activity that ran in 2009 and through January 2010. We determined that there were some mistakes in pricing for which IBM should receive credit;

2. We approached all appropriate media partners where credit was due, and each of them issued full credit to IBM;

3. With IBM’s help, we have clarified any ambiguity in contract language to avoid possible confusion or misinterpretation of pricing terms going forward.

All of the billing related to these media costs are paid by IBM without agency commission or mark-up of any kind. So, at no point did Neo@Ogilvy or Ogilvy & Mather benefit or profit in any way from these pricing discrepancies. IBM has told us they don’t believe they were intentionally overcharged in this situation, and they consider the matter closed.

At a moment like this, an important reminder: in all business dealings, Ogilvy holds itself to the highest standards of business ethics. We have a comprehensive program in place to ensure that we maintain the highest ethical standards. We make this policy clear in our U.S. Employee Handbook. We annually reaffirm this policy to all employees in the company. Most recently, we have mandated that all employees complete the annual WPP ethics online training program.

We rigorously investigate all ethical inquiries, concerns, and allegations. This is not simply about compliance, but about doing the right thing.

If you have any questions about our practices and policies related to business conduct, please reach out to your manager or human resources contact.

Many thanks.

John Seifert

OK, MultiCultClassics has questions about Ogilvy’s practices and policies related to business conduct.

But first, it’s necessary to provide some quick hysterical historical factoids.

Ogilvy has messed up client billings before. Ironically, the last instance when they were caught involved John Seifert’s wife, who wound up being sent to prison for her money mismanagement. Feel free to review the details right here. As part of her sentence, Shona Seifert was forced to draft a Proposed Code Of Conduct For The Advertising Industry—which was actually pretty well-written and thoughtfully conceived. For example, read this excerpt:

If you believe something is wrong, you have a responsibility to say so, regardless of your position in the company or the industry.

Don’t duck the difficult issues. Don’t hide the truth. Discuss the issue with your colleagues and bring it to the attention of management.

Inspired by Ms. Seifert’s manifesto, MultiCultClassics would now like to examine an issue not related to Ogilvy’s bungled billings, yet potentially more criminal. Specifically, it’s time again to consider Ogilvy’s actions—and inactions—surrounding hiring and diversity.

The Ogilvy corporate website boasts a strong commitment to creating an inclusive workforce. It even displays a quote from iconic founder David Ogilvy:

“In recruitment and promotion, we are fanatical in our hatred for all forms of prejudice.”

Despite the rhetoric, however, John Seifert conceded in 2009 that the industry is “not exactly leading the way” with diversity, and his agency is “not blind to the fact that there is so much more to do to recognize our ambitions.” Sounds like an open admission of hypocrisy and guilt, huh? Take another peek at Seifert’s memo to the troops:

At a moment like this, an important reminder: in all business dealings, Ogilvy holds itself to the highest standards of business ethics. We have a comprehensive program in place to ensure that we maintain the highest ethical standards. We make this policy clear in our U.S. Employee Handbook. We annually reaffirm this policy to all employees in the company. Most recently, we have mandated that all employees complete the annual WPP ethics online training program.

Maybe the place should have everyone complete an ethnics online training program. Otherwise, all the sanctimonious chest-thumping is just stereotypical bullshit.