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Board Meeting One Board Agenda item: One

From: Sylvie Tourre, Head of PR, Paris Office To: Board Directors

Market opportunity in China

We have had a number of meetings with clients recently where they have expressed surprise that WRSX is not in China currently. Many of our competitors are already established there and it is seen by some as the market opportunity of the future.

There are two issues for the Board to consider: Should WRSX consider China as a suitable opportunity for expansion in this financial year? What is an appropriate way for WRSX to enter the Chinese market?

This is a major decision for WRSX with potentially significant long-term implications for the business. We need to think about the purpose of our entering this market. Also, how we can position ourselves in a way that delivers value for our clients and where we can be competitive against other global players and against the local Chinese agencies. The Board will need to decide if it should put the resources into developing a presence in China and also, if it does decide to go ahead, how to ensure success.

Sylvie Tourre Head of PR, Paris Office

China – The Opportunity

China has grown to become one of the world’s largest advertising markets under the drive of continued economic growth. China is expected to become the world’s second largest advertising market next to the USA within the next three years. Hard evidence for this has been produced by our own WRSX market insights team.

Our WRSX research and market insights team has just completed a major market research study that has taken three months to complete, which forecasts 16 percent ad spending increase for China next year – and a likely minimum year-on-year increase over the next five years of 8 per cent per annum. Their forecast shows that measured media advertising spending in China is expected to reach US$45 billion this year.

Their study, “This Year, Next Year: China Media Growth” is part of our new in-depth media and marketing forecasting series and is drawn from data supplied by the top 1000 manufacturing companies inside and outside of China. Our team should be congratulated on an excellent research study which demonstrates the scale of the opportunity in China.

In value terms, the growth is led by a 16 percent increase in projected spending on television advertising, which was expected to increase from US$24 billion last year to US$28 billion this year. The largest percentage gain came in the forecast for internet ad spending, which is expected to rise from US$3 billion last year to almost US$4 billion this year, representing a 30 percent increase.

The year-on-year growth was attributed to several factors, including the following:

Rising consumer incomes: Per capita disposable income grew by 173 percent in urban areas over the past 9 years, from US$816 to US$2,515, and retail sales volume nearly tripled during this period. A continuation of the consumer spending boom is anticipated to play a key role in sparking future ad spending increases.

Retail distribution of goods: While the major cities are key to sales volume, increases in retail distribution are taking brands to more and more lower-tier cities. Subsequently, advertisers must not only invest in the major urban city areas, they must also spend to reach and appeal to new consumers in secondary and tertiary cities, which are set to grow more quickly than the developed cities of Shanghai, Guangzhou and Beijing.

“Retail sales grew 15 percent last year, double the rate of nominal GDP,” said the lead researcher on the team. “Advertising serves this rising urban consumer and increasingly the rural consumer as well. Advertising investment could well run ahead of GDP for years to come.”

Media inflation: Media inflation will force advertising budgets to rise as the cost of communicating with customers increases. Television especially remains a seller's medium in which the big channels like CCTV, Beijing TV and Shanghai Media Group (SMG) have tremendous power and influence. Demand for airtime far exceeds supply on these big TV channels, where stringent airtime restrictions also apply.

The WRSX market insights and research team described the Chinese advertising marketplace as a collection of evolving, complex and fragmented markets and said advertiser options will need to multiply accordingly, especially in digital, events, sponsorship and other branded content, with each platform offering new ways to reach and engage with consumers.

“The media market is about to begin an era of hyper fragmentation, offering media agencies and advertisers a massive degree of choice when formulating media plans,” they said in their report.

“This may come as a surprise to western advertising agencies and their clients who might not normally associate choice with China. The key challenge for advertisers in China is how agencies manage and evaluate this choice while striving for further media effectiveness and higher returns from their advertising media budgets.”

Agenda Item Decision Options:

Action Option A: WRSX's clients are clearly sending the signal that they see us as being slow to react to their own strategies for market development in China. WRSX needs to be seen as a front runner and not a laggard. If WRSX wants to position itself as a global player, it must be able to offer a full service to global brands which means having a major presence in China.

WRSX should find a suitable office to lease in the district of Shanghai that attracts creative and media businesses, so there should be a ready pool of talent. The firm should negotiate a five-year lease with an opt-out clause after three years. The new office should offer Consumer and Business to Business Advertising as well as PR.

Experienced staff should be recruited locally from Chinese agencies and international firms already based in China. Victor Xao in the London office should headhunt and interview the future local MD.

Rival firms that have taken the decision to enter the Chinese market this way have budgeted about £2m. In terms of WRSX resourcing this development, as well as financing the project, the main demand would be for management time in sourcing the right building, fitting out the building to WRSX standards, recruiting and training WRSX China staff, promoting the arrival of WRSX in China to potential clients and setting up relationships with local suppliers and sub-contractors. The Board will need to evaluate the risks of this option against potential returns in the future.

Action Option B: WRSX should not attempt to compete head-on with either the large global agencies or the major local Chinese agencies. While these agencies base themselves mainly in Shanghai, WRSX should set up small offices based in one of China’s tertiary cities and build knowledge and expertise in consumer behaviour in this city and the surrounding community. Expansion into a second city should be planned within 12 months. A team of three people could be selected amongst the young 'high-flyers' from the current offices around the world. Their role would be to set up the business in China and to assess the Chinese market and the likely opportunities for WRSX in the next two to three years. The objective would be for WRSX to become the experts in understanding the market in each geographic area it enters. This would be the lowest financial risk option to create a presence. The question is whether this shows commitment to the China market and whether it will meet client expectations in terms of how WRSX is perceived against competitors.

The costs of taking this route to market are estimated at £600,000. In terms of other resources, this is a low resource investment option with the main impact being the loss of some key players from other offices. It is also low risk in that if the business does not come in it will be easy to exit quickly with little damage done.

Action Option C: Ask Frederick Victor Xao to take on responsibility for China from the London office. Three Chinese agencies have recently been in Paris, London and New York looking for strategic alliances with global agencies such as WRSX. Authorise Frederick to select a strategic partner from one of these firms and negotiate a deal with them. With Victor’s experience, the strategic and cultural fit between a strategic alliance partner could be assessed. One major criterion for selecting a strategic partner should be knowledge of the sectors WRSX is already known for globally, i.e. automotive & transport, health & pharmaceuticals, telecoms, beauty & fragrances and government & public sector.

The cost of going this route is about £450k and the resources and risks associated with this route are less than others. Of course, if the wrong partner is chosen in China it could become high risk so the Board will need to make a judgment if Victor Xao is up to this task. His track record is outstanding and his staff hold him in high regard.

Action Option D: You decide to do nothing at this stage. China may be high in terms of opportunity but it is also high risk and you believe that existing clients will not be concerned about WRSX not being in the China market at this stage. There is already plenty going on in the business and the best option is to wait and see. This decision is too big to take without much more information.

Board Meeting One Board Agenda item: Two

From: Rod Raoul Saurez, Non-Executive Director, WRSX Group To: Board Directors

Sustainability profile of Group

You know at WRSX you pride yourselves on being on-the-ball and your market research team has a terrific reputation for identifying trends almost before they emerge. How come then that WRSX appears to be nothing about its carbon footprint and sustainability profile? I don't see anything on the website or in last year's Company report and frankly it's a bit disappointing. Is the lack of a coherent and well-publicised policy impacting on clients' perception of WRSX? What about potential shareholders – there are plenty of 'ethical' shareholders these days who will not invest in non-green companies. Also how is this lack of profile going down with young, bright people? It is hurting your ability to attract top talent into the agency?

I am a Non-Exec on several Boards and WRSX seems to be behind the rest in setting out its sustainability profile. I think WRSX needs to act and act now. Can we discuss this at the next Board Meeting?

The Brutland Report defines sustainability as 'development that meets the needs of the present without compromising the ability of future generations to meet their own needs' (United Nations 1987).

What is WRSX doing about its carbon footprint and sustainability profile? Is the lack of a coherent and well-publicised policy impacting on our clients, potential shareholders and our ability to attract some top talent into the agency?

There are a number of issues for consideration here. Firstly, WRSX's own policy on sustainability in terms of its own policies and practices and secondly, to what extent does WRSX want to promote itself as a natural home for businesses that have a strong emphasis on their eco- friendly products/services?

The Sustainable Advertising Partnership focuses on enterprise publishing, printing and packaging and defines Sustainable Advertising as:

• Is beneficial, safe and healthy for individuals and communities

• Maximises the use of renewable and recycled source materials

• Is manufactured using clean production technologies

• Strives for the total elimination of product and non-product waste

• Is made from materials healthy in all probable end-of-life scenarios

• Is physically designed to optimize materials and energy

• Is effectively recovered and used in close-loop life cycles; is sourced, manufactured, transported and recycled using renewable energy and clean production technologies; meets the needs of the present generation without limiting the ability of future generations to do the same.

Within WRSX itself sustainability policies might include offices powered by renewable energy sources such as wind, low-energy IT systems, sustainable office furniture, recycling of paper and glass, waste food going to the homeless, carbon offset against travel (and minimising business travel) and procurement criteria incorporating supplier selection based on the sustainability policies of the suppliers.

Certain agencies are going further and are setting out to attract exclusively clients who have a record of leading the way in terms of sustainability. For example, insurance companies who provide 'pay as you drive' insurance products that reward low mileage drivers, green buildings insurance cover and carbon-offset to customers. Another example would be seeking out clients in the construction sector that offer office building construction that incorporates energy efficiencies.

Other agencies are researching the environmental impact of each media channel e.g. the amount of electricity required to power a 30 second advertising slot. Using this data an Environmental Media Sustainability Index is created for media planners (people responsible for selecting which media is used to promote a product) so that media planners can include the eco-impact when weighing up the decision which media to use.

One agency has developed a tool for measuring the carbon footprint of on-line advertising campaigns thus allowing clients to off-set their carbon emissions by buying offset credits from organisations that fund emissions reductions.

Products have been developed such as solar-powered billboards, direct mail using recycled paper and 'Earth Hour' a plan to shut down all office lighting for one hour in a complete city to conserve energy.

There are major opportunities for WRSX's PR division to work with clients to promote their sustainability agendas such as banks promoting their paperless banking options and oil companies promoting their research into sustainable energy sources of the future.

In terms of value to shareholders, it has been difficult to substantiate the case for sustainability. While there is general consensus that pursuing a corporate sustainability agenda in marketing products and services is good for the consumer and good for business, there is no doubt that it currently comes at an additional financial cost.

Agenda Item Decision Options:

Action Option A: The Board is not in a position to dictate a WRSX-wide policy across geographic regions and sectors. Send out a broad-based statement of intent, publicise this on the WRSX website and leave local offices to decide their own policies and how they implement them. There is too much diversity across the Group to take any Group-wide action.

A budget of £100,000 would need to be set aside set for this option.

Action Option B: WRSX needs to be seen as a market leader in this issue and should re-brand one of the agency subsidiaries as a 'Green Agency' to target the emergence of sustainability as a strategic issue. This newly branded agency would firstly, review the sustainability policies of all existing clients and encourage them to meet an agreed sustainability profile or leave the agency. Secondly promote itself as a 'brand' that is known for its sustainability stance and use this to attract new eco-friendly clients to the agency.

This would be a major undertaking costing about £500,000 but is in line with the policies of some of the major global agencies such as WPP and Omnicom.

Action Option C: WRSX is in danger of falling behind its competitors in the area of sustainability. There are commercial as well as ethical reasons for setting a Group-wide Sustainability Agenda. Create a new WRSX Committee made up of internal employees interested in this issue and also employ an external 'Sustainability Expert' with extensive experience of this field in the Marketing Communications sector. This will mean a high salary cost but it will be the responsibility of this expert to develop a group-wide strategy on Sustainability and to ensure that it is effectively implemented.

Ask each office to develop an action plan for rating its sustainability profile. Ask each office to appoint a Sustainability Co-ordinator at a low/mid level salary. Each office will then report to their local Managing Director and the local Board on progress in this area sharing experience and best practice.

The Board would need to approve a budget of £350,000 for such an initiative.

Action Option D: This is a local issue and should not really be on the Main Board Agenda. What is appropriate in New York or London may not be right for Singapore, Paris or Shanghai for that matter. Ask for this issue to be raised in local Board meetings in the different offices and devolve power to those at the grass roots who know best what is right for them. This decision would mean no budget needs to be set aside at a Group level but there will be some costs at a local level

Board Meeting One Board Agenda item: Three

From: Serge Toussaint, Managing Director, Paris Office To: Board Directors

Managing Generation Y – Delivering the Doughnuts

One of my team, Ghiselle Briant who heads up the Research and Insight Consultancy has experimented with what she calls 'Delivering the Doughnuts' performance management i.e. work as many or as few hours as you like as long as you deliver on your objectives.

She believes that in order to attract the best talent into WRSX the Group should consider the research on Generation Y people born after the early 1980's) The research highlights attitudes to work/life balance. A recent survey of 2,500 people from this generation in professional services, banking and the law has shown that they are determined not to lead lives that revolve heavily around work. Instead they seek jobs that are fulfilling and fun, with decent holidays and the opportunity to take off long periods in order to do charity work or travel.

I think that we should look at this seriously. The best people always have choices about who they work for. Can this 'management by doughnuts' attract high-quality people into the Group in certain roles and what impact would the introduction of such an option have on the rest of the business?

I am seeking Board approval for introducing 'Delivering the Doughnuts' performance management in all Paris-based businesses with a view to expanding it across the Group if it is successful sometime in the future.

At present all French offices with the exception of Research and Insight Consultancy operate a flexible working policy that requires all full-time employees to work 35 hours. Each office has 'core hours' that must be worked by everyone. In terms of annual leave (Congés annuels), all employees are entitled to two and a half days of paid leave per month worked. This gives basically 5 full weeks of vacation a year (because Saturdays are strangely considered in the calculation as 'working days'), which may be taken either during a specified period or in agreement with the employer (sometimes vacation can be taken only after a full year of employment).

• number of days of leave taken at one time may not exceed 24 working days

• employee must take at least 12 working days of main vacation at one time

• main holiday lasting more than 12 working days may be split up by the employer with the agreement of employees and they are informed with at least one month of prior notice

• fifth week of leave must be taken separately from main holidays (usually August)

Ghiselle Briant has offered her team complete flexibility in terms of number of hours worked, office-based or home-based and Monday to Friday or weekends. Each individual and each team have agreed on how they want to work. Equally, they have all been set SMART Objectives (Specific, Measurable, Achievable, Relevant and Time Bound) that are generally more demanding than those set in other offices. Achievement of objectives is linked to performance-related pay i.e. bonuses paid for high levels of achievement. .

In Ghiselle’s team, results so far have been impressive. The business has increased revenue by 17% in the last two years and reduced costs by 6%. Ghiselle believes that this is entirely due to her team being highly motivated by her introduction of management by 'Delivering the Doughnuts' two years ago. There have been a few problems with people taking extended holidays where clients have felt rather adrift but Ghiselle believes this is outweighed by the benefits.

Serge Toussaint is keen to introduce this management concept in all the Paris based businesses, While holidays and other benefits vary considerably across the Group from business to business and region to region, there is no other business currently operating in this way. The Board must decide how to react to Serge's request.

Agenda Item Decision Options:

Action Option A: Agree with this request and start a consultation across all businesses that come under the Paris office about moving in this direction. Make this option available to everyone in those offices. Only offering this to Generation Y employees, born after 1980, would be age discrimination. Trial this in all the Paris businesses and then evaluate the impact before deciding whether to take this group-wide. A budget of £200,000 should be set aside for the consultation process and implementation.

Action Option B: This sounds like a small drip that could turn into a waterfall. What is Serge thinking of? How will clients feel if they ring up and find that people who should be in the office in their view are in fact not working or working from home? How will other employees feel if they see colleagues being offered this when they are not? Cancel 'Delivering the Doughnuts' right now.

Action Option C: Wow, what a great idea for a creative industry like this one. Time to throw out the rule book and introduce this on a Group-wide basis. First, ask who wants to work like this via a comprehensive employee survey and then implement on an office by office basis in the next 12 months. The only constraint should be client-facing employees who will need to agree what this will mean in terms of office cover. There may also be

some parts of the business where processes mean that certain employees have to be present at certain times. But the balance should be that the business has to give reasonable grounds for saying 'no' to any request by an employee to work like this in the future. Otherwise it's full steam ahead. The Board should approve a budget of £500,000 for this initiative for consultation and implementation across the whole Group.

Action Option D: This is a major decision for the Group and Serge is in danger of setting a precedent without having considered all the potential impact of his scheme. Commission a study on companies that have already implemented this and have had time to measure its impact. In the meantime do nothing in terms of expanding this scheme or trying to dismantle the scheme that Serge already has in place. The study will be conducted by an in-house team so there will be no cost.

Board Meeting One Board Agenda item: Four

From: Victor Xao, MD, London & Singapore Offices To: Board Directors

Non-performing business within the Group

I am seeking Board approval for the disposal of an Exhibitions and Conference Management company that WRSX acquired 18 months ago as part of a small group of Advertising agencies. The advertising agencies and PromoCo Exhibitions and Conference Management trade as part of WRSX Advertising, Singapore.

Deena Patel, the MD of this business believes that on the contrary WRSX should invest in expanding its Exhibitions & Conferences business, not only in Singapore but as a global offering to its clients.

Each of these sectors (exhibitions and conference management) has a few well-known global brands and then thousands of smaller, local companies who often survive because of a particular sector expertise and strong customer relationships. Neither of these sectors is growing rapidly except in some emerging markets such as India and China.

The costs of setting up a conference & event management company are low so there are many manufacturers of exhibition stands and even more conference and event management companies. This is not a business we want to be in and I am seeking Board approval to move forward with looking for buyers to take over PromoCo in the next few months.

The Exhibitions Division manufactures exhibition stands with a team of experienced workers based at a manufacturing site on the Ling Industrial Park in Singapore where they design and build stands for customers. The Conference & Event Management Division's expertise is in delivering highly organised and efficient events for large numbers of participants for a range of corporate, government and NGO clients. This sale would raise approximately £4.4m for WRSX.

PromoCo Exhibitions and Conference Management, Singapore

A wholly-owned Subsidiary of WRSX Advertising and Media, Singapore

Overview We do not see ourselves as mere stand-builders, designers, events or conference management practitioners, but holistic and enduring marketing strategists who want to unlock the potential of your brand and transform your marketing vision into today's reality, We have respected in-house specialists and this allows us to build our flexible team structure around you and your unique needs and objectives. We have come a long way since our establishment ten years ago and are now part of the WRSX Advertising and Marketing Communications Group. While based in Singapore, we can work with clients worldwide, and have instituted strong affiliates globally offering you a strong global network for your international projects.

Our ideology What makes us so different? It is our people and the way we work. PromoCo is a rare blend of diversely talented and immensely passionate group of creative, production and account people. We thrive in an environment in which diverse expertise and experience unite. Together we offer a holistic and experienced team committed and fervent to solving marketing challenges strategically, creatively and intelligently.

Management Team Deena Patel, Managing Director, Lee Chan, Director Exhibitions Division, Yifei He, Director Conference & Event Management Division

Our services Whether you are looking at a fully integrated campaign or expertise in a specific discipline, we are fervent in creating strong, sustainable connections to your consumers. Our commitment is to approach each project with fresh minds, courageous thinking and the drive to achieve your goal. We specialise in the following sectors: tourism, food & drink, government and NGO's.

Exhibitions Division We are a manufacturer of exhibition stands with a team of experienced workers based at our manufacturing site on the Ling Industrial Park. Here we design and build stands for our customers. Through our affiliates we are able to offer a full range of services including:

• Design & Build for Official Shows, Corporate Stands & National Pavilions • Creative & Art Direction for Graphics & Signage • Carpeting, Lighting & Audio-Visual Equipment • Furniture & Furnishings • Project Management

Conference & Event Management Division Our expertise is in delivering highly organised and efficient events for large numbers of participants for a range of corporate, government and NGO clients. Our services include:

• Conceptualisation of Themes • Design & Build of Theatre/Stage, Indoor & Outdoor Displays • Product Launches, Road Shows, Corporate Events, Gala Dinners & Training Programs • Meetings, Incentives, Conferences & Seminars • Project Management

Financial Information Last year the business turned over the equivalent of £2.6m but this has dropped to £2.2m this financial year following the defection of a large client to a competitor. This has had an impact on the Gross Margin which has dropped from 16% to just below 15% and Net Profit has dropped from 4.7% to 3.8%. with an actual anticipated profit of about £84,000. However, if you take out the contribution that the business should be making to WRSX Singapore for use of central marketing and other services the business would make a loss in this financial year. The major overheads for the business are the exhibition stand manufacturing site and storage unit in Ling Industrial Park in Singapore and the equipment for making the stands. For the conference and event management business the main cost is staff and the business relies on building relationships with clients in order to build loyalty. The conference and events management business could make a profit if the exhibition business was disposed of but the price for the exhibitions business alone would be only £2m.

Victor wants to sell the whole business now but will the Board ratify his decision or look for another solution that keeps Promoco in WRSX as Deena Patel, Managing Director has asked them to do?

Agenda Item Decision Options:

Action Option A: Sell the whole Promoco business. This will raise capital of £4.4m to reinvest in other parts of the business that are more profitable and have more growth potential.

Action Option B: Retain the Conference Management division of the business and sell Exhibition Stands. Bring the Event Management division under another part of the business in order to reduce its fixed costs. This would raise £2m and would allow WRSX to enter the Conference and Events Management business which is worth £100bn worldwide.

Action Option C: Re-brand PromoCo to WRSX Exhibitions and Conference Management. The managers of this business have a lot to offer the WRSX Group. Give them 12 months to prove their worth and see if they can turn this business around. Give top managers equity in the business and set in place a profit-share for all employees. Support a £300,000 investment in new design and printing facilities for the Exhibition Stands business. This is an opportunity to add a new service line to the client offering of WRSX Group. The total cost of this including the £300,000 investment will be in the order of £1.1m.

Action Option D: This is a local issue and a local decision. Leave Xao and his local managers to make the decision when they have their next Singapore strategic planning meeting in six months. Deena Patel may convince Victor and the rest of the team to keep the business but either way it's a decision for the Singapore team.

Board Meeting One Board Agenda item: Five

From: Francoise Mellier, Group HR/Talent Director, Paris Office, WRSX Group To: Board Directors

Cultural change in New York

There are some profound differences in culture across the Group and that in some cases these differences are detrimental to the business. In particular, the hierarchical nature of the New York office's management style is in huge contrast to the Paris office and indeed the London office. The result of this is that junior and middle managers in the New York office are not empowered to make decisions that are commonly made by their equivalents across the Group in other offices. Decisions about important and urgent matters, many of which relate to clients, are delayed, sometimes to the detriment of the business. The issue for the Group is whether it is acceptable for the New York office to continue to operate as it does or whether steps should be taken to bring about change in the culture of the New York operation.

The Board asked Francoise Mellier, the HR Director from the Paris office to produce a confidential report on this issue. An employee survey was carried out as part of her research and the results are now ready to be presented so that the Board can decide whether it needs to take any action as a result of Francoise Mellier's report.

The issue for the Group is whether it is acceptable for the New York office to continue to operate as it does or whether steps should be taken to bring about change in the culture of the New York operation.

Summary of findings:

The New York office is in an old building on Madison Avenue with beautiful antiques and paintings from the nineteenth century in the offices of all the top managers. Client feedback is mixed. Some love the old fashioned formality and manners of the New York office. Some find it conservative and reflecting a lack of innovation in client work. Junior and middle managers in the New York office are not empowered to make decisions that are commonly made by their equivalents across the Group in other offices. Decisions about important and urgent matters, many of which relate to clients, are delayed, sometimes to the detriment of the business. It difficult to transfer people into the New York office, or to get them to work on project teams under some of the top NY managers, as they feel de-motivated by their lack of authority. Some of the very best talent in New York seems to be leaving the agency and exit interviews have highlighted 'lack of respect' and 'autocratic working environment' as a major reason for leaving. The culture of the New York Office is very formal with senior managers only attending meetings with their peer group or their direct teams. The New York office negotiated to retain its Executive Dining Room arguing that more junior staff would find it uncomfortable to eat their lunch with senior managers if there was only one staff restaurant. There are also separate toilet facilities for senior managers. All managers above a certain grade are entitled to an office with windows to the outside and getting one of these offices is seen as a symbol of 'having arrived' in terms of career goals in the New York team. All of the top team are located on the 5th floor of the building and not with their teams. Senior managers tend to avoid social events with employees or lower ranked managers.

The employee survey attached makes it clear that while some people find the lack of authority a problem, especially those who have transferred into the New York office, some actually like fact that they are not accountable for decisions made.

There is an argument for radical change if the Board believes that the New York office will not deliver its performance objectives if the current culture is allowed to continue. Mellier's report raises the issue of how clients perceive WRSX. She believes that successful global organisations have global cultures which supercede national cultures. Companies such as IBM, Procter & Gamble and Citi have corporate cultures that are seen by clients as delivering the same quality of products and services wherever you do business with them. Such organisations have delivered this global culture through creating global systems, global processes and global structures.

The issue before the WRSX Board is whether change is necessary – and if it is, the scale of the change that is required to drive better performance and long-term growth in New York.

New York Office – Employee Survey Executive Summary

Introduction:

First Person Research, WRSX's appointed research consultancy, was briefed to conduct a survey among New York Office employees at all levels. Questionnaires were distributed to all employees and staff participation was on a 'voluntary self-completion' basis, i.e. all staff were offered the opportunity to complete a survey. There was a 42% completion rate which is better than the industry-average of 27% for staff

surveys. The data has been checked to see if it is representative across all businesses that fall under the New York Office – and it is representative unless there is a 'health warning'. The survey was conducted in the past three months and this is an Executive Summary of the main findings.

"The Agency has a clear strategy that is well communicated to its employees": 55% of all respondents agreed that the agency has a clear strategy but only 23% of employees agreed that communications about the strategy were clear and effective.

"The culture of the Agency is positive and optimistic": 43% of respondents said that they were positive and optimistic about the agency's future

"The business places the most competent people in management positions": As many respondents disagreed with this statement as agreed with it, i.e. 50:50

"My manager is interested in my well-being": As many respondents disagreed with this statement as agreed with it, i.e. 50:50

"The style of management in the Agency motivates me to do better": 60% of respondents disagreed with this statement. The positive response rate was particularly low amongst mid-level managers and creative teams.

"My relationship with my immediate boss is good": There is a generally good relationship between workers and bosses, with 65% of respondents agreeing that they have a 'good' relationship with their boss. However, only 35% of mid-level managers and creative teams had a positive view of their relationship with the senior management team.

"I am clear about my objectives and how they fit into the Agency's performance objectives": As many respondents disagreed with this statement as agreed with it, i.e. 50:50

"I feel that I have sufficient authority to be able to do my job without always referring decisions to my boss": 47% of respondents disagreed with the statement but this rose to 65% disagreeing at mid-management level and within creative teams it was 71 %.

"I feel that I have too much responsibility for the level that I work at in the Agency": Only 26% of respondents agreed with the statement. It would appear from this that employees are willing to take on more responsibility.

"When things go wrong I feel that the right people take responsibility": 71% of respondents agreed with the statement – evidence that there is not a 'blame' culture present in the Agency.

"People learn from mistakes and share their learning with others": 60% of respondents agreed with the statement.

"I would be happy to recommend this agency to a friend as a good place to work": Overall, 63% agreed. However when the data is split by unit / function, the figure dropped to 42% in the 'creative' function areas.

"We are a work hard/play hard organisation": 46% of respondents agreed with the statement.

"We have a lot of fun and many of my colleagues are friends": 76% of respondents agreed with the statement.

"Senior managers are approachable and in touch with what is going on in the business": On average, 32% of respondents agreed with the statement, but there are big differences between units / departments. Please see the full report.

"This is an agency that always puts its clients first": 54% of respondents agreed with the statement. In the open-ended question towards the end of the survey, many employees commented that 'the agency puts clients before employees'.

"Sometimes I feel that clients are unreasonable in their demands": Surprisingly, 23% of respondents agreed with the statement – surprising because we may have expected this figure to be higher. The answer is in answers to the open-ended question: 'While clients may be unreasonable in their demands, it is up to the right WRSX department to negotiate with them and make sure that their demands are not seen to be unreasonable. It is about the management of expectations – for clients and for employees'.

"I feel that my ideas and suggestions are listened to by the agency": Only 44% of respondents agreed with the statement.

"My remuneration and benefits package is in line with, or better than, what I would find in other agencies doing a similar role": 71% of respondents agreed with the statement.

"My remuneration and benefits package reflects the level of effort I put into my work": 75% of respondents agreed with the statement.

"There are opportunities for me to progress within the Agency should I wish to do so": 71% of respondents agreed with the statement.

"I have been provided with training which will allow me to progress in the Agency": 65% of respondents agreed with the statement.

"The standards of Health & Safety within the Agency are high": 82% of respondents agreed with the statement.

"The Agency invests in my professional or technical training": There are differences between units and functions, with some being higher and others lower. On average, 54% of respondents agreed with the statement.

"Senior managers know what I do and I feel valued by the senior team for my business unit": 51% of respondents agreed with the statement.

"On a day-to-day basis senior managers know what is going on in the Agency": 41% of respondents agreed with the statement.

"When we have successes we all celebrate and share the rewards": 35% of respondents agreed with the statement.

"When we have successes this is communicated throughout the Agency": 45% of respondents agreed with the statement.

"Our recruitment processes attract high-calibre people": On average, 78% of respondents agreed with the statement. Management scored 67% with the trades-management people scoring 75%.

"New people are welcomed into the Agency and properly trained to do their job": 51% of respondents agreed with the statement.

"We value diversity in the Agency in terms of Race, Sex, Sexual Orientation, Culture, Age and Experience": 83% of respondents agreed with the statement.

"Our senior management team lead from the front and are the primary motivators in the agency": 23% of respondents agreed with the statement.

"I see myself having a long-term career with the Agency": On average, 52% of respondents agreed with the statement. There are however, differences between age bands. 65% of 18-24 years olds agreed, with 41% of 35-44 years olds agreeing.

"I have not thought about my long-term career but am happy in my current role": 49% of respondents agreed with the statement. As with the question above, there are differences between the age bands.

"I believe that I will need to look outside the Agency for my future career": While the survey was anonymous, this is an emotionally difficult question for employees to answer. 21% of respondents agreed with the statement. Amongst certain groups the figure was as high as 43%. Because of the difficulty of the question, the real figure may be higher.

Prepared by: Robert X. Preston | First Person Research Inc.

Agenda Item Decision Options:

Action Option A: The first option put to the Board is to undertake a radical review of the management structure of the New York office, reducing the number of management layers and moving authority down the organisation in line with the rest of the Group. This will mean interviewing and consulting with staff and managers, re-drawing of job descriptions and objectives in line with similar roles in other offices. The budget for this restructure would be £350,000.

Action Option B: The second option builds on the first. So, as well as undertaking a radical review of the management structure of the New York office, reducing the number of management layers and moving authority down the organisation in line with the rest of the Group, the Board votes for further action. Radical change will only be brought about by moving key personnel from other offices into the New York office at a senior level. This is what Francoise Mellier calls 'Leadership by example'. This will also mean moving some of the New York team to other offices or giving them an option to take early retirement or redundancy. The budget for taking this action would be £800,000.

Action Option C: The third option again builds on options A and B. All of the suggestions in A and B would be put into effect but there would be even more radical change. The plan would be to move out of the current building into a new, ultra-modern building similar to the London and Paris offices. But, this would mean moving from Madison Avenue seen as the heartland of advertising in the United States. Only the top five managers would have their own offices. Everyone else would work in open-plan offices in teams based on sector/service offering. There would be meeting rooms booked on a first-come-first-served basis and hot-desking for visiting staff from other offices. There would be one staff restaurant and no Executive Toilets. Out would go the antiques and in would come modern art and modern furniture. The budget for this action would be £2.5m.

Action Option D: The disruption of trying to bring about this kind of radical cultural change could be very detrimental to the business. The easy option will be to wait until some of the key players at the New York office retire and then instigate changes. Do nothing for now.

Board Meeting One Board Agenda item: Six

From: Jay Bravura, Silverfish – New Media, London Office To: Board Directors

Consultants’ report on opportunities in digital media

Three months ago WRSX called in a well-known firm of management consultants, McIver and Co to advise us on how WRSX should position itself in digital communications in order to gain competitive advantage in this increasingly important advertising market. An increasing percentage of WRSX clients’ budgets are being spent in the digital space. By this I mean: website development, on- line advertising, e-commerce, social networks and blogs, interactive content, email marketing and mobile marketing. Already many of us can quote instances where we have seen consumer media budgets shrinking – and the money going on digital advertising. My view is that we need an effective presence in this space – and quickly. The McIver & Co research shows how spend in the digital space has increased year-on-year by an estimated 15%.

The report highlights that we have no cohesive group-wide strategy in this market. I believe that the management consultants have got this right. We do have a competitive advantage but at the moment it sits squarely in my London team. We need the investment in order to make this a group-wide advantage. We have the opportunity to convince our clients that we understand digital media and the new technologies better than our competitors – and specifically how to apply our industry sector/product category knowledge to digital media and creativity. We have the ability to provide our clients with consultancy and technology expertise on how to use digital media to drive up brand recognition and sales of their products and services. But we are not offering this to our clients across the group and they are taking this part of their business to competitors. All we need is the investment to scale up the operation.

My suggestion is that review the main points in the McIver report and the Board votes for a major investment in the expansion of the Silverfish brand in order to position us clearly to take advantage of this opportunity.

Extracts from a report by McIver & Co, Management Consultancy for WRSX Group

Overview of the digital media industry

On-line and mobile based advertising currently account for approximately 18% of total advertising spend but this is growing year on year. Last year the industry experienced a frenzy of acquisitions and investments as companies jockeyed for leadership positions and competitive advantage. Internet-based marketing is the major trend for the moment but mobile advertising and digital TV are an increasing major focus for investment as technologies converge. Digital technology offers advertising agency clients advertising that is:

Results-based and measurable Targeted effectively at consumer segments and individual buying habits Rich, varied and interactive

On-line advertising formats can involve search, games, online directory listings and other permission-based models. Video-based services on broadband and interactive digital TV networks are also becoming a whole new area for advertising opportunities. Social networks have also gained much attention in recent years, but currently questions are beginning to be asked about the true potential of advertising over this medium. Personalised media and one-to-one communication will be the predominant mode in digital media. In addition to the marketers, major players in the mobile and Internet fields are also taking great interest in these developments.

While the Internet companies (e.g. Google) have clearly been the leaders to date, media companies are now making great progress. New advertising models, permission-based marketing and premium sales activities are being used to attract people to events and services. New video applications are also emerging as internet media companies seek to exploit the added speed and capacity of broadband infrastructure.

While it comes as no surprise that revenue at digital specialty agencies rocketed last year (up 26.8% in the U.S.), it's clear that digital services have become a way of life (or a way to avoid death) for agencies of all disciplines. In fact, U.S. ad agencies reported an average 20% of revenue from digital in the last financial year. Approximately 34% of the total digital spend is with the top four agencies (WPP, Omnicom, Interpublic and Publicis) but more than 65% is with smaller agencies and non-traditional digital advertising providers. Digital has reshaped direct marketing and that has turned top-tier direct shops into some of the biggest digital agencies.

A reflection of the growing digital advertising market has been the growth in internet advertising across Europe, which is taking an increasing share of total advertising spend. Four of the major Internet media companies in the US capture over 60% of US online advertising revenues.

To date, traditional ad agencies have been accustomed to mass media advertising, with its one-way flow of communication. Digital adverting however will be led by consumers; they will more or less have full control of the information that they wish to receive and the format will look nothing like traditional advertising. It will be highly personal and highly interactive. Mass advertising will not disappear. There are still good reasons for it to continue, but over time its role will be eroded. The trend will be the democratisation of advertising, necessitated by changing consumer behaviour in favour of the digital media.

WRSX Strategy

Successful in the digital advertising market comes from three major capabilities: workforce talent, applied business analytics and resourcing of business development.

WRSX needs to focus on attracting and retaining people who have the core skills for this market. The right culture is also an essential

ingredient for success which means full integration into the WRSX Group may not be advisable. Investment in IT systems for business analytics to target highly specific consumer segments and provide feedback on results of campaigns. Future business development will rely on investment in more sophisticated customer segmentation capabilities, moving towards performance-based models and an awareness of which capabilities agencies should develop internally, which they should acquire through strategic acquisitions and which they should buy-in from other providers.

Report Conclusion

WRSX has not addressed the issue of a clear strategy for its digital business. It has not made a Board-level decision to really be in the digital media industry and consequently has not invested sufficiently to become a market leader. WRSX must decide whether it can compete directly with top digital agencies, and if so how it will do this, or whether it should take a low-investment/low risk view of this market opportunity.

Agenda Item Decision Options:

Action Option A: There are many players in the digital market. WRSX’s Silverfish digital agency needs to be distinctive in order to charge a premium price for the digital consultancy services it offers to its clients. Silverfish’s CEO (Chief Executive Officer) Jay Bravura is very aggressive and ambitious. Jay is a go-getter with a fantastic creative team behind him as well as technology expertise. Equally importantly, in terms of adding value to clients, Jay and his team have built up extensive knowledge of how digital marketing is most effectively used in the context of WRSX’s target industry sectors, i.e. automotive, health, telecoms etc. The Consultants recommend a Group investment of £3m to develop a global digital brand within three years. This means investing in people, IT systems and business analytics. WRSX needs to position itself as a significant player in digital media across a broad spectrum including social networking, blogs, tweets, email marketing, search engine marketing etc. Not only will this enable WRSX to service its clients locally in terms of digital media it will also spread the knowledge, currently embodied in a small team, throughout the group. The proposal is to make a deal with the management team of the London WRSX agency Silverfish and roll them out internationally. There is also the option of another digital agency in London that may come up for sale later this year and the Board should look at buying this when it comes on the market in order to build market share.

Action Option B: This is a high risk market. Who knows if there is real money to be made here? Major agencies have the resources to invest in digital. WRSX has limited resources. WRSX’s digital media value proposition should be to buy digital media for its clients at low cost by driving economies of scale through effective media purchasing with a small number of digital providers. So for example, WRSX will offer low-cost search engine marketing by negotiating competitive prices with Google and Yahoo. All other digital media services, including consultancy should be outsourced to specialist digital agencies. WRSX should not seek to develop its digital expertise or promote its digital brand.

Action Option C: WRSX should not invest heavily in developing digital marketing expertise across all of its geographic regions at present. What WRSX can do is to exploit the excellent reputation of Jay and his team and they should become the WRSX “Centre of Excellence” for digital media/marketing. The very nature of digital is that it does not require a local presence. Jay and his team should be “parachuted in” to work with clients across the globe when their expertise is required. In order to make this effective their remuneration packages will need to reflect their special role within WRSX.

Action Option D: WRSX should not consider expanding its activities in the digital market. It is too competitive and it is not able to compete in terms of economies of scale against major players. WRSX should concentrate its resources on building its traditional advertising agency and other businesses and leave the digital space to others.