London strikes: Coups, reviews and why WPP HQ wants 100% control of the 'Australian experiment'
The plots are literally flying on the reason for WPP’s surprise move to reacquire the circa 40% stake of WPP Australia and New Zealand that sits with investors on the Australian Stock Exchange. From secret coups to CEO reviews, the stakes are high.
Command and control
There’s a handful of plausible but still speculative options on why WPP’s London headquarters moved last week to lob a bid to take its colonial outpost entirely back inside the camp after 20 years of experimentation under ousted founder Sir Martin Sorrell and the Australians, adman John Singleton and Russell Tate. Tate was Singleton’s one-time chief at the listed ad group, STW, who kept the peace in an often fractious relationship between Singleton and Sorrell. In 2016, STW merged with WPP’s ANZ assets to become WPP AU with Singleton and Tate protégé, Mike Connaghan, at the helm.
In a parallel path to Singleton and Sorrell’s tensions, Connaghan and WPP AUNZ chairman Rob Mactier were engaged in a longstanding stand-off of sorts until Mactier eventually engineered Connaghan’s exit and a year later finally saw a replacement in the German, Jens Monsees.
One of the rowdiest theories circling the market in the past week is that it was Monsees who served as the likely trigger for WPP’s move last week to delist the Australian operation and move to 100 per cent control.
As the scenario goes, a key group of WPP AU execs, led by John Steedman, whose retirement and exit was announced abruptly last month, attempted a coup a few months back to oust Monsees by going straight to global WPP boss Mark Read on their grievances with Monsees leadership style and strategy to overhaul the local group. Monsees and the local board had no idea what was in play.
If it’s true, and multiple accounts confirm something did transpire of that nature, it was a high-stakes play to go over the heads of the CEO and board.
The plot thickens
Until WPP’s bid last week, it seemed the mutiny had failed. Steedman was gone and Monsees, who from the get-go had upset the establishment inside WPP AUNZ with a necessary overhaul, was back in business turning the group into a more technology-focused services enterprise.
Not so. Read clearly must have had conversations with Mactier subsequent to the attempted putsch in which a review of the CEO, leadership team, staff and clients by independent consultants was a likely trade-off.
That ‘360’ review has been tabled with the WPP AUNZ board, in which WPP in London has four seats, and the findings are said to be pretty damning. Some of them anyway.
Which gets us back to Monsees and the unrest inside the company, which Mi3 covered three weeks ago in this podcast interview and story with him.
In multiple conversations since the WPP London offer was lobbed last week, it seems the internal unrest has only escalated.
“He’s lost the dressing room and can’t get it back,” says one observer. Others empathetic to what Monsees is attempting to do say it’s not about the strategy, but how he’s going about it.
“What WPP globally is doing isn’t that inconsistent with what Jens is doing,” says another familiar with the internal rumblings. “He’s not that far off. It’s his leadership style. There are still people inside who don’t want any change but Jens has clearly seen the 360 review results. He’s changed his tone and adhering to some of the feedback - but people remain unhappy.”
Indeed, the past week is a good example. WPP AUNZ announced 10 days ago it was giving back staff salary sacrifices made through Covid. Leadership at the various agency groups received an email early on Monday morning November 30, and the story was in the trade press within hours. Agency leaders were faced with widespread fallout among staff because the announcement and headlines did not match what many employees quickly realised – they did not qualify for the payback. One senior insider called it a “sham” in that perhaps 3 per cent of WPP’s 3800 employees would get some hard cash. Others suggest it's around 1000 people.
There was also widespread frustration that there was no consultation with those leading the individual business units and they were left dealing with thousands of disgruntled staff without any detail. There’s an alternate scenario which says Monsees was pushing the board for approval and when he finally got it, he had to move quickly to meet the pay cycle in the first week of December to get something through before Christmas to staff.
Whatever the case, it was another instance which pitted the group’s leadership against the leader and what they feel is an autocratic approach to Monsees’ transformation program.
Which gets us right back to the trigger for WPP’s move to take 100 per cent control. The findings of the 360 leadership, staff and client review was enough for WPP to strike. The price is cheap and if Monsees is facing as much internal resistance as the feverish speculation suggests, it’s an elegant out for WPP AUNZ’s board.
Many think WPP Global’s takeover of Australia and New Zealand is a done deal although it may have to up its 55c per share offer – yesterday it was trading at 58.5c.
If the deal transpires, the local operation will simply align to the global strategy under a country manager – WPP globally has its own transformation strategy in the wings with McKinsey at the helm.
In Australia, WPP needs talent and mojo. Once a dominant force, WPP AUNZ is now off the game versus rival holding companies here and they privately are rather chipper about the current state of play. With whatever transpires, competitors figure there’s at least another year before the company even starts to regain some competitiveness.
Interestingly, Monsees is interested in staying on even if the takeover lands. In a conversation I had with him this week, he wouldn’t talk to any of the scenarios laid out here because of restrictions around WPP’s bid. But when asked if he would stay in Australia, he was unambiguous. “I love it here,” he said. A continued role at WPP AUNZ under WPP global control, however, is very unlikely to carry the $1.5m package he is on now running a listed company. That’s possibly a deal breaker but if Monsees’ intention is to stay put, no doubt he’s already thinking about other opportunities.
There are whispers of other big developments to emerge from WPP AUNZ in coming days and how the local board will respond to London’s offer remains to be seen. But whatever transpires, there’s still a truckload of grind to come if the once mighty WPP in Australia is to regain its mojo. Bring out the popcorn.
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