Bell Pottinger. Two words that will feature heavily in business school case studies in the years to come.
Advisory firms shouldn’t wait for the denouement of this sorry tale before reflecting. Stick those two words on the wall now, with the simple phrase below it: Reputation is everything.
A PR firm accused of inciting racial hatred in South Africa may seem very far removed from domestic real estate. But it’s not.
Investec, Unite Students, Carillion and NewRiver REIT are among the clients to have walked so far. Part-owner Chime Communications has written off its 27% stake.
And founder Lord Bell says the firm will “almost certainly” fail to recover. If so, a £20m business will have failed almost overnight.
So what lessons should be learned? Even if, as the firm has suggested, this was the work of a small team and did not reflect the values of the business it shows two things.
One, how the actions of small number of employees can have devastating consequences. And two, the importance of strong governance to ward against such actions.
But trade body the Public Relations and Communications Association went further, holding the business accountable. It imposed its harshest sanction – exclusion from membership for five years – on the entire business.
The parallels with real estate come thick and fast, especially on the advisory side of this sector.
Both PR and property often offer rewards on an eat-what-you-kill basis. That makes sense to a point. Where it can fall down is that it offers no incentive to turn down a client, even if that is in a business’s best interests.
Employees of at least one company with a foothold in this sector received an email from their chief executive this week urging them to ask questions about whether taking on certain clients is the right thing to do.
Without prejudging the answer, it’s certainly the right question to ask.
Bell Pottinger’s reputation has shattered – avoidably, easily and perhaps deservedly.
It should be a salutary lesson for all – especially in this industry where reputation is everything and, by the man and woman on the street, routinely questioned.
■ Derwent’s White Collar Factory launched this week and impressed on all levels – from the basement space, where Chiltern Firehouse chef Nuno Mendes is expected to take up residence, to the rooftop athletic facility which turned the most heads at the launch party. The space prompted one senior member of the design team to say: “You deliver a 300 sq ft fully let building, and all they want to talk about is the running track.”
But with the scheme already Derwent’s most successful development, his tongue was firmly in his cheek.
Up next for the developer and architect AHMM is 1 Soho Place, W1, which also has a talking point at its heart.
Work will start next spring. All being well, come delivery in late 2020/early 2021, the team might be prompted to say: “You deliver a successful 285,000 sq ft mixed-use scheme on the corner of Oxford Street and Charing Cross Road – and all they want to talk about is the new five-storey 350-seat theatre.”
To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette
