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Viewpoints: 4 things the PR industry can learn from California Fitness’ demise

The demise of California Fitness in Hong Kong is a cautionary tale. I have been a California Fitness member for the past 10 years and for much of this time I was a neutral if not positive advocate of the place. The gym was convenient, reasonably priced and I had good, friendly and competent personal trainers.

I have been watching the developments of recent weeks with sadness but not surprise. As with all situations like this, they rarely happen overnight but are an accumulation of actions and decisions over a period of time.

For California Fitness, I could have predicted their demise over two years ago. Management lost sight of their customers and, through their actions, lost faith with their staff. At the gym I go to – yes, it’s still open as of today but for how much longer is anyone’s guess – staff turnover has been high. Staff complained of being asked to stay at work until midnight for no reason and weren’t being trained to focus on the right things. The service-profit chain – happy staff, happy clients and happy profit – was slowly being eroded, link by link.

For all services industries in Hong Kong, including public relations, this case reinforces the importance for management of focusing on staff and client needs in tandem. This is particularly necessary in Hong Kong where the demand for superb multi-lingual agency talent by client brands is high. It also underscores the importance of industry standards to give clients confidence they will get what they pay for and provide some means of redress if things go wrong.

In Hong Kong, a group of agencies, both international and local, established the Council of Public Relations Firms of Hong Kong (CPRFHK) some 14 years ago to ensure consistent standards across the public relations industry. CPRFHK’s introduction of an external accreditation programme for member firms has helped to improve the PR industry’s standing and it’s something the fitness industry should also consider.

In addition to external accreditation, the CPRFHK takes a temperature check of the industry through its annual benchmarking survey. This year a total of 21 member and non-member firms took part in the survey. The findings confirmed that PR in Hong Kong is a fundamentally healthy industry, making progress against structural challenges caused by the changing communications landscape, with reasons to be optimistic for the future.

Increasingly, well-run firms are adopting common commercial best practices, enabling better and more objective choices for clients. Talent remains the biggest challenge for PR agencies, particularly relating hiring and retaining staff in the emerging areas of expertise such as social and digital.

Newer challenges include maintaining profitability across a broader range of services, dealing with client structures and budgets that are not keeping pace with communications best practice, and new competitors from the digital space.

Despite these good results, PR professionals can’t afford to rest on our laurels. We should continue to provide training and work/career opportunities for young talent so they can embrace and apply new PR thinking in ways that address the real challenges brands face. And we need to help our clients structure themselves to take full advantage of the new services on offer. Here are four things every agency should consider doing to keep the service profit chain strong:

  • Talent development: Training is important for talent development but so is the right attitude. As Aristotle says: “You are what you repeatedly do. Excellence is not a singular act but a habit”. Giving junior and mid-level people the opportunity to develop good work habits will get them faster to where they can do great work consistently. It will also build the capability and reputation of the industry.
  • Client-agency reviews: Agencies should not only schedule in regular sessions for clients to provide feedback but should also ask for an opportunity to provide brands with feedback on things that could be improved on the client side. These sessions recognize that any relationship is a two-way street and agencies are often only as good as the clients they work with.
  • Good thinking takes time: PR consultants frequently have insufficient time to spend on strategy development and creative ideation. We are always fighting the clock and while we have great ideas, we often do not have the time nor the processes that allow us to stretch these ideas to their fullest and richest. This is where the advertising agencies tend to eat us for lunch. We should make sure we carve out thinking time – and get paid for it. This will help both us and our clients to realise the full potential of our ideas.
  • Measure the impact: Every meeting or planning session should start by thinking about business objectives – how can PR make a difference to the business by improving perceptions, building reputation, opening the door for sales, or changing behaviours? Measurements should be aligned to these business objectives.

So good things always come out of challenges. Let’s hope California Fitness’ demise spurs new standards for the fitness industry and a fresh drive by other service industries, including PR, to keep the service profit chain strong.

Rachel Catanach is president and senior partnerof Greater China for FleishmanHillard and board member of the Council of Public Relations Firms of Hong Kong.

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