St+Luke's+-+An+Advertising+Agency

 This case study is taken from Leadbeater’s __Living on Thin Air __  (1999). Whilst it describes events that took place over a decade ago, [|St. Luke’s] is still a very successful agency run on the same principles as discussed here. St. Luke’s began life as the London office of a large American advertising agency and even during that time it was committed to following strong ethical principles in its work. In the mid-1990s the American firm was sold to another business and the expectation was that St. Luke’s would become its new London office. The London managers were unhappy with this proposed new arrangement and, with the support of the staff, they went to see the new owners with the aim of purchasing St. Luke’s and going it alone. After some protracted negotiations the managers were able to purchase St. Luke’s for £1m.

The managers were committed to the idea that the ownership of the business should reflect everybody’s contribution to it. Using a statutory vehicle called a [|Qualified Employee Share Ownership Trust], they distributed 30% of the business’s shares to all employees, regardless of their position or salary. Each year more shares are distributed to staff.

St. Luke’s is run by a five person board which is elected by all of the staff. It addresses day-to-day management issues and meets once a fortnight. Any member of staff can attend these meetings as an observer. Monthly Flag meetings, which are open to all staff, review past performance and consider the business’ future strategy. There are also weekly planning meetings for individual teams always chaired by junior members of staff.

The atmosphere in the business is, according to Leadbeater, “a cross between a café and a library”. There are no individual offices and people work at large communal tables. Nobody is allowed to colonise their own little corner of the office. At the end of the day the office manager collects up all of the papers that have been left on the tables. There are rooms devoted to specific clients and the creative teams meet there to discuss these accounts. There is a large chill-out room for staff.

Employees are largely free from close supervision and as a consequence they have a lot of individual responsibility. Pay is negotiated by staff based on appraisals of their performance by their colleagues, rather than exclusively their managers.

=__Questions __=

1. St. Luke’s is a successful advertising agency. What is it about these arrangements that have contributed to its success?

2. What are the specific skills that managers in this business need to possess? Are they different from those skills managers would need to possess in a more traditional business?

3. What are the disadvantages of these arrangements? What impact might they have on the business’ capacity to provide an excellent service to its customers?

4. Are we looking at one of the 'ways of getting things done' that is appropriate for the advertising industry, but can’t be used in other industries?