STW flags further mergers and restructures to take greater control of its business
STW Group has unveiled a new management structure, and flagged a “range of business mergers”, as the embattled company aims to take greater control of its subsidiaries and instil “financial discipline” across the business.
It has formed 14-strong executive council (EXCO) with each of its divisions reporting into an EXCO member.
Chief executive Mike Connaghan will take charge of agencies, chief strategy officer Rose Herceg will have responsibility for data and digital labs while Ogilvy chief executive David Fox will oversee shopper and activation.
STW has named Phuel co-founder and MD Gavin Dunn as its new chief talent officer. The retention and development of staff was a “major battle ground”, STW said.
Other EXCO members include Added Value MD James Pike who will oversee insights and research, Hawker Britton director Justin Di Lollo who has responsibility for internal communications and government business and The Brand Agency CEO Steve Harris who will focus on production and content.
In a strategy update this morning, STW said every company within the group will report to an EXCO member in a structure that will “result in closer, deeper oversight of the companies”.
“This will allow us to better leverage our scale and result in far better synergies across the group,” it said. “Every EXCO member has deep knowledge and expertise in that companies discipline and provides guidance and thought leadership.”
STW also announced a new reward system for “all levels of the organisation”, while a “portfolio rationalisation” was flagged.
That includes the merger of Moon and Shift into the newly formed Ikon Sydney Group to create a “media led powerful new full service agency”.
Mumbrella revealed the merger of Moon and Shift last month with Connaghan saying the market “clearly indicated to us that a full-service offering is an attractive proposition considering the massive structural change in our industry and current business climate”.
STW said “four more projects are in progress with announcements imminent”.
“A range of business mergers, consolidations and divestments as part of a strategy over time creating fewer, bigger and better businesses to drive organic growth,” the company said.
The shake-up follows a turbulent period for STW which reported its first profit slide in 2014 since the global financial crisis. The company said it has always been one step ahead “but in 2014 we fell behind” while its new business win/loss ratio “was not up to our standard”, the firm added.
The poor performance saw its share price halve in barely six months, hitting just $0.53 on Friday. Shares rallied today on release of the strategy update, rising to $0.59 at 12.30pm, up more than eight per cent.
STW’s share price over six months
“We were too slow in responding to performance issues and intervening in some businesses,” the company said of its 2014 performance. “We have picked apart our strategy, we’ve benchmarked global best practice, we have consulted clients, we have checked in with our partners [and] we have sought external views.”
Connaghan said: “We are confident in our strategy. The new initiatives will allow us closer oversight, enable better optimisation of group resources and importantly help us to drive organic growth and deliver value to all shareholders. STW Group is well place for future growth”.
Steve Jones
Don’t the titles of the management team tell you where the problems are? Value Add?
I would get that 14 to 6, harder decisions need to be made i think
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@chris. Agree. 14 is too unwieldy for even a good dinner party.
A Gang of Four, or six, gets results.
Yes, toes get stepped on, egos bruised. But the work of management and direction gets done.
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No market update is complete without the ubiquitous “leverage our synergies” line.
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Maybe they should acquire AJF
Heard theyre close to selling
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Talk about an update about nothing. I was expecting write downs.. Instead it was a task force. Those always work well…
To the commentator above, acquisitions are off the cards according to yesterday’s briefing. Divesting under performing businesses is the new focus.
Now, what to divest?
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I’d divest Chris Savage’s plastering business for one.
http://www.chrissavage.com.au/
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