Hill and Knowlton

A company without a moral rudder’

Hill and Knowlton has been labelled by one ex-employee as “a company without a moral rudder”.

Background

As the first multinational PR company and for a long time the largest in the world, Hill and Knowlton has created and refined many of the key techniques and strategies of public relations. H&K has over the years developed extremely close relations with many branches of government in the USA and around the world.

H&K fell from the world number one spot in the early nineties when it became embroiled in a series of scandals and internal conflicts. In recent years, under the leadership of CEO, Howard Paster, it has shown strong growth and has re-emerged as one of the industry leaders.

Market Share/Importance

H&K’s 2000 revenues totalled $306m, with $177m earned in the USA, giving it the third highest revenues for 2000 behind Fleishman-Hillard, and Weber-Shandwick Worldwide

Whilst it maintains long-term relationships with many major corporate clients, H&K is also one of the first choices for companies in need of crisis management.

History

After an 18-year career as a reporter, editor, and financial columnist, John W. Hill founded his public relations company in 1927 in Cleveland, Ohio. His early clients were banks, steel manufacturers, and other industrial companies in the Midwest. Hill, managed the firm until 1962, and remained active in it until shortly before his death in New York City in 1977.

During the Depression, Hill entered into a partnership with Donald Knowlton, previously the PR director of a client’s bank. The firm’s headquarters moved to New York in 1934, to be closer to its client the American Iron and Steel Institute, while Knowlton stayed in Ohio and operated Hill and Knowlton of Cleveland.

Despite the Depression, Hill and Knowlton grew rapidly and the firm’s business continued to expand through the 1940s attracting major corporate clients including leaders in the steel, aircraft manufacturing, petroleum and shipbuilding industries.

Hill and Knowlton was the first American public relations consultancy to establish itself in the newly formed European Economic Community. In 1952 Hill and Knowlton began to assemble a network of affiliates across Europe and by the middle of the decade had become the first American public relations firm to have wholly-owned offices in Europe. John Hill had realised that the growing multinationalism in many business sectors opened up a market for a multinational company.

H&K was the original multinational PR company, an audacious business move closely followed by Burson-Marsteller, and it brought huge new revenues. Throughout the 1980s and early 90s the two companies played leapfrog for the world number one spot.

The second major innovation in PR practice pioneered by H&K was to offer both PR and lobbying services. By the early 1960s lobbying had developed a very seedy reputation and John Hill had a very low opinion of the practice. This was to change however, with his appointment of President Eisenhower’s former Press Secretary, Robert Keith Gray, to the Washington DC office, in 1961. During the 1950s the DC office had only three staff. Gray, a man of tremendous political experience and ambition, persuaded Hill to let him conduct lobbying operations, and soon began to pull in a great deal of new work [see below], and by the mid-70s the hugely profitable Washington office employed 30 people.

This was the first ever fusion of lobbying and PR services, a move that other major PR companies have since followed, and one that has arguably changed the nature of politics in the USA and the rest of the world. Joseph Goulden commented in The Washingtonian in 1974, “Nothing quite like Hill and Knowlton exists anywhere else in the city’s lawyer-government-lobbyist establishments. What H&K sells… is manipulation of the governmental process – in Congress, the regulatory agencies, the executive departments”

In July 1980, J Walter Thompson, the advertising agency, bought H&K. In 1987, the communications conglomerate WPP Group in turn, acquired JWT.

H&K’s acquisition by the WPP Group brought many changes to its existing culture. John Hill had a reputation for sticking to his (highly conservative and business friendly) principles and refusing jobs of which he did not approve. However, as part of the debt-laden WPP Group and under the leadership of new CEO Robert Dilenschneider, profitability became the paramount concern. A string of controversial accounts such as that for the National Conference of Bishops and the Church of Scientology [see below] caused considerable internal dispute within H&K leading to resignations and a tarnishing of its image. As a result of these troubles, H&K began to lose business and revenue in the early nineties, particularly in the USA. Under new management structures it has now largely recovered from these difficulties.

As a member of the WPP group [www.wpp.com], Hill and Knowlton now participates within “a comprehensive and, when appropriate, integrated range of advertising and marketing services to national, multinational and global clients.” Which is to say that H&K’s expertise in lobbying and PR can now be coordinated with that of other leading PR companies such as Cohn & Wolfe or their old rivals Burson-Marsteller, and with marketing, advertising and business consultancy companies.

Up in Smoke

The tobacco industry has waged a fifty year campaign to hide the health effects of smoking. In 2005, the US Department of Justice’s legal case, asking for a staggering $280 billion in damages, finally reached court. They argued that the tobacco industry carried out a fifty year campaign of deception. At its heart was Hill and Knolwton. An Executive Summary of Preliminary Findings noted: At the end of 1953, the chief executives of the five major cigarette manufacturers in the United States at the time – Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard, and American – met at the Plaza Hotel in New York City with representatives of the public relations firm Hill & Knowlton and agreed to jointly conduct a long term public relations campaign to counter the growing evidence linking smoking as a cause of serious diseases. The meeting spawned an association-in-fact enterprise to execute a fraudulent scheme in furtherance of their overriding common objective – to preserve and enhance the tobacco industry’s profits by maximizing the numbers of smokers and number of cigarettes smoked and to avoid adverse liability judgements. The fraudulent scheme would continue for the next five decades.

One of the tactics was to create a controversy over health where there was not one. For example one Hill and Knowlton memo from the sixties says: “The most important type of story is that which casts doubt in the cause and effect theory of disease and smoking”. Eye-grabbing headlines were needed and “should strongly call out the point – Controversy! Contradiction! Other Factors! Unknowns!”

The PR industry and Hill and Knowlton have tried to keep the controversy open ever since.

Working for Oil Giants, the Nuclear Industry and Torturers

The firm helped in the aftermath of the Exxon Valdez oil spill in Alaska and the Three Mile Island nuclear accident.

It has worked for Governments with appalling human rights records, including Egypt, Haiti, Indonesia, Morocco, Turkey – and China after the Tiananmen square massacre. It has also worked for Saudi Aramco, the state run oil company in Saudi Arabia.

The UK office has worked with the Government of Maldives on promoting the country as a tourist destination, whilst Amnesty International has issued a string of warnings and reports about this and the government’s repression of the political opposition.

Paving the Way to War

Hill and Knowlton played a leading role in the run-up to the first Gulf War. In August 1990, Iraqi troops invaded Kuwait. Fourteen years ago the American public were reluctant to send troops. Selling the war was not going to be easy.

As many as 20 PR firms were used to mobilize US opinion in favour of the war. Hill & Knowlton, then the world’s largest PR firm, served as the mastermind for the Kuwaiti campaign. The Kuwaiti government agreed a $12 million contract under which Hill & Knowlton would represent “Citizens for a Free Kuwait,” a classic PR front group which hid the role of the Kuwaiti government and its collusion with the Bush administration.

One PR commentator noted about Hill & Knowlton’s unprecedented campaign that: “H&K has employed a stunning variety of opinion-forming devices and techniques to help keep US opinion on the side of the Kuwaitis The techniques range from full-scale press conferences showing torture and other abuses by the Iraqis to the distribution of tens of thousands of ‘Free Kuwait’ T-shirts and bumper stickers at college campuses across the US.”

Hill and Knowlton also devised the defining moment that swung American public opinion in favour of war. It arranged for the daughter of the Kuwaiti Ambassador to the US to appear as an ordinary Kuwaiti girl in front of Congress. Her written testimony was passed out in a media kit prepared by Citizens for a Free Kuwait. “While I was there, I saw the Iraqi soldiers come into the hospital with guns, and go into the room where babies were in incubators. They took the babies out of the incubators, took the incubators, and left the babies on the cold floor to die.”

It was a testimony that drove the US to war. It was totally false.