How the power players do it - by Fortune senior editor at large Patricia Sellers

The PR power behind HP's board of directors

August 17, 2010: 12:42 PM ET

While perplexities proliferate around Hewlett-Packard's ouster of CEO Mark Hurd, here is one answerable question in the corporate soap opera: What is APCO Worldwide?

It was PR strategists at APCO who helped the HP board decide how to handle sexual harassment charges against Hurd. Kent Jarrell, an APCO senior vice president who heads the firm's litigation communication practice, presented a mock newspaper article that illustrated the potential damage to HP's reputation if the board didn't nip the imbroglio in the bud.

Photo Credit: APCO Worldwide

"Funny, it takes a sex scandal," says APCO CEO Margery Kraus about the new curiosity about her firm. Most of the interest hasn't been in APCO per se, she notes, but rather "in the fact that no one has heard of us."

APCO may be the biggest consulting firm that no one has heard of. Kraus founded the business 26 years ago as a business development and public affairs affiliate of law firm Arnold & Porter. Today she has 500 employees serving clients such as Microsoft (MSFT), Dow Corning, and World Wrestling Entertainment (WWE) in 20 countries.

"We've never been a showy group of people," says Kraus, 64, who is renowned in her own circle. Her peers elected her 2010 chairman of the Council of PR Firms. But she has never flogged her own story. In 1991, when she wanted to expand and diversify beyond the law firm, Kraus arranged a sale of APCO to Grey Global. She built APCO to $50 million in annual revenues by 2004, when she convinced Grey Global chief Ed Meyer to let her lead a management buyout. Since then, she says, APCO has doubled its annual revenues, sans acquisitions.

Global assignments from a broad range of clients--the UPS (UPS) Foundation (APCO's oldest client), Freddie Mac, Pfizer (PFE), to name a few—helped spur the rapid expansion, as has Jarrell's litigation work. He advised Merck (MRK) on its Vioxx lawsuits, WorldCom on its bankruptcy restructuring, and Ford (F) when its Explorer SUVs with Firestone tires were blamed for crashes. A former broadcast journalist at CBS (CBS), he is a PR man with a reporter sensibility -- known for telling clients to "think like a journalist" while presenting mock stories or dummy TV reports to show how the press might treat their crisis.

Jarrell declined to talk to Fortune about HP, which has been an APCO client for at least a couple of years. Kraus wouldn't talk about HP either. Last week, when everyone was buzzing about the Mark Hurd and Jodie Fisher, the freelance marketer who accused him of sexual harassment (he settled before the board ditched him), Kraus didn't talk at all. She couldn't -- because she had laryngitis.

Straining her voice to chat with Fortune ("You're the only press I've talked to," she rasped), Kraus insisted that the stress of the HP saga didn't bring on her throat troubles. She blames her husband of 44 years, lawyer Steve Kraus, for passing on a bug. In fact, HP was not the chief drama in Kraus' summer. First her daughter-in-law was diagnosed with cancer. Then her two-year-old granddaughter almost died from encephalitis. When Kraus's stepmother died, Kraus decided to move her 90-year-old dad into her home. Meanwhile, Kraus had major foot surgery -- and finally got the cast off last week. As she says, "Stress is relative."

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About This Author
Pattie Sellers
Pattie Sellers
Senior Editor at Large, Fortune
Executive Director of MPW/Live Content, Time Inc.

Pattie Sellers has written more than 20 Fortune cover stories including "Marissa Mayer: Ready to Rumble at Yahoo," "Muhtar Kent's New Coke," "Oprah's Next Act", "The $100 Billion Woman" (Melinda Gates), and "Gone with the Wind" (Ted Turner). She co-founded Fortune Most Powerful Women and oversees the Fortune MPW Summit, the preeminent gathering of women leaders in business and beyond—and programs such as Fortune MPW Entrepreneurs and the Fortune-U.S. State Department Global Women Leaders Mentoring Partnership. Pattie also develops Live Content across Time Inc. Her blog, Postcards, is about how power players lead and navigate their careers. Pattie won Time Inc.'s prestigious MVP award for her performance in 2012.

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