Episode 430

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There’s no other way to spin it — agency owners had it rough in 2023. And while we spent all year going over the struggles of agency ownership, one universal positive kept coming up with everyone.

Your teams are better than ever, and you want to learn how to keep your agency employees happy, so they stick around.

So this week, we’re turning to some of our Agency Edge research to dive into what agency employees said are the key factors that keep them happy and willing to stick around for the long haul.

While the assumption is that you’re already fairly compensating them and creating a fair and inclusive workplace, there are some less obvious things that really matter to agency employees. They could even be the difference between a star player staying for 10 to 15 years instead of three or four.

This episode will teach you the dos and don’ts of increasing employee retention and really going above and beyond to help your teams feel valued and cared for. It’s got a lot of valuable tips and tricks, so if you’re curious about how to keep your agency employees satisfied, don’t miss out on this episode.

For 30+ years, Drew McLellan has been in the advertising industry. He started his career at Y&R, worked in boutique-sized agencies, and then started his own (which he still owns and runs) agency in 1995. Additionally, Drew owns and leads the Agency Management Institute, which advises hundreds of small to mid-sized agencies on how to grow their agency and its profitability through agency owner peer groups, consulting, coaching, workshops and more.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev, or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here.

agency employees

In This Episode:

  • Recognizing that not every agency employee will want to stick around forever, and it’s not personal
  • The one thing you should not do to earn employee loyalty
  • Why offering equity or partnership in the company is almost always a bad idea
  • What agency employees actually want from agency owners
  • Setting quarterly growth goals for employees
  • Creating space to truly get to know your people beyond work
  • Rewarding employees for their effort fairly, but not equally
  • Getting agency employees involved in deciding their own perks for excellent work
  • Simply ask your employees what will make them stay
  • Get personal and thoughtful with your praise

“You must recognize a certain percentage, probably about 50 or 60% of your employees, who won’t stay with you for 10 or 15 years. But a core of people will stay with you for a very long time.” @DrewMcLellan Share on X
“If the goal is to keep your employees, giving them equity doesn't work. So don't give away your company. Don't give away something you've worked so hard to build and create value in.” @DrewMcLellan Share on X
“You must create space and time to get to know your people. They need us to understand what's going on in their world and everything they're bringing into our workspace daily.” @DrewMcLellan Share on X
“Let people show you how they want to show up and how much of their effort they want to give you, and respond accordingly.” @DrewMcLellan Share on X
“Just by having the conversation of telling them how much you value them alone will gain you a lot of loyalty and stickiness.” @DrewMcLellan Share on X

Ways to contact Drew:


Hey, before we get to the show, I just wanna remind you that we have created a private Facebook group just for you, our podcast listeners. There are almost 1500 agencies, agency owners inside that Facebook group every day talking about what’s going on inside their shop, asking for resources, gut checking decisions, talking about everything from pricing to hiring, to biz dev. All kinds of things are happening there. We’re starting conversations. You guys are starting conversations. What I love about it is the community’s coming together and sharing resources, encouraging each other, and just sort of having a safe place to talk about what it’s like to own an agency. So all you have to do is head over to Facebook, search for a Build, a Better, Agency Podcast group, or Build, a Better, Agency Podcast.

And you’ll find the group. You have to answer three questions. If you don’t answer the questions, we can’t let you in. But they’re simple. It’s, do you own an agency or do you work at an agency? And if so, what’s the URL? What are you trying to get out of the group? And will you behave basically? So come join us. If you haven’t been there for a while, come on back. If you haven’t joined, join into the conversation. I think you’re gonna find it really helpful. All right, let’s get to the show.

It doesn’t matter what kind of agency you run, traditional digital media buying, web dev, PRR brand, whatever your focus, you still need to run a profitable business. The Build, a Better, Agency Podcast, presented by a White Label IQ will expose you to the best practices that drive growth, client and employee retention and profitability, bringing his 25 plus years of experience as both an agency owner and agency consultant. Please welcome your host, Drew McLellan.

Hey everybody. Drew McLellan here with another episode of Bill, a Better agency. Welcome back if you’re a regular listener, and thanks for joining us. If this is your first time, this is one of my solo casts, so no guests this week, just you and me hanging out talking about something that odds are, I’ve been talking to you a lot about over the last month or so to the point that I think, oh, I should probably talk to everybody about this. So that’s, that’s the plan for today. Before I tell you what we’re gonna chat about, every time we do a solo cast, we of course give away one seat to one of our live workshops. So here’s how it works. You go to any place where you download this podcast and you leave us a rating and review.

So that might be for some of you, it might be Google, for some of you, it might be iHeartRadio, might be Apple Podcast, whatever it is. But just go ahead and leave us a rating and review. Take a screenshot of that and send it to me. So you’re going to email it to me at Drew at agency management Institute dot com. And the reason why I need you to do that is because in Mo, on most of those sites, you use a username and I can’t match your username, even if it’s cats, our best dogs, our worst 22, I have no idea who that is. So send me the review with your actual name and your agency name, and we will put your name in a drawing.

Your name stays in there until you win. So you know, our universe isn’t that big. So sooner or later you’re gonna win a workshop. And those workshops go for about two grand a piece. So all you have to do is get yourself to Denver and the rest of it’s taken care of. You just have to put yourself up in a hotel. And the workshop is on us So. This week’s winner is Jim Bianchi. Jim owns a PR shop out in Troy, Michigan. So Jim, I’m gonna be reaching out to you, congratulations. But I will shoot you an email and let you know in case that you miss this announcement on the podcast. So we look forward to seeing you soon at a workshop here in Denver.

Okay, so here’s what I wanna talk to you about today. So if you’re listening to this real time, it’s actually the week of January 1st, 2024. And man, many of you are very happy to see 2023 in the rear view mirror. And I get it, but despite all of the challenges of 23, oh, by the way, if you’re watching the video version of this, rather than just listening to the audio, excuse the hot mess that is behind me, normally I try and keep my office pretty tidy, but somehow my office has become Santa Central. And so there’s a lot of packages and gift wrap and stuff behind me, and it’s just too much to get outta here today.

So just enjoy the holiday. Merry min. If you’re listening by audio, then no problem. Anyway, 2023 was a challenging year for a lot of you. Biz dev was challenging. Economics of the year were problematic, but for many of you, there was an upside. And the biggest upside that we heard about over and over and over again is that you really felt like you have the best team that you’ve ever had, that you have gone through all the covid crazy hires and sort of cycled through the ones that weren’t a good fit and have kept the ones that were a, a great fit for your team and for your clients.

And now what you’re worried about and what you’re wondering about is how in the world do I keep these people? So that’s what I wanna talk about. In, This Episode is what, what gets an employee to stick around? How do we make employees sticky? How do we make ourselves sticky for our team? This has always been a challenge, but I think it’s particularly a challenge after Covid with all the changes in workforce and all the changes in how we work, where we work, the fact that our employees now can pretty much work for anybody no matter where that business is. So this, this worry, which you’ve probably always had, has become more exasperated post covid.

So how do we keep those folks? First of all, here’s what I’m gonna tell you. There’s no guarantees you can do everything. I’m gonna tell you every single thing. And the reality is that not everybody is gonna stay with you. You have to recognize that there’s a certain percentage, and for most of you, it’s probably about 50 or 60% of your employees who aren’t gonna stay with you for 10 or 15 years. But there is a core of people who will stay with you for a very long time. I know, you know, when I look at the businesses that Danielle and I used to own and still own, we both have 20 year employees.

And I think there’s, I think there’s a methodology around that. I think there’s an a way to give yourself a better shot at people wanting to stick around and be part of something for a long time. But I, I wanna start this episode with You Can do it all right? And sometimes people just need to go, and I think part of what we have to recognize when they leave us is they’re not doing it to us. They are doing it for them. And us having that attitude of Recognizing, that this is really not about us, that it’s really about their family or an opportunity for to make more money or to move or to move up in an organization or to take on a new role or a new challenge.

Sometimes there’s just nothing we can do to compete against that, and we have to just sort of wrap our head around that and accept it. But there are some things we can do that create a work environment where people want to be a part of it and they want to stay. So I’m gonna start with the thing you should not do, okay? And then I will tell you a bunch of things that you can try and you should do that we know through both empirical data and anecdotal data work, so many of you reach out to me and say, Hey, I want to give one of my key employees equity in the company to get them to stay.

And I will tell you that this is a horrible, horrible idea. So imagine if I said to you, Hey, I have a beautifully wrapped gift. Would you like it? Now, I’m not gonna tell you what it is, but it looks really pretty and it sounds great. Of course you’d say, absolutely, I want to have it. But if I said to you, Hey, I wanna give you a gift and it is gonna cost you some money, and it’s a poisonous steak, now they’re great pets and all you have to do is feed them live rabbits once a week.

But you know what? They live forever. They’re really interesting. They’re a great conversation piece. Most of you would go, no, I do not wanna buy your poisonous snake. That’s sort of what it’s like to say to someone, Hey, I wanna give you equity. I wanna make you a partner in my business. So first of all, everybody’s gonna take it when you offer it for free. But the truth of the matter is they don’t understand what you’re actually offering them. They don’t really get that there are consequences and there are trade-offs to being a business owner.

And honestly, when you say to most of them, probably 95% of them, Hey, I wanna sell you even at a discount, a portion of my business. Most of them will say thank you. But no. So offering someone equity, I I, I cannot tell you how many times unfortunately, an agency owner has disregarded this advice, has given one or multiple people, two, one, 1%, 2%, 5% of their business. And in the beginning, the employee is super excited about it. But you know what? At the end of the day, couple things happen every time a couple things happen, number one, the employee still leaves, and now you have to buy the equity that you gave them back from them at fair market value.

So they’re leaving to go to one of your competitors or somewhere else, and you have to pay them for the gift that you gave them for free. Or because in your haste, you gave them shares without really walking them through what it means to be an owner. The obligations of ownership, the risks of ownership, what you discover is they’re actually not good partners and they’re not someone you wanna share your business with. And again, now, now we have a messy breakup situation on our hands, and you still have to buy the shares that you gave them for free. so if you think that equity is going to keep someone in your shop, first of all, I’m gonna tell you you’re wrong.

Unless, unless they own 20 or 25%, that’s, that’s enough that they really do feel like they’re owners and they feel the benefits of ownership like distributions or dividends and things like that. But the reality is, being a minority partner in a privately held business isn’t all that great shakes, their vote doesn’t really count. Even if you treat them like an equal partner, the at the end of the day, you, your votes trump their votes. So they don’t actually have a lot of partnerships say in how the businesses run. The dividends they get aren’t that big. And if they are gonna buy more of the agency someday, they’re just going to have to use those dividends to buy future shares.

So it just isn’t as attractive. It sounds super attractive when you say it to them in the abstract, I want to give you equity, I wanna make you a partner. But the reality of it isn’t as sexy or awesome as we think it is, or as they hope it is. And so I can think of one example in all the times I’ve seen this happen where the, where the person actually stayed and a decade or so later actually did buy the founding partners out. But that’s it. One time that that strategy worked. And the rest of the time, I, I cannot, I can’t count how many phone calls or texts I’ve gotten from angry, frustrated, disappointed agency owners who gave away parts of their business and then had that partner turn around and leave, and then on top of that had the really unfortunate situation of having to buy back the gift that they gave them.

so if you think that ownership is gonna be sticky, I’m here to tell you it’s not. The only way it is sticky is if they actually buy the shares. And even that, even that when they give you money for the shares with a vision of a future where they’re gonna buy more shares, even that isn’t a guarantee. We just had a situation where an agency owner had sold a small percentage of the business to a long-term employee, and the intention was very clear about this person buying the agency found her out, and she still left.

She still found a better opportunity. She found she didn’t really have the appetite for buying more shares. And so she sort of felt stuck like, I’m not gonna buy more shares and I’m being offered a better gig over here. So you know what? Even though I’m an owner of 3% or 5%, I’m gonna go somewhere else. So just know that that’s not, that’s not the way to do this. I’ll do a solo cast somewhere down the line in 24 about sort of how to approach the conversation. If you really do wanna sell part of your business to an employee, that’s a whole different conversation that we don’t have time for today.

But I’m just here to tell you, if the goal is to be sticky, if the goal is to keep your employees giving them equity doesn’t work. So don’t give away your company. Don’t give away something you’ve worked so hard to build and create value in. There are other ways to make yourself a sticky shop where people wanna stay. So we’ve done, the agency Edge research program is about 10 years old now. So 10 year for 10 years, we’ve gone out and done primary research. And in most cases, as you know, we talk to people who hire agencies and we ask questions like in 23, the question we asked was, how, when and why do you give your current agency more budget?

Because we knew everybody was struggling with biz dev. And so we wanted to figure out how to get more share of wallet from our existing clients. But twice in the 10 years, we have kind of turned the telescope, if you will, and we have talked to agency employees. One was before covid and one was after Covid. And what we were asking them about was how they felt about working in an agency, what made them feel valued, what would make them turn down a job offer from someone else to stay at your shop? Those kind of things. So here’s what we learned, and I will tell you that all of the things we’re gonna talk about today are even more valued and important post covid than they were pre covid.

These were still sort of the highest ranking of, here’s what makes me wanna stay at an agency, but even more so post covid. So the number one answer across the board, both research studies and in just our anecdotal conversations with our key exec groups, our COO groups, all of your leaders, is I want to keep growing and learning, help me find opportunities and take advantage of opportunities where I can keep getting better. Our best employees aren’t content to be static, to not grow. They want to keep grooming themselves growing.

And it’s not just about so they can get a bonus or a raise or a promotion, although that’s part of it. It’s really because they’re just driven to learn and they’re driven to get better. And thank goodness, because in our business the last, the worst thing for us to have is an employee who thinks they know everything and doesn’t wanna keep learning. So they’re looking to us to create opportunities for them to grow and learn. And you know what? Professional development is a shared responsibility, I believe. And so some of that’s gonna be on your time and your dime agency owner, and some of it should be on their time and their dime. And that’s how you’ll know when they are somebody that they’re, it’s really worth investing in when they’re also learning on their own.

They’re listening to podcasts, they’re reading books, they’re taking online courses, whatever that may be, but they’re driven to learn whether you bring up the opportunity or not. Now, a lot of our employees don’t know how or where to even go to look for opportunities to learn. So you may have to serve up some of them, but that was the number one thing is, is help me create a a growth path. So if you’ve been a long time listener or you’ve been around a MI for a while, you know that we are big fans of one-on-one meetings. And in episode 15, way back in the day, I did an episode talking about one-on-one meetings. And I gave you a form to fill out.

And what I love about the form that we created is the very first question on that form is, what’s my quarterly growth goal? And this form is a form that your employee fills out you don’t fill out. But I’m not gonna get into the whole one-on-one thing. ’cause you can go back and listen to that episode, but, but every employee should have a quarterly growth goal. Here’s something I’m gonna learn or get better at this quarter. And you or their supervisor should know what it is and should be working with them, actively working with them to figure out what resources they need, how much time do they need, how can we support you in getting better. So that’s the biggest thing you can do to make your employee feel like there’s opportunity for them.

Many of you are small shops, and so if you don’t create a quarterly growth goal and you don’t identify ways for your team members to grow, they look at your org chart and think, I’m stuck here. I’m stuck in this position. There’s somebody above me who’s not that much older than me and they’re not going anywhere. And so how in the world do I advance my career? How in the world do I advance professionally? So not only do you need to make sure that they continue to grow, but you need to carve out a career path for them. You need to help them see what the future looks like. And we’ve had agencies that have done a really great job of building out sort of this stair stepped for every department, okay, today you’re a junior woodchuck and if you want to be a woodchuck, then here are the soft and hard skills you have to be good at to earn the role of woodchuck.

Now, once you become a woodchuck, here are the soft and hard skills you need to learn to be a senior woodchuck and so on. So building that path out for them and for everybody on your team and helping them understand that even in a small shop, there’s opportunity for promotion, for raises, for professional development, for growth. Those two things combined. When a, when an employee sees that you have a vision for them and that you have a plan, and, and in all fairness, they have to work the plan, they have to get better at some things. They have to learn some skills, they have to learn some abilities that they don’t have right now. They may have to learn some, they may have to practice on some clients or coworkers, but they gotta get better at some things to go from junior woodchuck to woodchuck or from a woodchuck supervisor to director of woodchuck’s or whatever, whatever the progression is for them, wherever they are in your org, in your org chart.

But those two things combined make an employee feel like they can stay with you for a long time and there’s opportunity for growth. So those two, super important. The next one is, and this became really, really apparent in the post covid study, and we hear it all the time. One of the way, one of the reasons why an employee would not leave you is because they feel seen. And you know what, that’s challenging. And when they say that they want to be seen, it’s not just that they wanna be recognized for their work, of course they wanna be recognized for their work, they want to, they want attaboy and attagirls.

They want praise, they want recognition. They want you to know what they’re doing and that they’re working really hard and that you appreciate it. But when I say they want to be seen, what I mean is as a whole human being, they want you to see them. They want you to understand what they’re going through. They want you to know that their mom has dementia and that’s really been challenging for them. Or you know, their kid’s about to get kicked outta kindergarten because she can’t be quiet. Or that, you know, they are struggling because their best friend was diagnosed with prostate cancer or whatever it is. And it’s not always bad things.

It may be they’re working on their MBA and boy, they’re stretched super thin or they’re super excited to start investing in real estate. And so they’ve been looking at houses for their very first rental property. It doesn’t