Episode 150

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Before we dive into today’s topic — I first want to say thank you for your listenership and loyalty! We are downloaded in over 85 countries and I’m grateful for every listener. This solocast is Episode 150 of Build a Better Agency and I’m grateful for your time and the conversations we’ve had over the last three years.

Way back in Episode 35 (in early 2016), we talked about the employee shortage and the challenge the shortage was creating for agencies and agency owners. If anything – things have gotten tougher.

As you know, I see the financials for about 120 AMI agencies a year. I review their P&Ls, balance sheets, ratios, and some other information. And I will tell you that even though agencies may have had a good year financially in 2017 — they didn’t actually get to keep a lot of the money they earned. And the reason why they didn’t is because their employees are taking more and more of that money. This is happening because of scarcity. The truth of it is…scarcity wins. And right now, your employees are in control.

There are fewer good agency employees than there are agency needs and jobs. And I don’t think this is going to change any time soon. I thought it might be helpful if I shared how some agencies are addressing this challenge. I will walk you through some creative benefits employees consider to be brag-worthy, as well as the benefits that scored at the top of our research with over 1,000 agency employees. The truth is, 401k programs and insurance coverage no longer differentiate you from your competitors — they are table stakes.

Here’s the reality — we have to understand what today’s workforce wants and you have to make sure that your culture and your benefits package match those expectations if you want to attract and retain the talent you need to grow your agency.



What you’ll learn about in this episode:

  • How to attract and retain quality talent using today’s tools and why you need to build a pipeline for talent in the same way you build a pipeline for new business
  • How long you should reasonably expect your employees to stay with your agency
  • What are some brag-worthy benefits that will get your employees talking about your agency with their fellow professionals
  • How you can provide your employees the opportunity to have flexible work hours or work from home days without losing the valuable in-office collaboration
  • Why your employees will actually take less time off if you provide them with unlimited PTO
  • Why we cannot dismiss the changes in the needs of today’s workforce as just a millennial thing
  • What your employees consider to be the most important thing keeping them in a job – or – how they decide to accept a job they are offered
  • How treating all of your employees fairly does not mean you have to treat them all equally
  • Why just because someone is good at their job does not mean they’re going to be good at supervising other people doing that job
  • What are “boomerang employees” and why you should consider circling back to them

Drew McLellan is the CEO at Agency Management Institute. He has also owned and operated his own agency since 1995 and is still actively running the agency today. Drew’s unique vantage point as being both an agency owner and working with 250+ small- to mid-size agencies throughout the year gives him a unique perspective on running an agency today.

AMI works with agency owners by:

  • Leading agency owner peer groups
  • Offering workshops for owners and their leadership teams
  • Offering AE Bootcamps
  • Conducting individual agency owner coaching
  • Doing on site consulting
  • Offering online courses in agency new business and account service

Because he works with those 250+ agencies every year — Drew has the unique opportunity to see the patterns and the habits (both good and bad) that happen over and over again. He has also written two books and been featured in The New York Times, Forbes, Entrepreneur Magazine, and Fortune Small Business. The Wall Street Journal called his blog “One of 10 blogs every entrepreneur should read.”

The Golden Nugget:

“The most important thing you can do to invest in your employees is to give them your time, your attention, and your mentorship. Share your expertise. Nothing is stickier to your employees than you.” - @DrewMcLellan Click To Tweet


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Ways to contact Drew McLellan:

We’re proud to announce that Hubspot is now the presenting sponsor of the Build A Better Agency podcast! Many thanks to them for their support!

Speaker 1: If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Agency Management Institute’s Build A Better Agency podcast presented by HubSpot. We’ll show you how to build an agency that can scale and grow with better clients, invested employees. And best of all, more money to the bottom line. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host Drew McLellan.


Drew McLellan: Hey, everybody. Drew McLellan here with another episode of Build A Better Agency. Actually not just another episode, episode 150. When I look back over the episodes, it’s amazing what we’ve talked about. And I’m excited to be here with episode 150. This episode is a solo cast. So as you know if you are a regular listener, that means it’s just you and me chatting about something that I’m talking to agency owners about every day. And I want to make sure it’s on your radar screen. If you’re new to the podcast, welcome. Normally I have a guest with me and I spend the hour picking their brain and trying to learn everything I can from them on your and my behalf. But every fifth episode it’s just us. So that’s one of these episodes.


  So we’re going to talk about a critical topic. So way back episode about 35 I think it was, I talked a little bit about back in 2016, I talked a little bit about the employee shortage and the challenge that that was creating for agencies and agency owners. And quite honestly, it hasn’t gotten better. If anything, it’s gotten to be even more challenging.


  So I wanted to do a reboot on that. Obviously new content, but I want to talk to you about what agency owners are doing today to try and find and retain great talent. And I also want to talk to you a little bit about what it is that the employees are looking for, what I’m hearing them talk about. And one of the things that we talk about in AE boot camps as we talk about how fortunate they are and some of the perks of working at an agency. So they obviously give me a lot of feedback about what’s important to them. And I want to share that with you.


  But first, I want to get a couple of things on your radar screen. So if you have not signed up to do the podcast giveaway … so every week, we give away something to our podcast listeners. So many of our guests are authors, or are experts, or teach courses or things like that. So they’re very generous in giving us some of their items to give away. We also give away some AMI items.


  So one of the things that we’re going to be giving away over the course of the next couple months is we’re going to be giving away one seat to each of the workshops that we have coming up. And we have quite a few. So let me tell you quickly about them. And then I want you to go sign up. So if you’ve already signed up, it’s agencymanagementinstitute.com/podcastgiveaway, if you’ve already given us your name, you’re already in the drawing, you don’t need to worry about it. But if you haven’t, this is the week to go do that. Because we’re going to start giving away workshop seats. And these workshops seats sell for 1,700 bucks. So this is not a small little prize. All you have to do is get yourself to the city where the workshop is and put yourself up in the hotel that we get a great rate at, and you’re all set. So the tuition is completely covered on our end. So make sure you go agencymanagementinstitute.com/podcastgiveaway.


  All right, let me tell you. So quickly in September, we have a workshop for agency owners and leaders called Best Management Practices of Successful Agency Owners. And that is September 27th and 28th in Chicago. And we spent two days talking about everything on the operational side of the agency. Money, people, process, policies, systems, leadership teams, the structure of your agency. We cover it all. So that’s a great broad view workshop on how to run your agency more profitably. And then December 4th and fifth, we will be down in Orlando on Disney property with Money Matters. And Money Matters is for two days, all we do is talk about money. So everything from financial metrics, to how to know if your agency is financially healthy. What are the metrics you need to look at to decide if you actually need to add staff, or if you have inefficiency inside the staff you already have? What are some tax strategies that will allow you to keep more of the money that you make? Pricing strategies, proposal strategies. Biz dev strategies. We again, cover everything tied to money over those two days.


  This is a great workshop for owners, for CFOs, bookkeepers, accounting types. Anybody who touches or thinks about the money in your agency. And again, we’re going to be giving away a seat.


  Also, we have some great workshops in January coming up. So we have two new business workshops with the Mercer Island Group folks. So if you’re not familiar with them, they are an agency search firm. They help brands find the right agency, and they manage that process.


  So as a result, Robin and Steve Boehler see all kinds of agency presentations. They see the winners, they see the losers. They also do agency consultation. So they understand our world in a really unique way. So they’re actually doing two two-day workshops. They’re back to back. You can attend one, you can attend the second one, or you can attend both of them for a bargain price.


  So the first one is called Incoming to Income. And it’s all about how do you respond to RFPs, how do you write proposals that win? And one of the things I’m super excited about is they’re going to show us some written responses that won the business and dissect why they won. They’re also going to show us some written responses that did not win the business, and dissect why they didn’t get picked. So that’s going to be January 15th and 16th, also down in Orlando because it’s January, on Disney property.


  And then two days later, the 17th and 18th, they’re doing a workshop called Show Up Ready to Win. And again, they’re going to talk about presentation styles, and how to get that first meeting, and what to talk about in that first meeting. And again, what I’m super excited about is they’re going to take a presentation that an agency made that won the business. And they’re going to dissect it and show us why it won. And they’re going to show us some losing presentations and point out all the things that they did wrong so we can fix our presentations. So again, that’s January 17th and 18th. And yes, of course you can sign up and just go to these things. I’m just telling you you have a shot at winning a free seat. So if you can, get signed up.


  And then right afterwards, the next week, I’m doing a workshop with Robert Rose. Robert Rose helped co-create Content Marketing Institute and Content Marketing World. And he and Joe Pulizzi wrote the book Killing Marketing and a couple other books that are really talking about the future of marketing. And Robert has a whole list of things that we as agencies need to be very mindful of as we think about how to build our agency out for the future. So I think of this workshop is how to future proof your agency. How do you make sure that what you are starting to offer and starting to build in terms of your skill sets are what clients are going to want in the future? And that workshop is January 23rd and 24th, also on Disney property in Orlando. In sunny Florida in January.


  So please sign up to win a free ticket. That’s my point. Agencymanagementinstitute.com/podcastgiveaway. I want to see all of your names. The good news is a lot of you have not taken advantage of this. So your odds of winning are pretty good. Many of you have already won. That does not mean you are out of the running. We don’t pull your name out of the hat and then you’re not in the hat anymore. So if you’ve already won something, awesome, you could win again. But honestly, given the volume of you that listen, I’m sort of surprised at how few of you have taken advantage of this. So get your name on that list and have a shot at winning one of these great workshops. And if you don’t win of course, go to agencymanagementinstitute.com. You can read more about them. You can register. We would love to have you regardless of how you get there.


  All right, let’s dig into the content, shall we? So 2017 was for many agencies a very good year. So as in our agency peer networks, I see the finances of all of my agencies. So I’m looking at a PNL, and a balance sheet, and some other information from about 120 agencies. And I will tell you that many, many agencies had their best year. If it wasn’t their best year, it was still a very good, healthy year. However, many agencies didn’t actually get to keep a lot of that money. And the reason why they didn’t is because the employees are taking more and more of that money.


  So the reality is things get more expensive and currency shifts. And right now, one of the currencies that we are struggling to monetize is the people that we have on staff. And this is one of the reasons why many agencies have moved to a hybrid model where you’ve got some employees and you have some contract labor. And I’m a proponent of that model if it makes sense for you. It’s a great way to move a fixed cost into a variable cost category. So up into the cost of goods, rather than below the line into your adjusted gross income numbers.


  But every agency, most agencies anyway need some employees. And just know that if your employees are getting more expensive, if your employees are coming to you having done some searches on the Google and find that they believe that they’re being underpaid, you are not alone. I’m having this conversation with agency owners every single day.


  So what do we do about that? The truth of it is scarcity wins. And right now, the employees are in control. There are fewer good agency employees than there are agency needs and jobs. And I don’t think this is going to change. We talked about this at the very beginning of the cycle two years ago. And I don’t believe it’s going to change. Particularly in some specific job descriptions.


  So art directors, not hard to find. Copywriters because of content, getting much harder. Digital folks, people who have certifications and who have skills in the digital arena, getting very expensive and hard to find. That’s just our reality.


  So while we can complain about it, while we can be frustrated by it, at the end of the day, this is just the reality of doing business for us. So this is no different than rent or paying the heating bill.


  So we’ve got to figure out ways to attract the right talent. And more important you all know just like a client, there’s very little ROI in the first few months. And in some cases in the first several months of a new employee hire. Just like there’s very little ROI oftentimes in a new client, you have to ramp up. And the same thing is true with your employees.


  So it becomes even more critical today that when you recruit, you recruit well. And when you hire, then you’re hiring people for the long run. That these are people that you want to invest in and that you want to keep.


  So right now, the problem is that your competition is everywhere. So you are being cherry picked everywhere. Many agency owners say to me, “I feel like I am the training ground for bigger agencies, for client side jobs. And increasingly, for my own clients. My clients are poaching my employees to build out internal agencies.”


  So if you’re experiencing any of this, we talked a little bit about some of this in the trends episodes that I did, 140 and 145. You’re not alone I guess is what I’m saying. I don’t know if that gives you comfort or not, but you are not alone.


  So the reality is many of those places, larger agencies, client side, they are offering some things that some agency owners have been a little leery about offering. But the truth of the matter is that you’ve got to be competitive. And right now, your competition is offering things like flexible hours.


  So what many agency owners have done is they have decided, we all give this speech about it, it’s super collaborative. Need to be able to have everybody in the room together to do the work. I get that. But we’ve got to offer some flexibility around that. So what many agencies are doing is they’re saying, “Okay, nine to four is basically when everyone has to be in the office. Or if you’re a virtual agency or a hybrid, has to be online and available. Everybody has to be available from nine to four.” If you want to start work at seven and leave at four, or you want to start work at nine and leave at six, that’s fine. So if you have to drop your kids off, or you have to check on your mom, or you want to work out before work or after work, whatever it is. Or maybe it’s a traffic pattern you’re trying to avoid. Whatever that may be, that agencies are beginning to recognize that like their competitors. And again, your competitors aren’t just other agencies. Now when we’re talking about employees, your competitors are everybody who might hire and employ your people.


  So flexible work hours is becoming pretty much the norm today, and agencies are going to have to wrap their head around this. We have to find a way to collaborate in a compressed period of time if we are going to be competitive in terms of employees.


  Another thing that agency owners are not excited about, you’re excited about it for you, but you’re not excited about it for your employees is work from home options. So some agencies have decided that every Thursday, I’m just making up the day, but every Thursday is work from home day. So everyone works from home on Thursday. Some agencies have gone to a four and a half day workweek, so they’ve added a half an hour or so to Monday through Thursday. And then they close down at noon or one on Friday so people are able to get out early and have a longer weekend. Other people are allowing people to work from home.


  Here’s what most of you are doing. If something’s going on in somebody’s life, the new washer and dryer is being delivered, whatever it is, you’re willing to let them work from home episodically. But most of you don’t have a policy that says, “Here’s our work from home policy.” And you’re going to have to get to that. And what that’s going to have to establish is how often can someone work from home? What’s the process of them letting the team know they’re going to do that? Do they have to ask permission? How many days a week or a month are they allowed to do that? And which positions are eligible for a work from home kind of opportunity. Some positions are less flexible about that than others. But to say nobody works from home ever today, it means you’re going to have a really hard time finding employees.


  And by the way, this is not just a millennial thing. I know a lot of times we dismiss it this is what the millennials want. So I’m being sort of forced to do this. These are employees of all ages. As you know, we went out and did some research a couple of years ago, where we talked to over 1,000 agency employees. And we’re hearing these demands, these requests, these needs from people of all ages. So it’s not just a millennial thing.


  Another thing that’s happening is many of your competitors who are fighting for the same employees are being very creative with time off. So very few places have sick days and vacation days anymore. Most people have blended that together to PTO, paid time off, which most of you have done. But what is now the trend is unlimited PTO. So basically, do not freak out. That is not as scary as it sounds. You have to have good rules around it. You have to have some boundaries around it. And I will include in the show notes a couple examples of unlimited PTO policies that have come from agencies’ handbooks to give you an idea of that. So don’t be afraid of that. It’s becoming more and more common.


  The truth is, and my agency, we’ve been unlimited PTO for I don’t know, 15 years. And I have lots of agencies that are on unlimited PTO. And the truth is without exception, your people take less time off with unlimited PTO than they do when you give them a set number of days. It’s sort of the all you can eat buffet mentality of I don’t have to worry about using up all my days because I have this unlimited supply. So I’m not scrambling to use them all. It’s not a use it or lose it sort of mentality. So it actually benefits the agency. And by the way, if someone quits or you fire them, there’s no accumulated vacation days that you have to pay out. So that’s a huge liability that all of a sudden goes off your books.


  Another thing that most of your competitors are doing, again, regardless of where they are in the space, client side or agency side, is that they’ve got some sort of a metric based bonus program. So it’s a here’s your salary and here’s your opportunity to earn more money based on your performance, based on the company performance. And there’s a lot of different models for that. Many of you have heard me talk about the AMI bonus program. But there’s lots of models, but having one is important.


  Here’s a biggie. Educational opportunities. When we interviewed those 1,000 employees, we asked them what was the most important thing for them to decide to stay at a job, your job, right? Or to take a job that they’re being offered. And the number one thing was not money. The number one thing was that they would be given regular opportunities to keep growing and learning. So that’s sending people to workshops, that’s letting them get certified. That’s allowing them to take time at work to do webinars or take other online classes. It’s honestly learning from you. It is lunch and learns. It’s you teaching them.