Episode 25

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Drew McLellan is the Top Dog at Agency Management Institute. He has also owned and operated his own agency over the last 20-years. And all through the year, he straddles the fence of working in his agency and working with 250+ small- to mid-size agencies in a variety of ways.

AMI works with agency owners:

  • By leading agency owner peer groups
  • Offers workshops for owners and their leadership teams
  • Offers AE bootcamps
  • Conducts individual agency owner coaching
  • Does on site consulting.

Because he works with a lot of agencies every year — he 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, Entrepreneur Magazine, and Fortune Small Business. The Wall Street Journal called his blog “One of 10 blogs every entrepreneur should read.”


What you’ll learn about in this episode:

  • Stale employees: how to recognize them and why they’re holding your agency back
  • Can these employees be saved? It’s a firm maybe.
  • How to have the necessary conversation with stale employees — you owe them honesty
  • The kinds of goals to set to see measurable change and growth before determining their place inside your agency
  • The costs to you as an agency owner for working with stale employees to up their game
  • How to recognize if you really do have to let the employee go
  • How to make a decision while realizing that you aren’t the only person it affects


The Golden Nugget:

“Stale employees are literally taking money out of your family’s pocket.” – @DrewMcLellan Share on X

Click to tweet: Drew McLellan shares the inside knowledge needed to run an agency on Build a Better Agency!


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Speaker 1: If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Build A Better Agency, where we show you how to build an agency that can scale and grow with better clients, invest in employees and best of all, more money to the bottom line. Bringing his 25 plus years of expertise as both an agency owner and agency consultant to you. Please welcome your host, Drew McLellan.


Drew McLellan: Good day, everybody, Drew McLellan here with another episode of Build A Better Agency. Today’s episode is one of my solo casts. So no guests today, just you and me chatting about something that I think needs to be on your radar screen. So settle in and let’s have a, what I believe for many of you will be a little bit of an uncomfortable conversation. As I spend time with agency owners all over the globe, one of the trends that I am really seeing over the last year or so is what I have deemed stale employees. And what a stale employee is, is it somebody who’s been on your staff for a very long time and somebody who used to be amazing. They were awesome. They were your go-to employee and you used to count on them all the time. Odds are they’ve been with you five or more years. They’re incredibly loyal to you and the agency, or at least they were, that may be waning a little bit now.


  But, you know what, they have not kept up and they have not kept their skills or their attitude sort of in line with where your agency is going. Not always, but often these people end up in the creative department. And for whatever reason, they decided somewhere along the way that they had learned everything that they needed to learn and they were sort of done. And so they have been behaving and performing at the same level for the last several years, without learning anything new, without adding any skills to their repertoire. And without really moving in the direction that your agency is moving. They’re very stuck in their own ways. And in fact, they’re so stuck in their own ways that whether you know it or not, your staff has work around this when this person is involved. So they know that they have to work around this employee. So let’s say that this employee’s name is Bill. They have a “Bill work around” that allows them to get work done by basically doing an end run around Bill, because he’s such a problem.


  He’s such an obstacle now that they can’t really get the work done at the level they want it done when he’s involved. And so whether you know that or not, that’s going on inside your shop and part of the problem is whatever this person used to be great at, it’s not that they have lost skills. They’re still good at what they used to be good at. The problem is what they’re great at, you don’t really sell very much anymore. And so part of all of this understand is them sort of longing for the good old days. Them wishing that their skills were more in demand. But the reality is they are now much less productive and much less profitable for you. They’re also probably one of your more expensive employees. They’ve been around for a long time. You were awarded them generously for their loyalty early on.


  And so odds are, if you look at your payroll, they’re in the top third of your payroll. So they’re very, very expensive for you. And they’re even more expensive because they aren’t really productive and profitable for you. They’re not helping you build the agency anymore. They’re actually an anchor that’s keeping your agency from growing as quickly and as strong as possible. And the real conundrum of this for all of you is, and I can hear you wincing as you are starting to recognize the person in your shop that I’m talking about, is this a very emotional issue for you. And it’s very emotional because this person has stuck by you. They were probably with you and things were a little tight in their early years. They have been a huge advocate for you and the agency. Sometimes they work really long hours. And part of that is they just don’t really know how to get anything done efficiently anymore, but you think of them with great fondness.


  They’ve been a part of your world for a very long time. And so the idea of dealing with this employee issue is really emotionally laden for you. And it’s very difficult. So when I go to visit an agency for example, and I’m spending a couple of days with them, it’s pretty easy for you to pick out who that stale employee is. And when I talked to the agency owner about it, you all sort of sheepishly acknowledge, you know that this person isn’t as good as you need them to be, or isn’t as good as they used to be for the agency. But you then dodging this issue for a super long time. So when I pushed the issue, the question that I get asked is can they be saved? And I will tell you that I have a great answer for you and that is it’s a firm maybe.


  I will tell you about 75% of the time. The answer is no. And the reason the answer is no most of the time is because that employee is sort of mentally done. They believe that they’ve paid their dues and they do not want to acknowledge or recognize their own obsolescence. The other reason why it doesn’t work most of the time is because it would require a huge time investment on your part to really hold the line and to keep pushing them to get better. And most of you will not actually invest the time. You’ve let this go for so long and you’ve let them get away with it for so long that the idea of addressing this issue is painful to you. And so at the end of the day, they don’t want to invest the time. And in most cases you don’t want to invest the time either.


  So I would say 75% of the time no, that this employee is not going to get better and you can have a very difficult decision to make. But that is not to say, I don’t think you shouldn’t try. I do think you should try to save this employee. I think you owe them that. But part of what you owe them is you candor. You owe them the honesty of acknowledging that they are no longer as valuable to the agency as they used to be. And that this cannot continue for the long run, that you have got to do something different. So either they’re going to have to get different or better, or you’re going to have to let them go. So let’s say that you are committed to having this conversation with them. Here’s the way I would play that out. First, I would schedule it away from the office.


  I would allow for a couple hours and I would brace yourself for a difficult conversation. I’d start the conversation by acknowledging the history that you share together in the agency and the incredible value that they have brought the agency over time. So I think you need to give them credit for what they have done and meant to you and to the agency. But from there, you need to have a very candid conversation that talks about where you’re at today. And you want to back up that conversation with facts. So I would do a little bit of homework in terms of time sheets and billable ratios and all of those sorts of things, how long it takes them to get work done, all of those kinds of things. And also not only facts, but truths. And the difference between a fact and a truth is a fact, I can lay a piece of paper down on the table and show you what I’m talking about.


  And a truth is sort of a here’s what’s happening culturally inside the shop. Here’s how people are feeling. Here’s how people are reacting. Those are truths, but they’re not really something you can prove in black and white. So I’d have that candid conversation with them, with both facts and truths woven into that conversation. And then I would say to them, you know what, for the good of the agency, I cannot allow this to continue. So I want to have a conversation with you today, Bill, about whether or not you are willing to grow and change for the betterment of the agency, or if you would rather, I help you find another job somewhere else. Because one of those two things needs to happen. I need you to step up your game because I’m paying you X thousands of dollars, and I need you to be worth that much money to the agency, or I’m okay if you say, you know what? I just don’t have the gas in my tank to learn something new, or I don’t believe in that, or I don’t agree with the direction we’re going.


  And so, you know what? I do need to find a different job. But allowing them to continue in this with the same behavior and the same skill set is not an option. So I’ll tell you what, no matter whether they actually are willing to do the work or not, they’re going to say that they are. One because that you’ve caught them off guard. And two, because even if they are in the back of their head, thinking you’re a son of a bitch and they’re going to quit. They want to be paid while they look for a new job. So in 99% of the time, they’re going to say, “Yes, I am willing to do the work.”


  And you need to accept that on face value, regardless of whether or not you think it’s true. And together, the two of you need to define what needs to change. And you need to do that with smart goals. So you all know that smart stands for specific and measurable, attainable, relevant, and time sensitive. So you need to set goals that you can measure against in a very objective way. And you also need to set what I would call baby goals. So if one of the goals is that they have to learn how to code websites and they don’t know how to do that at all. They’re a traditional art director, let’s just say. You need to set goals between today and being able to code that allow you to measure progress along the way. Why? Because you don’t want this to drag on for six months or a year.


  So what you’re going to say to them is I want to see measurable change and growth within 90 days. And if I do not see measurable change and growth within 90 days, then you are going to have a choice. I will give you the opportunity to resign, or I’m going to fire you. So that’s the deal. And then you need to set the goals and you need to have a very firm deadline for closure one way or the other. Again, 90 days, 60 days, I would not go out more than two months to three months the most. So 90 days, 120 at the very farthest out. But I think that’s too far. 90 days is plenty of time for you to see whether or not they’re going to make some progress and you need to have that in writing. So you know what Bill, when we get back to the office, I’m going to write up these goals that we’ve set, and I’m going to put the deadline in writing and you and I are both going to sign that document, okay?


  And then Bill’s going to say okay. So Bill says, okay, you guys have set the goals. Now, what was it going to take? And here are the costs to you as an agency owner. The first cost is simply your time. You need to meet with this person every single week to measure against the goals. If they are not your direct report, if they have a supervisor below you, then you and that supervisor, and they need to meet every week because they need to understand that this is critical for you, and that you are willing to invest the time to get this right. And you need to know you’re going to have a lot more candid conversations. This is not the time to go back to sort of that passive aggressive hinting at things you need to be very clear about when they hit the mark and when they miss the mark.


  So you’ve got a lot of time invested in these weekly meetings. You all sort of going to have to invest time in coaching and mentoring them. You’re asking them to make some pretty big changes. And so they’re going to need you alongside helping them figure out what they need to learn and how to learn it. And then also catching them doing it well and right, so that they are encouraged to keep pushing forward if they are making the effort. An additional cost for you or some hard costs. So in many cases, they’re going to need some educations, some classes, some workshops. They may need other resources. They may need software. They may need books. They may need an online course. And maybe the biggest expense to you is while they are learning these new skills, they’re going to be even less productive than they are today. So you also have to know that you’re going to be giving up billable time and their time on client work for them to grow into this new role that you want them to grow into.


  In many cases, this 30, 60, 90 days is really about buying yourself and them time to recognize the truth. And in most cases, the truth is that they have outlived their usefulness to the agency. And I know that’s harsh and I know it’s painful, but you need to understand the truth about your agency and your employees. At the end of the day, you can decide to let them go or not, but at least you’re making a conscious decision. But I am telling you for the salary that you’re paying them, you are literally taking that out of your family’s pocket and out of your pocket and giving it to them because they are being unproductive. They are hurting your culture and you’re allowing that to happen. You’re actually paying them to do that to your agency. And you need to recognize that. I know this is a difficult topic, and I know that you want everybody to be happy, great, and deliver on-time and on-budget killer work.


  But the truth is that most agencies have a stale employee or two, that we have just avoided working with. Now, I will also tell you that sometimes this has a happy ending. This happened to me many years ago, and I had a very candid conversation with an employee who turned out to be one of my best employees for many years. So you can’t have a happy ending, but it requires both of you being willing to come to the party and change and grow and invest the time and the effort and the need for great honesty between the two of you. And if you can pull that off then great, you’ve saved a great employee who’s going to bring new skills. Otherwise, you’re giving someone else the dignity of recognizing that they are no longer adding value and you’re going to help them in a very respectful way find something new.


  I want you to think about this for a little bit, and I want you to recognize what these stale employees are costing you and your agency and the risk that you’re putting your best employees at by keeping a stale employee. No one wants to work someplace where they’re giving 110% and somebody who’s making twice as much money as they are, is putting in 60 or 70% and no one’s saying a word. So you really do, you’re taking great risks by leaving this person unchecked inside your agency. So I want you to recognize the cost and then make a decision. And make a decision once and for all. Either I’m going to tell her this person being on my payroll and delivering sort of half-assed effort for as long as they want to work here, or I’m going to address this problem and fix the problem for my agency’s good health. But either way, I want you to recognize the cost and make a decision so you can move forward.


  That’s it. That’s my conversation for today. I know this is a tough topic. I have spent many, a phone call and many a drink with a lot of you over this topic. And I know that it is a very difficult one to face, but I am telling you for the health of your agency for the financial health of your family, this is an issue that you can not allow to go on and on without addressing it. So thanks so much for being with us again. I appreciate you continuing to listen to the podcast. Thanks for all the great feedback. If you are loving the podcast and you haven’t gone over to iTunes or Stitcher yet and left a review, I would greatly appreciate it if you would do that. I hope you have subscribed so that you don’t miss a single episode and I will be back next week with a guest to help you build a better agency. In the meantime, if you need me, you know how to reach me. I’m [email protected] and I will talk to you.


Speaker 1: That’s all for this episode of Build a Better Agency. Be sure to visit agencymanagementinstitute.com to learn more about our workshops and other ways we serve small to mid-sized agencies. While you’re there, sign up for our e-newsletter, grab our free ebook and check out the blog. Growing a bigger, better agency that makes more money attracts bigger clients, and doesn’t consume your life is possible here on Build a Better Agency.