Episode 35

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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
  • 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 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:

  • The employee shortage: why it’s happening right now
  • What agency employees want most (and how to use this to attract and retain them)
  • Things that will cause employees to leave
  • The best benefits you can offer to attract and retain employees
  • How you can compete with the corporate world for employees
  • Why you need to be actively looking for employees, even if you don’t need them right now


The Golden Nugget:

“Modern employees will leave your agency if you don’t provide flexibility.” – @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 to you, please welcome your host, Drew McLellan.


Drew McLellan: Hey, everybody. Drew McLellan here for another episode of Build a Better Agency. Thanks for coming on back or for joining me if this is your first episode. This is one of my solo casts. As you know, normally, I have a guest with me every week talking about some aspect of building a bigger, better, stronger, more profitable agency, but every fifth episode is just you and me. Typically, I choose a topic that I’ve been talking to a lot of agency owners about over the course of the last month that I’m assuming is also on your radar screen. I just want to do a deep dive with just you and me on this topic because I believe that I can add enough content here that we don’t need another expert in the field to talk about this. And so today, what I want to talk about is, I think, a challenge that many of you are having.


  The good news is that when I look across the landscape of all of the agencies that I speak to and work with every day, the good news is that new business is on the upswing. Many of you are experiencing shorter sales cycles, more yeses than nos, and the business is growing. The challenge is that while the new business is coming faster and easier, the employees to take care of that new business is not coming faster and easier. And so, for many of you, you are really facing a crisis of having the right people in the right seats on your bus to make sure that you can take care of clients.


  And here’s the reality for all of us, is this is not unique to you. I don’t care if you’re in a big market or a small rural market, or you’re a big shop, or a small shop, or a specialty shop, or a digital shop, it really doesn’t matter. Agencies across the land are really struggling to find, hire, recruit, hire and retain great employees. And so, really what this podcast is about is how do you create an environment that is sticky for employees. What I mean by that is it’s sticky in that it helps you keep the good employees that you have, but it’s also sticky like a web when you try and attract people to you, that they really get caught up in what you’re doing and how you’re doing it to the point that they want to join the team. This is really about creating a sticky environment for employees, whether it’s potential employees or employees that you already have in the shop.


  Why are we facing this problem? Well, the reality is that odds that your next employee is already employed, that the unemployment rate for white-collar college-educated people is less than 2% right now. That’s more than half of what the general unemployment rates are. Basically, the employees that you want to hire are in high demand. Add to that the fact that everybody is competing for the same people that you’re competing for. You’re not just fighting against other agencies to get great employees. You’re fighting against a client’s side businesses. You’re fighting against the media. Everybody is trying to get these same employees, people who are digitally savvy, people who understand content and social, people who can sell, people who can talk business and marketing. Those kinds of people are in high demand, not just in the agency world, but in the world in general, which means that you are competing against everybody.


  The bad news of that is, I hate to tell you, but as you already know, agencies are not where people get to be uber-wealthy. So it is going to be pretty tough for you to compete on salary alone because a corporate job is always going to pay better and may even have better benefits than you do. You simply are not going to be able to compete. I have a lot of agencies who are losing good employees, and they’re losing them to client-side jobs because the employees, they’re getting a 20, 30, 40% increase in salary, and the agencies just can’t compete. But here’s the good news. I believe that people are wired to work in agencies. And the best employees that you have, and the employees that are going to be your best employees who don’t work for you today, are people who really need and want to work in an agency environment. And so, it’s not just about the money. It’s about a lot of other things that make you the right place for them to work. And that’s what we’re going to talk about today, is things that you can do to create an environment that is sticky.


  There’s a couple things that I wanted to get on your radar screen right now. First of all, I know that for some of you in my conversations with you, it irritates you that you have to go to all of this effort to create a culture and an environment where people want to stay. That for some of you, your thought process is, “You got to be kidding me. I’m giving them a good job. It’s a steady job. I am paying them a good wage. I have a decent benefit package. Why in the world do I have to jump through these hoops?” The reality is you have to jump through these hoops because there are more jobs out there than there are bodies. And so, you’ve got to do things that differentiate you as an employer that make you the place that they want to be. So whether it irritates you or not, this is something that all of you need to be thinking about and probably doing.


  Okay, so what are the things that you need to do to create this sticky environment for employees and prospective employees? The first one is, and this may come as a surprise to you, but the number one thing… Remember, I don’t just hang out with agency owners, I hang out with a lot of agency employees, especially on the account service side and the digital side. The number one thing that they cite as what makes your work environment a place they do or don’t want to stay is you. They want more of you. They want to learn from you. They respect you. They hold you up on a pedestal in terms of your marketing prowess, your agency knowledge, the way you work with clients. They want to be like you. They want to learn from you. Many times, they feel like they don’t get enough of your time and attention.


  So what they want is they want to be mentored by you, or at least someone on your leadership team. One of the best ways to mentor your employees is to have those weekly one-on-one meetings that I talked about in podcast episode 15. I gave you the form to fill out and all of that. And I gave you a lengthy description of how to go about conducting those meetings, so I’m not going to get into it in this podcast. But if you can conduct a one-on-one meeting with your employees. And again, these are meetings that they own. A big part of it is about their growth goals for the quarter. Again, go listen to the podcast to get the whole details. But these one-on-one meetings do a couple things. One, they tell your employee that they’re responsible for their own professional development, that you’re there to support them, but that they own that responsibility. Two, you’ll be amazed at what you learn in these meetings and how much tighter you are connected to the employee, but also the employee’s work, also, the feeling of accomplishment and pride that that employee gets by being able to report into you their successes for the week. So I highly recommend the one-on-one meetings.


  I will also tell you that another thing that your employees want is they want annual reviews. They want to know not only how they’re doing and where they’re going, but they want to understand what your vision is for them and how to get there. So it’s not just enough to say, “Boy, I think you can be a senior account manager in a couple of years.” They want you to help them map out what they need to do to earn that responsibility and title, and obviously money from you. So that’s a great place for annual reviews. I strongly recommend that you separate salary discussions from annual reviews. If you are going to combine salary bumps in pay and the annual review, here’s what happens, they flip to the back page, and they looked to see what their salary increase is. And if they’re not happy with it, they don’t hear another word you for the whole review. So I would just make an agency-wide announcement that we are no longer going to discuss raises as part of your annual review. Your annual review is a look backwards to see what you’re doing well and where you can improve. And it’s also mostly about what you’re going to do in the coming year to continue to grow and serve the agency and our clients. That’s a separate discussion than a salary discussion.


  So they want the one-on-one meetings, they want the annual reviews, but they also want you to notice that they’re doing well. They suffer under the delusion that you have a very clear idea of how they spend their day and what they’re doing all day. In the AE Bootcamps, one of the things I tell them is, “Keep in mind that your boss has 5, 6, 8, 10, 50, 100, 150, 200, whatever it is, employees that they are sort of keeping track of. There’s no way they can know what all of you are doing all of the time. So I encourage them to merchandise the good things that they do so that they do get on your radar screen.


  But it’s important to them that you notice and that you acknowledge when they have gone above and beyond, or they have made a client super happy, or whatever it is. So even if you have to have your lieutenants, your leadership team or other people, department heads, cluing you in to when somebody is going above and beyond, it is important as one of the leaders of the agency for you to acknowledge that. Again, some of you come from the school of, “If I didn’t see my boss and he didn’t talk to me, then I knew I was doing a good job.” Well, you know what? That is not today’s employee. They want recognition. They need acknowledgement. And while that may irritate you, if you don’t do it, you’re going to lose some great employees.


  They also want to understand that you have a vision for the agency, and they want to know what that vision is. Where are we going together? What are we building together? What are we trying to accomplish together? If you have hung out with me at all at any of the owner workshops, or you have listened to some of my other podcasts, you know I’m a big proponent of some level of open book management. I don’t believe that your employees can act like owners if they don’t understand the game that’s being played and how they can influence it. But in general, they want to know what is your vision for the agency, and where are we going, and how can I contribute? Even more so, they would like to have a voice in that. They want to be able to contribute ideas of how you can get there. That’s very important to them, and that’s part of creating an environment that makes an employee either want to stay or want to come and work for you.


  Another big area that is sticky for prospective employees and your existing employees is the whole arena of professional development. For the most part, good employees are hungry to keep learning. They understand that if they don’t continue to sharpen their saw, they will become irrelevant. And they’re looking for opportunities to get smarter and to do better and to deliver better results to the clients and to the agency. There was a recent research piece that said that employees rated being sent to professional conferences and workshops, that that to them was the equivalent of a 20% raise. That’s how important it is to them. It really says to them that you’re willing to invest in them and that you believe that they have potential beyond wherever they are today. And for you, that’s about helping them grow.


  I think it’s super important that you emphasize to them that their professional development is a shared responsibility. It is not on you to be tracking down conferences and saying, “Hey, I’m going to send you here.” Should you do that? Yes. But it’s not just your responsibility. Professional development is a shared responsibility, and they need to understand that they have some ownership in that. Many of you already ask employees to come back and do lunch and learns after they’ve gone to a trade show or a conference or a workshop, and that’s important. You want to have them bring back whatever they learned and infuse it into the agency. One of the other things I love about professional development is I think of it as a great litmus test to identify which of your employees think of their job as a job versus a career. Which ones are in there and just phoning it in, and they’re the ones that are leaving at 5:15, and which ones are there because they’re very invested?


  And how they respond to professional development, both you giving them the opportunity and then what they do with what they’ve learned. Do they come back to you with a plan of, “Here are five things I’m going to do different based on that workshop I went to. Here are three things I think we should change in how the account service department behaves based on that workshop. I’d like to do a presentation to the leadership team about this topic or that topic.” Those are the employees that you know you can count on in the long haul, and those are the employees that you should be investing in both in terms of your time and money. Because for them, it’s not a job, it is a vocation. It’s something that they take great pride in, and they want to get better in. So don’t look at professional development as an expense. It absolutely is an investment, but it is also a great way to see your superstars bubble up amongst the employees.


  Okay. I got two more big categories to talk to you about, but first I want to take a quick break for a promotional announcement. So just sit tight for a second, and then I’ll be right back.


  I get that sometimes you just can’t get on a plane and spend a couple of days in a live workshop. And so, hopefully, our online courses are a solution to that. Lots of video, hours and hours of video, a very dense, detailed participant’s guide, and all kinds of help along the way to make sure that you get the learning that you need and apply it immediately to your agency. Right now, we’ve got two courses that are available. We have the Agency New Business Blueprint, and we have the AE Bootcamp. So feel free to check those out at agencymanagementinstitute.com/ondemandcourses. Okay, let’s get back to the show.


  Okay. We are back talking about sticky employment environments so, again, creating an environment where your employees who are currently working for you want to stay and they’re turning down offers from headhunters or your clients or the media, because they want to stay and keep growing with you and your agency. And also an environment where when you talk about the way you work with your employees, prospective employees say, “You know what? That’s a place that I want to be.”


  The next one is one that we all talk about quite a bit, which is culture. Here’s one of the places where you can really kick the corporate job and the media department… or the media companies. You can really kick their rear ends because you can create a culture that is very vibrant and very energetic and really a place where people feel like it’s a fun place to work, it’s a creative place to work, it’s an energized place to work. All of that starts with you. You can’t be thinking about your shop like it’s still the 1950s. The reality is that the workplace and the employees are changing the way we work, and we have to make some modifications. If you still have your heels dug in that everybody is going to work from 8:00 to 17:00, and everybody is going to work in the office five days a week, I am here to tell you, if you haven’t already seen the attrition, you are going to start seeing attrition.


  Today’s employees want more flexibility. They want to be able to blend their work and their life. And so for some of them, that means coming into work earlier so they can leave by 4:30 so they can pick their kids up after school. For others, it means not coming in until 9:15, because that’s what time they can get to the office after their last kid gets on the bus. Or they carpool with a bunch of other people, and that’s when they can get to the office. Your employees are expecting you to be a little flexible. That doesn’t mean that they can be irresponsible. It doesn’t mean that they can just come in willy-nilly whenever they want. You can still put structure around it, but they want flexibility. They want flexibility in terms of the hours that they work, in terms of when they start and when they stop. They also want flexibility in terms of where they work. Whether that’s work from home on occasion or remote employment, there’s lots of different models. I’m not going to get into any of those in this podcast, but know that you’ve got to be thinking in those terms to be competitive today, whether you like it or not.


  I also think it’s important that you create an environment that says, “We, at this agency, are lifelong learners.” So whether you do something old school like you have a book club or you bring in people to do lunch and learns once a month for your staff, whether it’s a media reps or your 401(k) rep or somebody else to teach them some aspect of the business or just adult life in general, but that you’re creating an environment where people learn, that you’re sending people to workshops. All of that sort of stuff matters to your employees.


  I think you also have to create what I would call moments of fun. These are little quickie things that happen that are playful. Think of them as palette cleansers. Your people are working hard. They’re concentrating. They’re trying to be creative on demand. Every once in a while, it’s nice to have a mental floss moment, where I get to clean up my brain, get a refresh, and then go back at it. And that can be as simple as you stopping at the grocery store and bringing back ice cream sandwiches for everybody. That can be as simple as somebody deciding to have a paper airplane contest. These are events that take 15 minutes or less, but they are just moments of play in the middle of your day. Lots of agencies have pinball machines or ping pong tables or dart boards or something in their office. But a lot of times those things gather dust. So they’re great in the beginning, and then they just sort of gather dust. So why not start a foosball tournament or something that says to your employees, “It’s okay to play on occasion.”


  They need that mental break. I will tell you this, whether you plan it or not, or someone else in your shop plans, it’s important that you participate. And here’s why. When you don’t participate, you are sending the message loud and clear that you don’t approve. I get that you’re super busy. I get that you may think that 15 minutes of ping pong is stupid. But you participating at some level or Cinco de Mayo chips and salsa, you don’t want to do that, or you’re on a diet, or whatever, participate at least for a while. Give them the very clear physical sign of your presence that you approve of this behavior and activity. It’s great if you want to initiate it. A lot of agencies have a fun committee or a social committee. You can handle this however you want, but it’s important that you create an environment of play and fun inside your agency.


  It’s also important that you do bigger things around that theme on occasion. So think of them as field trips, a couple of times a year, four times a year, that you guys pack up at 14:00 or 15:00 in the afternoon, and you go to an art museum, or you go throw clay pots together, or you build a habitat for humanity house. Whether it’s a team-building activity, a creativity activity, you go see the newest animated movie together, whatever it may be, look for ways to fuel and feed your team’s creativity and their sense of team. It doesn’t have to cost a million bucks. You don’t have to do it very often, but I’m telling you, those are the moments where your team comes together. They bond, they create connection, and they look at your place as something more than just a job. They look at it as their place, and it’s sort of their posse of people. You can create that environment pretty easily and pretty inexpensively.


  I also think it’s important in the culture that you help your employees understand how agencies make money and how they can influence that. I am a big proponent of AGI-based bonus programs. I have not done a solo cast on this, but I need to do one. But if you have interest in a bonus program, know that we teach it in great detail in both our Best Management Practices of Agency Owners and our workshop called Money Matters. You’re welcome to attend one of those. I promise I’ll do a podcast on this in the future. But I am a big proponent in create… Rather than just giving away a Christmas bonus, why not do a bonus that teaches your employees how to think and behave like an owner when it comes to money?


  And that only happens through repetition and education. I promise you, they are already guessing how much money you make and all the things that you worry about, about open book, those things exist in your head. There is a way to do a bonus program that is tied to AGI that helps them understand how and when the agency makes money. You can’t expect them to be good stewards of the agency’s money if they don’t understand how it works. So package all of that up. That’s all about culture. That’s about shared accountability. That’s about when the agency makes money, we all make money. That’s about moments of fun and that mental floss. All of those things matter.


  And certainly the last component of this, of the sticky work environment, is the whole idea of benefits. Again, remember that salary alone is probably where you’re never going to cut it, but you certainly want to make sure that you are paying a competitive wage in compared to other agencies. We do an annual salary survey where you can look at the numbers based on geography, based on number of employees in the agency, and based on a specific job titles. That’s a resource for you. I know there are plenty of other salary surveys out there that are more generic, that aren’t as agency specific, and I know there are some other ones out there that are agency specific. So whichever one you use, first of all, make sure that your salaries are competitive.


  Secondly, beyond that, making sure that your benefit package is competitive. Again, in our salary survey, we ask agencies to tell us what benefits they put in their package and at what percentage do they pay for it versus the employees. So you can sort of see what other agencies are doing in terms of vacation time and other things, right? Speaking of vacation time, one of the big benefits that is very sticky for today’s employees is unlimited vacation time. Now, before you start clutching at your chest and saying, “There is no way I would ever do that,” let me tell you how this works. It’s still by department. You can still limit how many days in a row someone takes so that they can’t take off for a month and a half. In the AMI agencies where we have implemented the unlimited vacation policy, we’ve done studies, and we have looked at how much vacation time was taken in the old school way, where people got a set number of days, whether they were PTO or vacation days versus the unlimited vacation. And in every single case, the employees as an aggregate whole took fewer days or the same number of days that they took when they had a defined vacation policy.


  But the differences are pretty dramatic. Number one, the employee satisfaction around vacation policy went up dramatically. Number two, you know that crunch of people taking time off from mid-November through the end of December because you have a use it or lose it policy, that goes away. Think of the unlimited vacation policy as sort of an all-you-can-eat buffet. When your employees know that they have vacation when and if they need it, but that they don’t have to count the days and all of that, you will be amazed at how much more judiciously they use vacation time and how it gets spread out over the whole year rather than jamming up over the last six to eight weeks.


  Another benefit is if somebody leaves you and you have an unlimited vacation policy, you don’t have to buy back their vacation days. You don’t owe them any money for that. It’s a, “Look, when you leave you leave. Whatever vacation you used, great, glad you used it, but we don’t owe you any more money.” So that can be a huge savings for an agency, especially for some of your older employees who right now are getting three or four or five or six weeks of vacation. So that is a great benefit.


  Another great benefit is shutting down early one day a week. Many agencies have moved to a two o’clock or three o’clock shut down on Fridays. Now, the understanding of that is, is if a client schedules a meeting or whatever, yeah, you still have to go. So most employees end up getting maybe two Fridays out of the four they end up getting off early, but they love the idea that they may be able to sneak out early on a Friday. Some agencies do that year round and other agencies just do it in the summer.


  What many agencies do is, what they do is… Let’s say they normally start it around 8:30, what they’ll do is they’ll just add a half an hour to each of the first four days of the week to make up those two hours. So it’s really not time off, it’s really just rearranging time. So you can ask people to spend an extra half an hour a day during the front half of the week so they can get out at three o’clock on Fridays, which people adore.


  Again, we’ve talked about that flex and the remote time. Here’s an idea that is really, really proving to be successful in many agencies. I’ve got several agencies who are doing what we’re calling sabbaticals. And so what that is in essence is every three years, the employee gets an extra week of vacation and X number of dollars towards a plane ticket or hotel, which for most of you, you can use your AmEx points or your credit card points to buy that. Basically, what you’re saying to employees, “Drew, every three years, I’m going to give you an extra week of paid vacation, and I am going to contribute $500 to plane tickets for you and your family or you and your significant other, or you and your neighbor, or whoever.” You can set the dollar amount however you want. “We’ll buy $500 worth of plane tickets for you.” Or if they’re going to travel by themselves, “We’ll give you $500 in Essence travel voucher, and we’ll apply it towards plane ticket and/or hotel.” However that works out.


  Employees love this. First of all, they love that they get the extra week off. So obviously this does not work if you do an unlimited vacation policy. First, they love the extra week, but they love the fact that you were encouraging them to travel, and they love that you’re helping them do that by picking up part of the tab. The great thing about this is, the year they do it, there’s no way they’re leaving. And by the way, they have to pay it back if they leave with it six months of the sabbatical. For that year, it’s sticky. The next year, they still are remembering the trip, so it’s sticky. The third year ends, so that’s a year away from their sabbatical. They know their sabbaticals only a year away, so they’re less incented to leave you because they know they’ve got that extra vacation and that bonus money for travel coming up. And then the year of, they know it’s coming. And then, of course, they’re on the hook for the six months later. This is a really great way to hook your employees.


  I’m a firm believer that employees that are well-traveled and that explore the world, And again, the world could be Kenton, Ohio or it could be somewhere in China, that I don’t care about. But people who get out and see the world are better employees. They have a broader perspective. They understand the markets better, and they are somebody who has a broader understanding of the world in which we all live. So there’s lots of benefits to doing this. It’s super sticky. Your employees will love it. And I think they come back better employees.


  Again, just to wrap all of this up, the number one thing that makes your agency sticky for prospective employees and for the employees that you want to keep is you. That mentoring, that one-on-one meeting, you sharing your vision, all of that really matters. Your employees also want professional development. They want to get better. And that serves the agency, and it’s also, as I told you, a great way to identify your superstars. The third thing is all about culture. So creating a place that is energetic and creative and fun, and you can do that in lots of little ways that don’t cost you an arm and a leg. But it’s important that you do it, and it’s important that you participate. Last but not least, make sure that your salary and benefits package are competitive and try and throw in some extras that make you different and better than the other agencies, the other corporate jobs, and the other media companies who are all chasing after and trying to be a suitor to your employees.


  All right, that’s what I have for today so, hopefully, that was helpful. Happy to answer any questions as always. You can find me at [email protected]. Feel free to check out other podcasts. Again, remember, if you were wondering about that a one-on-one meeting, that’s episode 15. I promise I will do a bonus program episode pretty soon. But in the meantime, please subscribe if this has been helpful to you. I don’t want you to miss an episode. If you haven’t already, I would be so grateful if you would go and leave a review and a rating at either iTunes or Stitcher or however you’re accessing this podcast. That’s what allows us to get on the radar screen of other folks who are looking for good podcasts. So I am always grateful when folks do that. So if you would do that, I’d appreciate it. I will be back next week with a guest to help you build bigger, better, stronger, more profitable agency that you can be proud of, you can make great money at, and hopefully, you can wrap up and sell someday for big bucks. I will talk to you next week. Thanks so much for listening.


Speaker 1: That’s all for this episode of AMI’s Build a Better Agency, brought to you by HubSpot. Be sure to visit agencymanagementinstitute.com to learn more about our workshops, online courses, and other ways we serve small to midsize agencies. Don’t miss an episode as we help you build the agency you’ve always dreamed of owning.