Welcome to the Agency Management Institute Community where you’ll learn how to grow and scale your business, attract and retain the best talent, make more money, and keep more of what you make. The Build to Better Agency Podcast presented by White Label IQ is packed with insights on how small to mid-size agencies survive and thrive in today’s market. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.
Hey everybody. Drew McClellan here from Agency Management Institute. If you happen to be watching the video version of this, you can see that I am in a hotel room, which is no strange thing for you to see me in a hotel room. We’re actually down at Walt Disney World getting ready to teach Money Matters. So this is one of our solo casts. So this is just you and me hanging out talking about something that has either come up quite a bit in conversations with other agency owners or something that’s on my mind or something that I think is on yours or some combination thereof. So before I get into that, a couple things.
Number one, just want to remind you that the Build Better Agency Summit is in May ’23, which sounds far away, but actually is really not. In the blink of an eye, it’ll be here. Ticket prices keep going up as we get closer to the conference. So if you’re going to join us, by all means grab a ticket now. If you are an AMI member, so that’s a silver, gold, or platinum member, or you are a virtual peer group member, a key exec group member or a live peer group member, all of those qualify as members, you are eligible to come to the pre-event on Monday, May 15th, which we call family day, which is really translates to member day. So you’re going to come in right after lunch, we’re going to spend a half a day learning together and then we’re all going to go out to dinner. And then the actual conference is Tuesday and Wednesday.
Member day, we have three presentations. We have someone talking about unconventional investment opportunities for business owners and leaders. We have really brilliant estates attorney talking about if you are someone of high wealth or an entrepreneur, some things you need to do and know that are different about protecting your estate, keeping your assets out of probate and things like that. And then Susan Baier and I are going to reveal the member held back, the things that we will hold back just for members, of the 23 research that we’re doing, the agency edge research. So we will do those things and then we will head out to dinner together. And then the main conference starts on Tuesday the 16th.
If you’re not a member, sure hope you can come and join us for the full conference, the 16th and 17th. Really great speakers. We’re going to talk to an agency owner who started out five, 10 person shop, ended up selling to one of the big holding companies and how that happened because it was an accident. We’re going to talk to probably the preeminent experts on public speaking and public speaking, not just from a stage, although that too, but also from across the table or in a pitch or an RFP situation.
We are going to talk to someone on leadership. We’re going to talk about how to deal with stress as a leader. We are going to talk about all kinds of great things that I think you are really going to resonate with it. So anyway, we’d love to have you there. It’s in Chicago, May 15th for member day, May 16th and 17th for the general conference. Grab your tickets now before they go. The price goes up in ’23, so grab it now while we’re still in 2022 if you’re listening to this in real time.
So I just have a couple random comments and then I want to get into what I want to get into. Couple things, as we are winding down to the end of the year, you guys are weary and weary is different than tired. It is deeper than being tired and it’s more than just physical. And so what I’m hoping you will do over this holiday season is that you will take advantage of the fact that the phone’s not ringing as much and you don’t have quite as many emails in your inbox and you will really figure out what you need to do to replenish yourself because I don’t think it’s just getting enough sleep. I don’t think it’s just spending more time with family. I think it’s bigger than that.
And I just had a guest on in the last couple weeks, Jeff, who hopefully you’ve listened to and heard from, who talks about wellness as this emotional, spiritual, physical combination. Mental as well. So emotional, mental, spiritual and physical. And it feels like for many of you, you need to do a reset at of that level and you need to figure out how to find your mojo again.
And so I really do encourage you over the next few weeks because the reality is by mid-December through mid-January, things slow down dramatically. Many of you close down the week between Christmas and New Year’s. And even if you don’t close down, you know that things are going to be quieter. Clients are in, what I call, winter hibernation, right? They go dormant mid-December and they stay dormant until around Martin Luther King Day if you’re here in the United States, but mid-January before all of a sudden everybody’s pistons start firing again and they’re ready to go. So you have a good month to take a breath and really evaluate where you think you’re at and what you need to be fueled up for ’23 because I think ’23 for many of you, it’s going to be a watershed year. I think that many of you are walking into 2023 with great contracts signed, with a rock solid team.
Here’s a sentence I have heard more in the last six months than I have heard in probably two years, which is, I love my team. We have the best team we’ve had in eons. So what you need to do to keep that best team is to be an inspired leader. And you cannot be an inspired leader if you’re exhausted. So just from me to you take some time, really reflect, don’t just assume it’s more sleep or eating better or whatever, really think about what it is that you need to feel full again and give yourself that gift this holiday season please.
All right, that is not actually what I want to talk about, although I wanted to talk about it. So what I actually want to talk about today is very practical. It is time sheets. So do not turn off the podcast. Do not decide already that I’m wrong about time sheets. Just hang with me and give me a minute or two. So here’s the deal, time sheets are not about measuring and monitoring your team. Time sheets are about data. Time sheets are about whether or not your estimates are accurate. Time sheets are about whether or not your team member needs more training. Time sheets are about how the team is working together. Time sheet is about how much time you’re writing off and why. Time sheets are foundational pieces of data that you cannot get in any other way.
I know there are other people out there who will tell you, you don’t need to time sheets and as long as you’re making money, you don’t need time sheets. That’s insane. That’s not paying attention to your budget just because there’s money left in your checkbook at the end of the month. You absolutely need the data that time sheets give you, but time sheets are 63% less accurate when they are not done every day. So I can hear you now. I can’t get my people to do time sheets. I’m not doing time sheets. My people do time sheets once a month, once a week, whatever it is. And I’m going to tell you all of that is bull, absolute bull. You have to do your time sheets and you have to do them every day.
So what I want to do is I want to teach you a methodology of how you within three months can have 95% to 98% compliance on daily time sheets. Yep, 95% to 98% compliance on daily time sheets. I have never ever had an agency implement what I’m about to teach you and for it to not work. It’s never not worked. In other words, this is guaranteed to work if you execute it the way that I’m going to teach you. Okay?
So first thing is you bring your team in together and you talk about time sheets, you talk about the fact that time sheets are not punitive, that no one’s going to get in trouble for accurately filling out their time sheet. You are going to talk about the importance of having that data, that it’s not about big brothering them, it’s not about tracking down their every moment. It’s really about understanding how the work is getting done and how much time stuff actually takes. And if somebody needs some training in certain places or some support, if we actually need more staff, if we are understaffed, this is going to show up. It also is about helping us understand the accuracy of estimates. So that, for example, what most of you do when you go to do an estimate for a job is you look back on the previous jobs and you say, “Oh well, we billed $15,000 for that last time.”
If you’re not doing time sheets every day and you’re not checking against those time sheets, you have no idea that it actually took you $23,000 worth of time to do that task the last three times you did it. But with accurate time sheets, you can see very quickly that your estimates are underestimating the amount of time it’s going to take to get that particular task done. So you’re going to bring them together, you’re going to explain time sheets, and then you’re going to talk to them about the importance of accuracy. Many agencies when they start this what they discover is that their employees were, in essence, doctoring their own time sheets because they didn’t want it to look like they were going over budget. And so they weren’t really reporting the number of hours they were working. So many of you, your employees are coming to you and saying, “Hey, we need more staff.” And when you look at your time sheets, you’re like, “That’s crazy. They’re working 38 to 42 hours a week. How can we possibly need more staff?”
But in many cases, your employees are not accurately reflecting their time and their time sheets because A, they’re not doing them every day so they don’t remember and B, because they don’t want to get into trouble. So you need to make sure that you explain to them, number one, we’re going to do these every day. So it’s going to be a bite size task. It’s not going to be an onerous task where you’re trying to remember what the heck you did for a month. No one can even remember what they had for breakfast three days ago, let alone what they did in 15 minute increments, so super important that we do them every day. And it’s super important that your time sheet accurately reflects exactly what you did that day, not what you were supposed to do, not what you think we want to see. We really need accuracy because otherwise we’re going to be making business decisions on faulty data.
Number two, what I want you to understand that doing time sheets every day is actually to your benefit. It’s to your benefit because we’re going to see if our estimates are too low, if we need more staff, if we need more people in a certain department or with a certain skill set, whatever it is, we don’t know that if we don’t have accurate daily time sheets. Okay? So I’ve seen many agencies task list, the codes that you use for your people to show exactly what they were doing on the project for the client. And I’ll tell you, sometimes you have four task codes, which is way too few. Sometimes you have 44 task codes, which is way too many. So you need to be able to drill down to the granular but not to the point that is ridiculous.
So probably 10 or so, 10 to 15 codes of billable time and probably a good 10 non-billable. And non-billable might be I was out sick, I was on vacation, my kid was sick, I was at a doctor’s appointment, I’m working on agency marketing, I was in an admin meeting. But you want to also be careful that you don’t have these big buckets like admin by itself where people can just dump their time when they can’t remember what they did. You don’t want that on the billable side and you don’t want it on the non-billable side.
But here’s the deal. You walked your people through how to do time sheets on the first day that they started, whether that was a year ago or 20 years ago and you’ve never talked to them since then about how to accurately do time sheets. So one of the things we find when we audit time sheets is that in many cases your employees are putting their time in the wrong place, either on the wrong client, the wrong project, or they’re using the wrong task code and they’re counting some things as billable that aren’t billable and they’re counting some things that are billable as not billable, vice versa.
So you want to review with everybody, “Okay, let’s walk through the task codes and talk about what they are and when you would use this task code.” The billable ones are pretty straightforward, it’s copywriting, it’s art direction, it’s client meeting, it’s strategic work, whatever it is. The non-billable is really where things get messed up. And many of your people, again, will put their time in non-billable time. So they’re recording their time if you’re doing time sheets, but they’re not recording it accurately because they don’t want to get in “trouble.” So you’re going to explain to them the importance of time sheets. You’re going to tell them that it’s a new day. We are all going to do our time sheets. So your time sheet is due by 10:00 AM on the day following the day. So if you’re doing your time sheets for Monday, your time sheet is due Tuesday at 10:00 AM.
Now here’s the trick of how this works. The reality is all of your people are going to say, “Look, I don’t have time to do time sheets. I’m either going to take care of the clients or I’m going to do my time sheets and if I get in trouble, that’s okay.” Because A, number one, they know there’s no consequence. Number two, they don’t think you’re looking and the truth is you’re probably not. And number three, they always know that client needed me is going to trump an admin task. And what you’re going to say to them in this meeting is there are no excuses, absolutely no excuses anymore for not getting your time sheet done. Everyone, including me, the agency owner is going to do my time sheet every day. And here’s what’s going to happen, here’s how we’re going to do this. There are going to be rewards for all of us if we do our time sheets every day.
And what I’m telling you is there’s a carrot and a stick and the stick is the human psychology that says, “I am willing to sacrifice me getting a reward because I don’t want to do my time sheets or I don’t have time to do my time sheets or whatever the excuse is, but I really don’t want to be the guy that keeps someone else from getting a reward.” And so there is an element of public exposure in this that is really important. So let me walk you through it and then we’ll talk about the psychology. So I work all day on Monday. My time sheet is due by 10:00 AM on Tuesday. Someone in your office, typically your bookkeeper or someone who’s has access to whatever software everyone does their time sheets in, at 8:30 or 9:00 on Tuesday morning, an email goes out to everyone. I want to emphasize to everyone that says the following people have one hour or 90 minutes to complete their time sheet for yesterday, Monday, fill in the date. So that goes to everyone. So everyone knows who does not have their time sheet done.
And what you’re going to say is, “All right, so for every day you get your time sheet in by 10:00 AM the next day your name goes into a hat for a drawing.” And you’re going to start out with maybe 80% compliance and you’re going to keep ratcheting it up until you get to 95% compliance. As long as we have 80% or 85% compliance, then everybody’s name who’s in the hat at the end of the week gets put into a drawing. If we as a collective group violate the 80% or the 90% or the 95% as we move on, if we do that, the entire hat gets dumped out, so whether you got your time sheets done all week, or you’re one of the offenders who didn’t get their time sheet done, nobody’s name goes in the hat. And we’re going to do that every week.
So in theory, your name could be in the hat 20 some times, how many ever Monday through Fridays there are in the month by the end of the month. You could have 20 some entries into the drawing and we are going to draw for a prize and whoever’s name gets drawn, they get to keep the prize. So understand the psychology of this, and I’ll talk about the prize in a second. Understand the psychology of this is that every morning the email goes out and says here’s what happened and here who has to, has an hour or an hour and a half to get their time sheet done. And on Friday an email goes out and says, “Because these people did not complete their time sheets, unfortunately, everyone’s name is now out of the drawing for this week.” Or “Hey, congratulations everybody, we exceeded the 80% or the 85% or the 90% or the 95% goal. Therefore, everyone’s name who’s in the hat stays in the hat and we start over again on Monday.”
So your employees do not want to be the person on the list that it says because Drew and Babette and Mary didn’t do their time sheets, nobody’s name is in the drawing. Nobody wants that. And it’s amazing the psychology that comes along with that and how much your people care about not letting their team down, not being the one that screwed the pooch for everybody. And they will get their time sheets done. So at the end of the month, you’re going to have how many ever people you have times, hopefully, 20 some names in the hat. And again, you may not hit a hundred percent compliance every week, but you will be astonished at how quickly you get into the high nineties.
So the prize needs to be something worthwhile. Some agencies give out a hundred dollars bill. One agency gave out $1,000 a month for the first year because they were so invested in getting everybody to do their time sheets. And when they did the math of what they lost when no one did their time sheets, it was worth $1,000 a month to them. I don’t think you have to be that extreme, but I would say a hundred dollar bill. One of the things that a lot of agencies do is they give away two plane tickets anywhere in the continental US and they use their Amex points or whatever their credit card points are for that, so it doesn’t cost them a dime. So whether you give money, some people give gas cards, don’t give extra time off, that doesn’t work as well.
So it’s either money or a significant size gas card, plane tickets or big money like the $1,000, you decide what’ll work for your agency. But it has to be significant enough that people want it. It can’t be like a $20 Starbucks gift card or it can’t be parking spot in the front of the building. It has to be something significant enough that people perceive a value to it and they want to win it. And more importantly, they don’t want to be the person that keeps someone else from winning it. So you set the stage, you have got to be… If you don’t do the public part, what I call the public shaming part, it’s not going to work. You have to do that part. You have to do it publicly. You have to have the prize if you’re going to really motivate people to change their behavior.
And one of the biggest indicators of whether or not this is going to work is if your name’s ever on that list. You have got to do your time sheets. And honestly for most of you, you’re either spending all your time doing client work, which again, is easy to write down or you’re not spending any of your time doing client work as you’re in financial meetings and new business meetings and mentoring your team. But there are going to be task codes perfect for you. And honestly, if you do it every day, it’s going to take you no more than 10 or 15 minutes a day. But if you don’t set the example, if you don’t do this, then nobody on your team is going to do it. I will tell you that right now. If the owner doesn’t participate, this doesn’t work. But when you participate and you issue the list every morning warning people that they have 90 minutes, it’s remarkable what happens.
What happens is the rest of your team starts to get on the people who are not doing their time sheets. And that happens in two different ways. Number one, on the morning that my name’s on the list, your team will keep other people from bothering me to make sure I get my time sheet done. “Hey Drew, you only have 30 minutes to get your time sheet done. Come on man, we want to win the prize. We don’t want our names dumped out of the hat, get it done.” And somebody’s walking towards my office and they’re like, “Uh-huh, you have to wait until he’s got his time sheets done.” It’s remarkable how your team will absolutely block the person from being interrupted.
Number two, they will bust my chops if I’m the guy that dumped the hat at the end of the week. They absolutely will because they’re feeling like, “Hey, we’re doing it, you’re not doing it. You need to be a team player.” And they really do self-police and pure police this. I’m telling you, this works every single time we’ve implemented it, as long as all of the elements are in place, as long as you have the meeting up front and you explain that no one’s going to get into trouble, that you start spot checking time sheets, by the way, which you should be doing anyway, to help people make sure that they’re doing them accurately. And to have conversations with people about we only put three hours on that task. It took you seven, help me understand why. Is it something that was new for you? Do you need some more training? Did it actually just take that long? Because if so, then we need to change the estimate template that we use for that kind of a project.
So it’s big meeting, reviewing why you’re doing it, reviewing the task codes and cleaning those up if you need to. It is random time sheet checks. So you’re looking for accuracy. It is the every morning email talking about who doesn’t have their time sheet done and giving them time to be in compliance. It is the Friday email that says either, “Hey everybody, if your name’s in the hat, it stays in the hat. Or you know what? Unfortunately, because these people didn’t get their time sheets done, the hat has to be emptied for the month and we start over on Monday.” You have to have a good prize and you need to celebrate this. You really do need to make it a big deal in your all team meetings, in some of your conversations, and maybe on your one-on-ones.
If you are a supervisor of somebody who is not doing a great job, who is emptying the hat on behalf of everyone else because they’re not getting their time sheet done, having a conversation with them about how important it is, one-on-one, and that you’re noticing that they’re not doing it, that they’re letting the team down, what can you do to help them make sure that they get their time sheets done? All of those kind of conversations super critical.
And then what you’re going to find is after three months, you’re going to be in the high nineties and then you’re going to sustain it for another three months and then you and your team can really celebrate that. You guys have really built a habit of getting those time sheets done every day. Many agencies will do the prize part and the compliance part, I would say for at least six to nine months. Some agencies just do it as a habit from then on and they do it forever and it’s just part of their culture because they’re always adding new people and they don’t want to have it slip back again. And so that daily reminder is just a constant reminder of, “Hey, you guys, this is super important. We need to do this to be respectful to each other. It allows the AEs to have accurate current data on where their jobs are at.”
There’s lots of reasons why this matters and honestly, the one reason why you as an agency owner don’t enforce time sheets is because you don’t want to do them. And that is stupid. I love you, but that is absolutely stupid. You are operating your business blind if you don’t know what your people are doing all day, how long things really take and where you have holes, whether it’s training or skill sets or people, time sheets are the only way to give that to you. So I think January one is a great time to implement this new program to say, “Hey, you guys, this is a new day. We have got to get better about time sheets and here’s how we’re going to do it.” I think the start of the year is a perfect time for that.
So that’s what I want you to do is I want you to go back, I want you to look at your time codes and the tasks that you have, both billable and non-billable, clean those up and then implement this program when you come back from the holidays. Okay? I’m telling you, having this data is really game changing. It really does allow you to be so much smarter about how you run your business. Once you have your time sheets every day, then we can start looking at things like billability and utilization and all kinds of other metrics that really matter to your business, profitability by client, profitability by project type. You can’t do any of that with accuracy if you don’t have time sheets.
So that’s what I want you to do, is to make the investment, put together a prize package, make it a priority, assign it to someone in your agency to do every single day and you commit to doing it as well. And I think you will be stunned at the decisions you’re able to make with more accuracy, with more confidence because you have the data that you need to do that.
All right. That’s it. Short and sweet this time. So have a lovely holiday, have a beautiful couple weeks, maybe even a month of the slowdown. Please remember what I said. Take some time, figure out what you need to do to really come back as an inspired leader for 2023 and take care of yourself. All right. Huge shout out to our friends at White Label IQ. As you know, they are the presenting sponsor of the podcast. They do White Label design to have PPC, and they are the saviors for many AMI agencies. People rave about them, not only their work, but what they’re like to work with. And so check them out at whitelabeliq.com/ami.
I will be back next week with another guest. I’ll be back with a solocast at the top of the year for you. And I look forward to walking out 2023 with you. And I appreciate you coming back every week and letting this be a part of your work and your life and I am grateful. So enjoy the holidays, enjoy your family and friends. Enjoy the quiet, find a way to come back really fired up and inspirational. Read a great book or two and just be ready to take on 2023. I think for many of you, it’s going to be a really, really great year. All right, see you soon. Tha