Episode 95

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Drew McLellan is the Top Dog at Agency Management Institute. For the past 21 years, he has also owned and operated his own agency. Drew’s unique vantage point as being both an active agency owner and working with 250+ small- to mid-size agencies throughout the year, give 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 — 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:

  • Reasons to build a leadership team
  • Why you should never start a leadership team out of frustration or overwhelm
  • Why your leadership team is a great place to mentor employees ready for the next level
  • How building a leadership team fits into your succession plan
  • What kinds of employees should be on your leadership team (and why you shouldn’t just look at employees with certain titles)
  • The huge decisions that you as the agency owner have to make before having your first leadership team meeting
  • What leadership team meetings should accomplish
  • Why every leadership team member needs to leave the meeting with a goal to accomplish before the next meeting
  • How to decide when to include your leadership team in the decision-making (and the three levels of decision-making you can use)
  • Why you need to have SMART goals for your leadership team


The Golden Nugget:

“Who in your agency brings a ‘we’ attitude? These employees should be on your leadership team.” – @DrewMcLellan Share on X


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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 there, everybody, Drew McLellan here with another episode of Build a Better Agency. As you might be suspecting if you’ve been listening to these in order, today’s episode is a solocast. So, unlike my normal episodes, where I have a guest and we pick their brain about something, the solocasts are really a chance for me to talk to you about a subject that keeps coming up in my conversations with agency owners, or in the agency owner peer network meetings, or in the workshops, something that I know is on a lot of the agency owners’ minds or the leaders’ minds, and it’s something I want to sort of just really drill down with you and give you some ideas and some things to think about around a really specific topic.


  And so, today’s topic, I want to talk a little bit about leadership teams. Many agency owners, for one reason or another, and we’ll get into that in a second, decide that they would like to cherry-pick some of their key employees and create a leadership team. And in the abstract, I think this is a dandy idea. I am all for it. Unfortunately, oftentimes what I see is that it doesn’t go well, and it doesn’t go well for a couple reasons. Number one, I think a lot of times, they are created out of frustration or a sense of “I’m tired of carrying the ball all by myself, so I’m going to put together a leadership team and I’m going to start delegating more, I’m going to start pushing some of this stuff off on my folks.” And while that is an end result, and it’s a good end result, it really shouldn’t be why you start a leadership team.


  So, don’t start it out of frustration, don’t start it when you’re feeling really overwhelmed. It’s actually something that I want you to be really thoughtful about, and there are some really great reasons to start a leadership team, and they are all valid. For some of you, they’re all going to be true; other cases, one or two of these may be what is compelling you to want to do this. But for most people, for most agencies, it’s a couple things.


  Number one, you’ve gotten to a size where the reality is, it’s difficult for you as an owner to really have your finger on the pulse of every aspect of the business and to make every decision in a vacuum. And so, many of you, you lead into a leadership team by having sort of an informal one. You have a go-to person or a right-hand person that you go to to discuss agency issues or decisions. For some of you, that might be a head of account service; for others, it’s often a CFO or somebody on the operations side. But your agency is getting to the point, either in sophistication level or size, where you know you need more heads around the table when it comes to making big decisions. It’s also an opportunity for you to set goals and to infuse those goals through your organization by having someone else other than you help carry the load of accomplishing those goals. So, it’s a way for you to plant seeds throughout your organization so that everybody is sort of moving in the same direction.


  It’s also a chance for you to accelerate the growth of your agency. So, by having more people who are thinking bigger than their functional job title and who are being given both the opportunity and the challenge of looking at some of the more agency-wide kinds of decisions you need to make, you can really accelerate your growth by having more folks who are focused on the bigger-picture goals. So again, it’s taking folks out of a functional role, creative director, let’s call it, and asking them to think about the agency as a whole rather than just their department.


  A leadership team is also a great place for you as the agency owner to mentor young and up-and-coming, or seasoned but ready for the next level, employees. So, it’s a chance for you to coach both formally and informally. It’s a chance for you to let them take a peek behind the curtain of how decisions get made and why they get made. And to that end, it gives them a chance and it gives you a chance to observe them getting the opportunity to get a little bit of a taste of what it would be like to run or own an agency.


  So, one of the motivations for many agency owners of creating a leadership team is that they have decided that at some point in time, they want to move to an internal sale. That’s their succession plan. And so, the leadership team is in essence a tryout: “I’m going to put some people together and I’m going to see who rises to the top. I’m going to see who works well together. I’m going to see how they think through challenges and find opportunities and maximize on them. I’m going to observe them without taking the risk of offering them ownership, but I’m going to observe how they approach ownership-like issues and questions.” All of those, or some of those, are great reasons for starting a leadership team.


  So, why would an employee want to be on a leadership team? First of all, they’re going to be flattered to be asked, and we’ll talk about who to ask in a second. Many of them say yes to it because they don’t feel like they have a choice, so be careful when you are inviting them to be on the leadership team, or you’re creating a leadership team, that you only want somebody on that team if they want to do it. So, I wouldn’t make it a mandate, I would make it an invitation. But if someone says yes, odds are, they are stepping up to that leadership role for a couple of things.


  As you might suspect, for some of them, they think there’ll be additional compensation or an opportunity to advance their career. And while there’s no doubt that some of that benefit is there, that should not be the carrot that you dangle. I would not pay them more for being on a leadership team; I wouldn’t promise them a promotion or a new title or anything like that. You want them to be on the leadership team for reasons much bigger than that, and again, much bigger than themselves. So you want them to be on the leadership team, and watch for this as you’re talking to them about the idea, because they want to have more of a voice in the agency, that they have leadership attributes or desires that they want to express, and they want to actually help chart the course of the agency. Also, hopefully, they want to learn. They want to learn how to run an agency better. They want to learn more than their day-to-day task or job or department responsibilities.


  Hopefully, they also want to influence the agency’s culture, and that they have a vision, just like you do, of where the agency might go, and they want to participate with you in taking the agency in that direction. And hopefully, they also just want to help, that they know that you are carrying a heavy load, and they want to help relieve some of that burden and use some of their talents and skills. In many cases, people that you’ve moved up or want to move up to a leadership team have been doing their day job for a while, and it may not be as challenging or maybe as stimulating as it was when they started. And so, a leadership team opportunity is also a chance for them to really stretch their wings and to grow. And so, not only do they want to help you and take some of the load off of you, but they also want to continue to develop themselves in terms of what’s possible for them inside the agency.


  So, let’s talk for a second about who should be on that leadership team. I think oftentimes, agencies default to department heads, and I’m not sure that’s always the right way to think about this. I want you to think about who in your agency brings a “we, not me” attitude, who thinks bigger picture, who comes to you with both problems but solutions to those problems, who behaves in a way that demonstrates to you that they are in this for the long run and that they are bigger-picture thinkers, that they are willing to go beyond what’s right in front of them, or that they’re good listeners, that they ask good questions.


  So, it might be a department head, and in many cases, that probably makes perfect sense, but it also might be someone who is in a department of one, or it might be somebody who is young and hungry. It doesn’t necessarily mean these are all people you’re going to sell your agency to or give your agency to, or everyone has to have a VP title, or that they all have to be at the same level. You’re thinking about the attributes that you want to surround yourself with when you’re making important agency decisions, and then look for the people who have those attributes.


  Now, if you’re doing this because this is part of your succession plan, and for many of you, that may be what you’re doing, so you may be doing this because you’ve identified, whether explicitly, and you’ve had conversations with them, or implicitly, they’re just in your head, you’ve identified some people on your team who could buy the agency from you at some point in time or take an ownership role. And this is your way of really mentoring them into ownership. So, in that case, you might want to think about who is all around the table and how are they going to work together.


  So, there’s lots of different reasons for putting together the leadership team, and there’s different ways to do it. But don’t default to people who’ve only been with you 10 years, or people who have a VP title, or people who are department heads. Be more open minded than that. Think about what you want the leadership team to do, and who is best suited inside your agency to do it, and don’t worry about them being sort of shoulder-to-shoulder peers or at equal levels. That’ll all work itself out.


  One of the things you need to talk to them about is that they now have two roles. They have a role of they are the agency employee, and they have a day job that they have to be good at, whether it’s art director or CFO or whatever it may be. And they also have a leadership team role, and at the leadership team role, titles don’t matter, longevity doesn’t matter, age doesn’t matter. Everybody’s voice around the table is equal on the leadership team. And you’re really going to have to teach them how to do that, because they’re going to come in with their own agendas, especially if they’re younger and they haven’t done a lot of leadership, and it’s harder for them to step away from what’s best for them or their department. So, you’re going to have to coach them through that, but those are the kinds of people you want on the leadership team.


  I would also argue that you do not want 50% of your staff on the leadership team. So, it doesn’t have to be a big group of people. Maybe it’s you and two other people or three other people, or maybe it’s up to five or six if you’re a larger agency. But be mindful of the ratio of leadership team members to the entire agency and make sure that it’s not, like I said, half of your staff. This is a small intact team, and you’re going to be meeting with them regularly, and we’re going to talk about how to set up the leadership team meetings, what should happen in those meetings, and what you can do inside of those meetings to make them effective. But first, let’s take a quick break, and then we will come back to that.


  I get that sometimes you just can’t get on a plane and spend a couple 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.


  All right, Drew McLellan here again with Build a Better Agency, back with you after our break to talk a little bit more about leadership teams. So, we’ve covered kind of the reasons why you would want to have a leadership team if you’re an owner, we’ve covered the reasons why you would or should want to be on the leadership team if you are a team leader, and we’ve talked a little bit about the kinds of people that you would want to have around the table with you. So now, let’s talk a little bit about what happens around that table.


  So, one of the ways that I have seen this go badly is when an owner kicks off a leadership team, and they agree on a cadence of meetings, monthly, every other week, weekly, doesn’t matter, but then the owner doesn’t honor that schedule. So, you have these people all excited, and they’re psyched up about being asked to be on the leadership team, and they’re ready to step up, and you’ve made a big deal out of it, and you’ve made them feel important and special. And then you start blowing off the meetings, or you start moving the meetings, or you start canceling the meetings, or you come to the meetings unprepared. And all of those things erode the enthusiasm and excitement and passion that your people had around being asked to be on the leadership team in the first place.


  So, one of the first things I want you to do is I want you to really think through how you want to do this. How often do you want to meet? How long should those meetings last? Is there a set agenda? Do you send out the agenda in advance? Is the agenda always the same? Do you go over certain things on a consistent basis? Are you looking at financial metrics and goals? What kinds of financial metrics and goals are you willing to share with those people around the table? Are you willing to let them see what the AGI is or other things like that, or are you going to hold your finances super close to the vest? I will tell you this: If you are going to not share with them any financial metrics or goals, this is probably not going to work, because odds are, that’s going to be one of the ways you would want to keep score.


  And that’s another thing you need to think about: How are we going to know if the leadership team is being effective? How are we going to keep score in terms of, is this time investment worth it? So, I would say you need to meet at least once a month, and for many leadership teams, it’s typically twice a month. And I would say you need to meet for at least an hour to two hours, and in the beginning, I would suggest that you have… you follow an agenda so everyone knows what to expect.


  And you’re going to have to go slow for the first ones. You can’t just, you know, all of a sudden expect those folks to know how to help you make good decisions and how to ask great questions that lead to better decisions. So, I’m going to suggest you take this slow, that you set some goals, you as the owner set some goals that you would like to have for the agency for the year, if you haven’t already done that. I would pick one or two of the goals, and I would ask the leadership team to help you dissect what it’s going to take to get to that goal and to put together a plan.


  And then I think it’s really important that everybody leaves the leadership meeting with a task or an assignment, something for them to focus on between now and the next meeting. So, it might be that you pair them up, they may work on things together, maybe that everybody does individually. If you have read the book Traction, you might be following that methodology. I’m going to do a podcast on that pretty soon, about how agencies are using a Traction-like methodology to move some internal projects quickly through their agency in ways that they never thought were possible.


  But you’re going to want to have everyone have something important to contribute when they come back two weeks later, so something to report on, because if you don’t start that expectation from the very beginning, then it ends up being meetings where you just sit around and chat about problems, and your goal should be “Let’s identify the problem or the opportunity, let’s discuss it, and then let’s come to some resolution around it. Let’s decide something and move forward.” And you’re going to have to model that for them, but pretty quickly they’ll take to it, and they’ll be the one, perhaps, who’s even leading that charge inside the leadership team meetings.


  Couple things that I want you also to think about inside the meeting and how that will go well. The truth is that no matter who is on your leadership team, and no matter how much you trust them, some decisions are not decisions that should be made by a committee. I think one of the most critical tools for you as an agency owner to leverage in the leadership meetings is what I call the three levels of decision-making. And it’s your responsibility to be very clear about what level each decision that needs to be made is, before you guys dig into it. So, let me tell you what the three levels are and then give you an example.


  The first level of decision-making is, “We are going to discuss this as a leadership team, and then we are going to, in a very democratic way, vote, and the majority wins, so this is going to be a decision we are going to make together.” And in that role, in that level of decision-making, my vote is no more or no less important than anyone else’s. The second level of decision-making is, “I have something I would like to discuss with you. I would like all of your feedback, I want to have a lively conversation around it, I want you to help me push and pull on this decision, but ultimately as the agency owner, I’m going to make the decision.” And then the third level of decision-making is, “Hey guys, guess what: I made a decision about something.” No discussion, no weighing in. This is the privilege of taking the risk of owning the agency.


  So, for example, let’s say that you get your healthcare premium notification, and your healthcare insurance is going up 35%. So, you have three ways to look at that. You can go to them and say, “Hey, we have some options in terms of how to manage our healthcare costs, and I want to discuss those with all of you, and then we’re all going to decide that together.” So, you would look at deductibles or whatever the variables are, and you would decide it as a group. Second way of doing that is saying, “Hey, healthcare costs came back and they’re astronomical. I want some thoughts from you. I’ve got some ideas, but I’d like some thoughts from you before I make a decision about how we are going to cover our employees with health insurance without breaking the bank.” And the third one is, “Hey, you guys, we got a 35% premium increase from our health insurance, and so I have decided to put our company back out to bid and see if we can get some more premiums. And if we can’t, I have decided we are raising the deductible to $5,000 to manage the costs,” or whatever the decision is.


  So, by doing that in the very beginning, what you don’t want to do is you don’t want to ask someone their opinion and then make them feel like it didn’t matter. So, you want to be really up front with your team, and you’re going to have to do this very deliberately in the beginning. You’re going to have to say, “Remember, there are three levels of decision-making,” and you might even have to review them, “and this is a level two decision, which means I want your input, but then I’m going to decide,” or whichever level it is.


  But you want your team to know that when they give you feedback, or when they’ve really thought about something, or when they ask great questions, that it’s been heard and respected and valued. And so, when they know that, for example, they get to weigh in but you get to make the decision, then when you make a decision that’s different than what they would’ve, they don’t feel mad or bad because they didn’t get to make it, because you told them right up front.


  So, that’s a critical element to making a leadership team work. And you as the agency owner, if that’s who you are, you have a responsibility to own that and to not pussyfoot around. Many agency owners are uncomfortable asserting their ownership and saying, “Look, this is my place, it’s my mortgage that’s on the line, and we are not paying that for health insurance. I know it would be great, but we’re not doing it, so we’re going to… Everyone’s going to have to chip in more,” or the deductible has to go up, or whatever it is. You have to be ready to make those tough decisions and to own those decisions, and to also have the privilege and responsibility of sometimes being the one that makes the call. So, I highly suggest that you use those three levels of decision-making.


  But the other thing I want you to think about is, inside those meetings, not only