Episode 188

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From staffing challenges to constant client demands, agency life can be bumpy. Our industry is in a state of constant change and that’s not going to let up anytime soon. For some owners, that’s exhilarating and challenging. For others, it just makes them bone tired.

Right now, most agencies are enjoying healthy profits, lots of new business opportunities, and a very difficult hiring season. Our employee base is changing and many owners struggle to find and retain talent that will help them grow and strengthen the agency. Clients are demanding more on tighter timelines and budgets.

How do we thrive in this ever-shifting environment?

In this episode, I talk with someone who has seen it all – Nancy Hill. She is a veteran of big box agencies, former president and CEO of the 4As, and, more recently, has started her own consultancy, Media Sherpas. This broad range of experiences has given her important insights into the current climate – the challenges and opportunities we face every day, especially when it comes to staffing and client relationships.

What You Will Learn in this Episode:

  • How to think differently about your agency’s staffing challenges
  • How to get more creative with your benefits package so that you retain younger employees
  • How to establish mutually beneficial expectations with agency employees
  • Negotiating with clients about scope instead of lowering prices
  • Managing just-in-time staffing
  • Why independently owned agencies need to be nimble in their decision-making
  • How to boost your agency’s ability to say no
  • How to thrive in an environment of constant change
“We can’t compete on pay, and we’re going to lose younger workers if we don’t offer them something else they value.” – @nhhill Click To Tweet “It might sound shocking, but agency owners should consider encouraging their employees’ side hustle.” – @nhhill Click To Tweet “If you allow a client to dictate all the terms, that's how your relationship is going to be forever and ever.” – @nhhill Click To Tweet “This is the first generation of employees that have decided they are simply not going to adapt to us.” – @nhhill Click To Tweet “Having a model based on a fully staffed and loaded agency all the time doesn't work.” – @nhhill Click To Tweet

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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 Agency Management Institute’s Build a Better Agency Podcast. Now in our third year of bringing you insights on how small to mid-sized agencies survive and thrive in today’s market. We’ll show you how to grow and scale your business, attract and retain the best talent, make more money and keep more of what you make. With 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey everybody. Welcome to another episode of Build a Better Agency. Before I give you a little bit of a hint about what we’re going to be talking about today, want to remind you that every month we are giving away a free either a seat in one of our live workshops or a seat in one of our on demand workshops, and the way we’re doing that is anybody who leaves us a review for the podcast, wherever it is you may connect to the podcast, so iTunes or Stitcher or Google or anywhere else where you’re downloading the podcast and you have an account, if you will leave us a rating and review and then take a screenshot of it and then shoot it to me at [email protected], we are doing a drawing every month among those folks who have left us a review. So as you know, my goal is to get lots of reviews so lots of people can find us.

So that’s how we are incenting you to help us with that goal. So really appreciate it. I do read all of the reviews. I am grateful for your feedback and your comments. So it’s not just about a numbers game for me. I really do want to hear how we’re doing, how we are helping your agency, what topics you would like us to cover that maybe we haven’t, and you can tell me all of that in your review. And I promise that I personally will see it, and I am grateful. So thank you for that.

So let’s talk a little bit about the episode today. One of the truths of agency life is that the only constant in our space is change. And when I think about what agency life was like when I started my career 30 years ago, compared to what it is like today as an agency owner of 24 plus years, the reality is the change that we’re experiencing today absolutely crushes the kind of change we had when I started in my career in the early ’90s. And so you sort of think, “Oh, I’ve done this for a long time. Things will get easier. Things will get more steady. Things will get more static and less unpredictable.”

And the reality is that is just not the case for us in our business. And so I know a lot of you are struggling with trying to figure out what’s coming next. Many of you are wrestling the challenge of recruiting talent and keeping those talent for longer than a couple of years. So lots things that are really facing our agency that add to the challenge of serving our clients well, building a profitable business and really creating a culture and a team that we can count on for a long period of time.

And so my next guest is going to give us a really interesting perspective on agency life from a lens that not very many people have. So, let me tell you a little bit about her. My guest is Nancy Hill. And Nancy Hill from 2008 to 2017 was the president and CEO of AAAA’s. And so, as you all know AAAA’s, here in the states anyway, serves what I call the big box agencies and also some of the larger independent agencies, but really is built for large agencies. So Nancy has seen the agency landscape from that perspective for the last decade. She’s a veteran of agencies from across the country. She began her career at Doner in Baltimore in like 1983 and was there for quite a while. She was at Chiat Day and Hill Holliday, and some other sort of big brand agencies.

And then served as the president of AAAA’s for the 10 years. And now Nancy has stepped down from that position and is working as a consultant, working with independent agencies across the country. And so she’s seeing now the agency business from a whole new landscape. And I wanted to talk to her about what she’s seeing inside the agencies, how smaller agencies can really leverage some of the things that are really unique to them, and actually that can be something that gives you a leg up over if you’re going against bigger agencies, and just also what she sees coming down the pike for us as agency owners. So I’m excited about this conversation. I think it’s going to be really interesting and really it’s a privilege to have Nancy on the show because she has been studying the industry from her seat at the AAAA’s for the last decade. And obviously is a long time veteran of the business. So I’m anxious to get her perspective. All right. So Nancy, welcome to the podcast. I am super excited to talk to you today.

Nancy Hill:

Oh, I’m really excited to be here. Thank you for having me.

Drew McLellan:

So, you have an interesting vantage point because you spent so many years at the AAAA’s and now you’re dealing with more independent agencies, smaller agencies. So I know that the AAAA’s did a huge report on the talent issue. And certainly it’s a topic that we’re talking about in all of our peer groups and things like that. Let’s talk a little bit about the challenge that many agencies are facing today. And I’m curious to see if you’re finding it too, but the agencies that we work with, the number one challenge for them, the number one barrier to growth right now is that they cannot find the bodies to fill their open positions. Are you seeing that as well?

Nancy Hill:

I’m seeing it in every manner and size of agency. If you think that the big agencies are having an easier time, you’re sadly mistaken because they aren’t. RGA for instance will have 160 jobs open in the New York office at any given time. They just can’t fill them fast enough. My clients range from agencies here in Cleveland, where I am now to clients in New York and Los Angeles, and I’m hearing the same thing from them too. And it doesn’t matter what size you are. It doesn’t matter what market you’re in, and it doesn’t matter what title you’re looking for. There’s, I think a big myth that it’s just the data people that you can’t find, or the analysts that you can’t find, or the programmatic buyers, but that’s not true. They’re having trouble finding anybody and everybody.

Drew McLellan:

Yeah. I don’t mean this in a bad way, but even account executives. So where you would think there would be a lot of them out there in some of the positions that have been traditionally part of agencies for eons, even those positions agencies are struggling to fill?

Nancy Hill:

That’s true. But I think that as a result what’s happening is that people are starting to form other organizations that will help with some of this just-in-time hiring on the agency side, and I’ll come back to that in a second, and help with what people perceive as the work life balance issue. And one of the reasons why they don’t want to work at agencies anymore because they don’t want to work more than 40 or 50 hours a week, especially as you start talking about the younger generations coming in because they have side hustles. So, there’s a thing going on in the industry right now where everybody’s trying to correct that for themselves, whether the employee or the employer. And I think it’s going to take a couple of years for that to balance out.

Drew McLellan:

So, it’s interesting. So I have a lot of agency owners in my world that are, let’s call it in their 40s or north of 40 maybe, and they really struggle with this idea of the 40 hour work week because they remember what it was like for them when they broke into the business. Yeah, I think about my own career, it was not uncommon for me to work till eight or nine o’clock at night and be in the office and then go back on the weekends. And I understood that that was just A, sort of the price of admission that, that was how I proved that I really wanted the work and that I was ready to position myself as a leader, but B, because client demands don’t come in Monday through Friday nine to five and a deadline is a deadline and all that sort of stuff, so how do you help agency owners who have that mindset of, “Well, this is how it is. This is how I grew up.

This is the agency business?” How do you help them wrap their head around this, what one agency owner called the yabba dabba doo culture, which is, a nod back to The Flintstones, when the horn would blow and [inaudible 00:09:00] slide down the dinosaur’s nose, how do you help agency owners wrap their head around this?

Nancy Hill:

Well, you have to be willing to wrap their head around it for starters. I’m one of the things that I usually tell anybody who will listen to me is, “Listen, this is the first generation that’s not going to adapt to us. They’ve just decided they’re not going to. They watch their parents work their asses off. They don’t want to live that way. And they’ve come into the workforce with a mentality of you adapt to me, I will give you everything I’ve got when I’m here, this is how I work, this is when I work, and this is where I work. And as long as you can live with that, then you’re going to get the best out of me. But if you don’t give me that in return, I don’t want to work for you.” And they don’t take that same mentality that we did that said, this is what I have to do to get ahead. I know for me the rule of thumb was, you didn’t leave until after your boss left.

Drew McLellan:

Right.

Nancy Hill:

And if your boss left at eight or nine o’clock at night, you stayed until nine or ten o’clock at night. And you were there before your boss came in, in the morning. They don’t think that way, they don’t work that way. “This is how I work. This is the equipment I need to do my job. This is where I’m going to do it from.” Sometimes that’s in the office and sometimes it isn’t. And you either need to learn to adapt to that, or you’re going to continue to have a problem hiring.

Drew McLellan:

So let’s talk a little bit about the where, because I think not only are the hours a challenge, but for many agency owners the, I want to work from home, I want to live in a different city, whatever that may be, again, that’s not how they grew up in the business, and so they wrestle with that.

Nancy Hill:

I just had a conversation last week with an agency owner from Louisville, not a very big agency, and he’s really trying to come to grips with that right now, in terms of people that he thinks are really valuable employees who want to return to their home towns, which are not Louisville. And I think it’s a little easier in that instance when it’s a known entity, somebody who’s already worked for the agency for a year or two, and you know what their productivity is, you know what their intellectual capabilities are. It’s a little harder when you’re hiring somebody off the internet, for lack of a better way of doing it. But I think we have to learn to be more flexible and have lots of different arrangements in order to make this work, because it’s the only way that we’re going to get through this.

The reality is that we don’t pay what other possibilities pay. And it doesn’t matter what market you’re in. Again, I’ll use Cleveland because that’s where I am. I have clients who are losing people to Nestle, to Progressive, to the they’re building in-house capabilities, maybe not full service agencies inside, but they are building some capabilities and they pay more, especially at those levels of two to three years experience. So we have to be more creative as we always have been and be more appealing as an industry when we can’t compete on those salaries, because what will happen, and it happens over and over and over again is these kids will walk in after a year and a half to two years, and that’s really about the right number, 18 to 24 months and say, “I can’t afford to work for you anymore. I have student loans, I have to pay off.” And we’re going to lose them if we don’t give them something else.

Drew McLellan:

So let’s talk about that. So if we know that our work sometimes demands nontraditional hours, if we know that depending on the job they may or may not have to be in our office. So it kind of depends on the kind of work we do that where our clients are, if they’re local, that sort of thing. And we know we can’t pay what the client side can pay, or in some cases for my listeners, maybe what a larger agency would pay, then how do agencies compete today in the talent war? What can we do? What are you seeing out there that is creative in terms of attracting and keeping… Is one thing to find them, it’s another thing to keep them, right? So you invested two years into them and now they really get the client, they’ve built a relationship, they understand the agency ecosystem, and then they walk in the door as you’re saying, “Guess what? I can’t afford to stay here.” How do we prevent that?

Nancy Hill:

Well, I mean, there’s a couple of things, I don’t think that it matters what size agency you are. You’re offering benefits of some sort to your employees, because that’s just… I mean, unless I’m completely missing something, even if you’re a 10 to 25 person agency, you’re offering benefits. Most of these kids that are coming into the business are still on their parents’ insurance. So they’re not going to take your insurance anyway. They can’t afford to go into your 401K program because they can’t contribute. So the match that you’re saying that you’re providing means nothing to them. So what agencies are doing in getting creative for these kids is taking that pool of benefits that they would spend on an employee and looking at it differently and putting together packages, for instance, that help them to either commute or pay back their student loans, rather than saying to them, “We have a benefits package that provides dah, dah, dah, dah.” That they don’t care about.

At that stage of their life they don’t care. So, that’s one way of looking at it. Another way of looking at it is encouraging them to have their side hustle. When we got into this business, moonlighting was forbidden. You didn’t do it. I worked for Doner in Baltimore and in large granted independent agency, it was written into your not employment agreement, but your rules, no moonlighting. Well now, you can’t stop them from moonlighting. So let’s figure out a way to encourage them to have these side hustles. I use the example all the time of, when I started in the business if somebody asked me what I did, I would say, “I’m an account executive at an ad agency.”

Now you ask that same age person what they do and they’d say, “Well, I’m an account executive at an ad agency, and I write a fashion blog and I’m a DJ on the weekends and I’m really into photography, and if I get time, I’m going to go to dance classes.” That’s how they live their lives. We know this about that generation, that parents scheduled them that way. So rather than fight that, let’s encourage that and allow them a certain amount of their day to work on those side projects.

Drew McLellan:

So given all of that, I have my agency owner hat on, and I hear my owners whispering in my ear, “Great, but we’re missing deadlines. We’re not getting the work done in the way that we should. We’re dropping the ball with clients.” How do I marry the needs of the agency, which are a deadline, is a deadline, and if we said it was going to be delivered to a client by Friday morning, we have to get it to them by Friday morning, and this desire to create this new more friendly work environment?

Nancy Hill:

So deadlines are reality. There’s no question. And I think that most of the agencies that I talked to would recognize that you have to… Some of it is how you hire and the expectations that you set forth with the people as you’re bringing them in. All of these things that we’re offering you in terms of that kind of an environment come with a caveat. And the caveat is you have to deliver on our expectations of you. We treat you like an adult, but we have expectations that deadlines will be met and all of those things will happen. And if they don’t, then those things start to go away and it may not be the right fit for you. You still have to have some expectations that things are going to get done.

This is where I also think that we, as an industry have fallen down with middle management, if you will, in terms of training them to be good managers, and it’s their responsibility to make sure that the people who report to them are delivering on their deadlines and really managing that process. And I think as we’ve moved more into project work which I’m sure you’re seeing the same thing with-

Drew McLellan:

Oh, gosh yeah.

Nancy Hill:

… [crosstalk 00:17:05] work with, that we have to get better at managing the timelines, the scope, and really understanding how we’re delivering, but also how we’re getting paid. And that requires a certain amount of transparency with your employees in terms of, “Here’s this contract for client X, this is what their expectations of us are. This is how we get paid. This is how we don’t get paid. And you need to help us manage that process.” If we’re not transparent with them, then how can we ask them to live up to those expectations?

Drew McLellan:

Yeah. And I also think on the flip side, as the work does move to more project work and finite deadlines, we also have to have different conversations with clients.

Nancy Hill:

Yeah, definitely. And I think we have to get better at saying there’s so many things about scope that you can use to your advantage that I think we forget because we put ourselves on our back foot for so many years. So, when you’re negotiating, whether it’s with the CEO, the CMO or the procurement person, regardless of the size of the company, the argument is still the same. And they say, “Well, your price is just too much.” Rather than saying, “Okay, I’ll lower my price.” You go back to them and say, “Okay, then we need to change the scope.” Because in order to deliver what you’re asking for, this is the price. And when you start negotiating that way, instead of, “I’m just going to lower my price,” then the conversation starts to change.

The same holds true with the ongoing relationship in terms of being really good about… They’re professionals too. And going back to them and saying, “Listen, what you just asked us for is really out of scope. And it’s going to cause a lot of extra work. So unless we can renegotiate the scope, we’re going to have to say no.”

Drew McLellan:

Yeah. Well, and you know what? What I’m always talking to agency owners about is because you’re exactly right, we present them with a scope of work and they go, “Oh, $50,000. Yeah, I only have $40,000.” And nine times out of 10, the agency owner, or the account executive goes, “Okay, we’ll do it for $40,000.”

Nancy Hill:

Exactly.

Drew McLellan:

And now what we’ve said to that client, or that prospect is A, I have no integrity in my pricing. You should never accept the first price I give you. And I was trying to screw you-

Nancy Hill:

That’s exactly right.

Drew McLellan:

… and I can get it done for 40 in theory. Now it may be that we actually are getting it done and not making any money, but from their perspective, they’re like, “You were going to take that extra $10,000 from me, and clearly you didn’t need it to get the work done because you just capitulated down to $40,000.”

Nancy Hill:

That’s exactly right. And that’s why I think scope can actually be one of our best tools in negotiating if we use it the right way and think about it as a way of saying, “Well, if this is what you want done, it costs $50,000.” “Oh, I only have 40.” “I’m sorry. Well then we’ll have to knock these three things off that scope.”

Drew McLellan:

Right.

Nancy Hill:

That’s just, it’s a much better way of going back than it is to say, “Okay, I’ll drop my price.”

Drew McLellan:

Yeah. So, in one of our workshops, Money Matters, we teach this negotiating tactic all the time, we talk about it all the time. In terms of A, walking in with multiple options. So immediately you’re saying to the client, “Look, whether you have $75,000, $50,000 or $40,000, we can deliver some subset of what you want.” And B, “No matter how much money you have, we can do something for you, but it’s not the same something.”

Nancy Hill:

That’s exactly right. And guess which one they almost always pick?

Drew McLellan:

Yeah, the middle one [crosstalk 00:20:37].

Nancy Hill:

The middle one.

Drew McLellan:

Well, and that’s what I say to people, I’m like, “This is not an agency thing.” If you go to Starbucks and you stand there, you listen to how often someone says grande before they save the other two sizes which I can’t even remember.

Nancy Hill:

No, it’s true.

Drew McLellan:

Psycology, yeah.

Nancy Hill:

It is. I don’t know why we as agency people have thought that we could be any different with our pricing. The reality is we can price ourselves exactly the same way that everybody else does, and somebody will pick something in the middle. And I got to tell you almost no client will pick the bottom. Almost no client. So chances are, you’re either going to get the middle or the higher price. So at least start there.

But going back to the way that, that impacts the way we hire and talent and all of those things, it also, I think, starts to teach us that having a model that’s based on a fully loaded agency all the time doesn’t work because you can’t have extra bodies sitting around waiting for the new business thing to come in. It just doesn’t work that way.

And I think we have to get better at what I’m seeing as a new development, in full disclosure I’m involved with one of these companies, a new development in what I call just in time staffing, which is hiring on an as needed basis. So what really struck me was I read an article about Brian Grazer and Ron Howard and the way they run their studio many years ago, I think they have 20 full-time staffers or something like that. It’s 20, 25. It’s not big. And they staff up or staff down based on whatever project they’re taking on, because one project is going to look very different from another project. And the skillset required is also very different based on how much of it is script driven versus how much of it is special effects. And if we start to think about our businesses the same way, no two clients are the same, no two assignments are the same.

So while we might have a core staff of people, we also have to have access to people who can come in or come out depending on what project that we’re working on and have a pretty dependable, and this is the way Brian Grazer just described it so please pardon the throwback, but you have to have a really dependable Rolodex to do that. Then access to the right people. And he made it his job as his partnership with Ron Howard to know who to go to, to bring in whenever they needed to. And I think we have to start thinking about ourselves that way, because that’s the nature of the way our work is coming in.

Drew McLellan:

Yeah. I think most agencies today, it was interesting I was talking to an Australian agency on our last night and he was describing his model to many… And he said, “Well, we’re a little different. We’ve got 25 FTEs, and then we have probably another 20 [inaudible 00:23:25] or freelancers.” And I said, “Well, that’s the norm today.” That many agency owners are doing that. But I think the challenge is, and I suspect this is the project that you’re working on, I think the challenge is