Agency Growth Tips 14/21: Hire people you cannot afford.
14th article in my FREE series of #AgencyGrowthTips – and this one is the penultimate article directly about people. A shortish one. But an important one, touching on taking risks – another article on that exact topic will follow next week.
Next week’s people focused article is called ‘Reward talent. Not just experience.’ it’s all about paying talent what they deserve based on the value they contribute to the business, regardless of their age.
I’m talking about not sweating young people without reward – and investing in them and training and developing the same young people to be leaders as soon as they’re ready, if they have that in them. Or giving them more responsibility if they’re ready. Giving people a chance, and not sweating over pay grades for a 25 year old. If they’re good and they’re valuable and irreplaceable and they deserve it, then reward them as such. But that’s for next week.
Today’s is based on a piece of advice I was given. That I didn’t listen to for a long time. And when I did, when I needed to, it made a huge difference. And I’ve seen others do this when they needed to, and it’s generally had the same positive results.
Aside: Usual dyslexia warning.
Agency Growth Tip 14/21: Hire people you can’t afford.
The single largest cost in our industry is people. Rightly so, they, and their time, effort and talent, are our product.
Clichéd maybe, but they are our greatest assets.
Unlike every other asset in your management accounts though, this asset it not easy to manage. Anything but.
But I am not moaning. It’s been insanely rewarding being an agency leader.
Sure, I employed a few headaches over the years – and I have been one myself for my employers – so I say this pragmatically. But on balance – founding then leading an agency(ies) and building successful teams and seeing people flourish has been nothing short of an honour for me.
In consulting with agencies, I can confirm, in the main every agency leader feels the same – seeing individuals in their teams grow, is as rewarding as their business growing. Sometimes more so.
One thing I certainly was good at, was bringing in new business and growing accounts. What confounded me at times, was how to handle it back at the ranch. When to employ, who to employ, how to resource new business, where to put people, when to promote and when to employ.
When we were small, it was pretty easy.
Because it was pretty obvious what we needed to do. But as we grew, I found it increasingly difficult to make the right decision fast enough. Not always, but sometimes I was paralysed – and I didn’t understand why. I do now. I just didn’t know what to do. So I didn’t do anything, or I simply shuffled the deck, adding more things for the team to do, rather than expanding the team.
An aside: I’ll write more on this in a future article, but one piece of advice I was giving that I now give everyone I consult with is growing by shrinking. What does that mean? Well, I bet you give way more than 10% of your time to the lowest billing 10% of your clients. It’s usually about 20% of your time.
So, if you win a big client or your clients are growing – maybe you don’t need to employ, you simply need to resign those clients – reducing complexity, giving you more time, allowing people to work on bigger clients and no brining on any new costs at all. Worth thinking about. I’ll come back to this – it’s a REALLY important point and strategy.
With real growth comes a challenge. I call it stretch. Suffering from stretch. It’s a condition. Stretch of your assets. Cash. Time. Energy. Motivation. Back to the important one. Stretching your people. And when an agency stretches, gaps show. It gets painful.
How do you know when you’re suffering from ‘Stretch’ it’s easy to spot. When the best thing about winning a pice of new business is getting the call, and then you look around and think ‘how the fuck are we going to actually do this?’… that’s stretch. And it’s common.
Aside from growing by shrining (above) if you win business, typically it means expansion. And at times, most agencies try to hold back on taking on big costs and new big salaries. But if you’re stretched, it’s time to take positive action. Grow the team. Sometime you can promote within and backfill. At other times, when your senior team is stretched and you need more middle or senior level people, it’s time to recruit. Urgh. That.
Yup, it’s a ball ache. But, critical for agency growth. If you’re in high growth, 50%+ per annum, you need great people. High growth is turmoil for an agency – amazing – but it’s hard to manage and hard to keep up.
For a long time, when I had to recruit I was scared of taking on very senior people. Not because they threatened me – far from it. I love working with talent. But for a while I thought, why would they want to work with us… we’re small. So I didn’t aim high enough or think big enough – and when we had hit high growth I was scared of aiming high because I didn’t think we could handle the big salaries.
But I learnt very quickly, when you’re stretched and likely to stay stretched – you need killer talent, experience and capacity. I made and I’ve seen in other agencies a few senior appointments, that ticked 9/10 boxes. And they didn’t work. Because the tenth box was probably the important one – they could grow the business, not just do the work. And those 10/10 box tickers were out of my assumed price range. And it happens everywhere. In every agency at times.
I was given the advice to dive in. To think of the salaries in monthly parts – not the big numbers. To remember if sadly it doesn’t work out, you can shrink the team. I am grateful that in the agency I founded, I never had to make one redundancy. But I’ve seen it in the Group – and it’s sad to see. I take people’s employment very seriously.
Wherever I cut corners in employing someone – it didn’t pay off. And it’s my greatest frustration actually, that at times I didn’t listen to my gut. I always knew when it wasn’t quite right… and it always turned out that my gut was right. What I know is, hiring ten out of tens and somehow finding the money, always did pay off.
I’m not just saying employ expensive people – but if someone ticks every single box and they’re expensive or out of budget at any level – I encourage you to think about the bigger picture… about 12 months time, 24, 36. Not next month.
Killer talent delivers. I bust through my pay scale versus my budget, only a few times. Across the Group, and in the agency I founded. And I’ve seen it elsewhere.
And in the main, the value from doing so was exponential.
Real talent costs. And so it should. It creates value.
And that’s what running a business is all about – not just running an agency.