One of my favorite pastimes is talking to agency owners. I have casual conversations with agency owners a few times a week. I like hearing about their successes, their stories, their challenges and specifically, I like hearing the questions they’re wrestling with.
By the way, if you ever want to pick my brain or just chat for 30 minutes, I’ll talk to anyone, anytime. All you have to do is reach out.
Anyway, one of the more common sets of questions from owners is, “When do we need a leadership team? How do we go about building one? What should it look like?”
These are such good questions because asking them generally means the agency is growing, the owners are focused on growth, and they’re proactively thinking about what a bigger agency would look like and what it would feel like.
Let me try to answer those questions here.
Your Vision For The Agency
For those of you who have been in one of my Cohorts, you know this is one of the very first sessions. What is your vision for the agency? It sets the stage for so many conversations that come down the road.
Do you want to be a 100-person shop, or do you want to be a 10-person agency? The answer to that question is going to color our conversation about a leadership team.
Do you want to make a ton of money or do you want to invest all your profit back into the agency? The answer is also going to color the conversation around a leadership team.
Do you want to be everything to everyone, or do you want to be very narrow in your offering? This might have less to do with when and how you go about bringing on a leadership team, but it’s definitely going to influence what that leadership team looks like and what they do.
This is probably the most important question related to your vision for your agency. What do you want to do? How do you want to spend your day? Keep in mind that what you’re doing today might not be what you want to be doing in two or three years and your vision needs to pull towards that for you.
This will also influence your approach to leadership teams.
What Does A Leadership Team Look Like?
Let’s start with some basics. Typically, these teams look like heads of departments or areas of your agency. These could include a Creative Director who heads up creative and that could include content too. Although depending on their skill sets and the nature of your agency you might actually have a Director of Content who specializes in content while your Creative Director focuses on design.
It might include a Director of Client Services who leads the consulting team who are the people who work directly with clients.
It could include a Director of Web or Interactive if you build a lot of websites or do a lot of complex web or digital work for clients.
If you’re big enough, it could include a Director of HR to handle your people-related hiring, firing, benefits, culture, etc.
It might include a Director of Finance to keep track of the money, financial reporting, and profitability.
It could have a Director of Technology or Strategic Partnerships if you have relationships with other technology companies, if you feel this is strategic and you want to have more strategic relationships with partners of all kinds.
You could have a Director of Marketing for your agency to handle your own marketing and you could have a Director of Sales who is responsible for new client acquisition.
You could also have someone on your leadership team that is responsible and accountable for client advocacy. This person must make sure your clients do not only have a good experience but also ensure that they are happy to share that experience with the world.
Without thinking too hard, that’s 10 new roles for your agency, 10 potentially high salaries, and 10 people who are only partially billable. You can see how you need to be ready for this.
Now to be fair, you don’t need all these people immediately to have a Leadership Team. You can grow into one just as easily. But again, having a vision and a plan is important. Knowing what this might potentially look like one day is important.
Hiring Upwardly Mobile Team Members
But let’s assume for the sake of this conversation that you want to grow, you want a bigger agency, and you want to be doing more CEO level stuff and have your teams handling more day to day level stuff.
This means you might have to adjust your hiring practices. If you have a vision of a bigger agency, then you should be looking for people who can grow into leadership roles over time.
These people are usually more expensive and more likely to leave if you don’t or can’t give them what they want or what you promised them.
Let me give you a few examples.
Your plan is to have a Creative Director and Director of Client Services as your first two Leadership Team members. Your first move should be to hire UP for your next designer and consultant hire.
By hiring UP, I mean looking for people who are overqualified for the jobs you're hiring them for. People who could potentially be a Director level. People who aspire to be a Director with you and people who have some of the skills required to do the next level job for you.
Your next Graphic Designer hire might be a Senior Graphic Designer or an Art Director at a bigger agency. Both of these people might be looking for an opportunity to be upwardly-mobile and land their first Creative Director job.
Your next consultant might have managed some major clients or some big projects or some very complicated projects in their last role and they’ve demonstrated some of the skills required for a Director of Client Services role. They might have more experience than you typically recruit for but since you’re hiring UP, you’re on the lookout for that.
In both cases, I would have conversations with those people about upward mobility, talk about the timing, and specifically the performance expectations in the current role that would signal to you that they might be ready for the next role.
As I mentioned, you should be prepared to pay more for these people than you typically would for those roles.
Size Matters
It’s a fact. You don’t hire people like this and consider installing a Leadership Team if you’re six people. But as you start to grow, it's going to be clear that you can’t manage 15 people. Here is a great article from Inc. Magazine that says most people can only manage seven people at once.
As you start to get bigger, it's going to appear that you’ll need help.
In most agencies, this starts with Client Services, so it’s very possible that your first Leadership Team Member is a new Director of Client Services. Perhaps you then hire someone to oversee creative, which includes content and web at the start. Now you have a Creative Director, Director of Client Services and you.
Congratulations! You have a three-person leadership team. What’s your next priority? HR? Finance? Sales? If you don’t have the expertise inside, don’t be afraid to hire from the outside.
However, this is important. Make sure you find someone who has experiences that you don’t have. If you want a Director of Interactive to help with website and interactive work, look for someone who has worked at a bigger agency than yours. We like to look for people who are the number 2 person in a department or team at a bigger agency and then lure them over by giving them the opportunity to be a bigger fish in a smaller pond.
Install Financial Controls
There are definitely a few potholes and traps to lookout for when growing and specifically when you're adding expensive resources that are part manager and part billable resources.
1) Make sure you continue to respect any profitability objectives you’ve set for the agency. You can lower your profit targets to invest in more expensive team members, but make sure that’s deliberate and for a limited time period. Their contribution should deliver efficiencies that allow you to return to a higher profitability target in short order.
2) Make sure you’re clear with these people about how much client work they need to be doing vs. how much managing or oversight they’re doing. These are jobs that are not typically 40 hour a week jobs. This should help ensure you get good value for what you’re paying them. They should be at least 50% billable and probably more like 70% billable if possible. This also puts your best people in front of clients.
3) As you move out of the day to day, make sure you focus on additional ways for the company to generate revenue. This should offset the investment and costs of your new leadership team. Additional technology partners should contribute to additional technology commissions. Referral relationships should contribute to more leads, a shorter sales cycle and more new clients.
By focusing on this, your Leadership Team should pay for itself.
The Catch
I’m sharing this from personal experience. Once you bring a Leadership Team onboard, it's very hard to adjust if the economy turns, if you run into a sales slump, or if the market dynamics change.
Before, if you needed one or two fewer people, you let them go. It wasn’t optimal, but you did it. Agency life is tough sometimes.
But when you have a leadership team, these are your best people. You’re not letting them go, you’re letting the people below them go, which still leaves you with the burden of expensive, partially billable resources.
Or, you’re doing nothing but pretending new clients are going to sign, revenue is going to come in, and that the company will rebound. You think that no matter what you do to close more new clients, market differently, our industry is hyper-competitive. Don’t make this mistake.
Instead, have open conversations with your leadership team about what changes are required and make them. Make them quickly. If people have to take a step back, they should be willing to do it.
Building an agency is exciting. Adding a leadership team is a big step and one that should NOT be entered into lightly. Hiring or promoting the wrong team member can be a big setback. There is a lot to think about.
If any of you want to talk about Leadership Teams specifically, I’m always happy to share my experiences with anyone who is curious. I’m easy to reach, simply email me at mike@agencies2inbound.com.
Start Today Tip – Your best plan of action is to create a plan. Who should be your first Leadership Team member? If you have an internal candidate, start those conversations. If you don’t, start looking externally. Neither of these action steps cost you any money, so proceed with them immediately. The longer your runway, the less likely you are to make a mistake. Taking your time is important. There is no rush when it comes to building a Leadership Team and as long as you have a plan, you can let the plan execute organically, as the company’s needs dictate. Follow these guidelines and your company will be one step closer to your goals of growth and professional development.
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