Agency Life: An Indictment of the Hire & Fire Culture
Most people know what it's like to get fired. It's happened to nearly everyone, even if it was just from a part-time job in college. And for those who don't know what it's like directly, you can probably imagine.
Getting fired sucks. It's a direct hit—to your self-esteem, to your self-worth, and to your ego. It's not just the loss of income, but also a loss of dignity. It hurts—even if you deserved it, even if you didn't want the job anymore, and even if your boss was a monster.
On the flip side, if you're a good person, being the one responsible for firing someone sucks as well. I usually can't sleep for weeks before someone gets fired, and the weeks after aren't much better. Firing someone is one of the most impactful things you can do to a person and should never be taken lightly or without due cause.
With that said, you can only imagine how I feel about the hiring and firing mentality that dominates digital agency culture. Not only is it disheartening, but the fact that this is the norm in the industry aggravates and confounds me.
Below are a few reasons why I disagree with this culture and how I think it can be changed for the better.
"Agency life" is a term that is used to describe the hire and fire culture most agencies embrace. Win a big account—staff up. Lose an account—cut the cord with your "least valuable" employees. Moreover, even without real job security, agencies expect employees to burn the midnight oil night after night, day after day.
Why? Because working at an agency is a privilege. Because to work at an agency puts you shoulder to shoulder with the best of the best, and if you want to prove your worth, you have to excel in the agency world.
I think this is a load of crap. I can do math and understand the need to staff up or staff down according to revenue; however, what I don't understand is the failure for agencies to create business strategies and to structure their services to avoid the feast or famine cycles.
Over the past nine years, we've never laid off a single employee. We've terminated people for causes; we've had employees voluntarily leave; but we've never had to let an employee go because of bad business conditions or poor strategy. It's probably one of the things that we're most proud of and a legacy we hope to continue.
We've structured our business in a way that avoids the highs and lows other agencies face.
First, we give set project fees. This allows us to have a results-oriented culture. We don't need (or want) our team to work late every night. We don't want them mindlessly logging billable hours.
Clients don't either. Clients simply want great websites. They want amazing digital campaigns. They want us to solve problems and engage users. They don't want a stack of hours each month.
Secondly, we don't take every project that comes our way. We try to be very deliberate with the clients and projects we choose. Sure, we've made mistakes, but we've tried to learn from those missteps. We want to take projects that allow us to make an impact, that align with our culture and values, and that fit into our business model, which brings me to my next point.
We don't want any client to comprise too large of a percentage of our overall revenue. One of our competitors has a client that comprises 50 percent of their annual revenue. If they lose that (and one day they will, because, as Mad Men's Roger Sterling once said, "The day you sign a client is the day you start losing him"), they will have to fire half their staff. That's not smart business. That's not risk avoidance. Too many eggs in any basket leaves agencies—or any company, for that matter—too vulnerable.
In addition, many agencies don't have the proper balance of recurring revenue to one-time revenue. Recurring revenue is like farming: each year the crops come in, and you can can have a steady supply of food. One-time projects are like hunting: you can't depend on a successful hunt each day or each month.
Our goal is to have our recurring revenue match or exceed our labor cost. This enables us to have the stability needed to grow the team in a very deliberate, consistent and dependable manner.
We also keep a reasonable amount of cash on hand to help us survive any external shocks. Clients will leave. Clients will be late paying their invoices. Unexpected costs will be incurred. We've had accountants and financial planners urge us to make our money work for us and not just sit in a low interest savings account.
However, having cash on hand has allowed us to weather various storms. We didn't have to overreact when the economy tanked in 2008 and several clients were 90 days or more past due on their invoices. To us, stability and culture are investments.
We don't care about drawing 3–5 percent interest on the money in our savings account when investing in the team drives bigger dividends. It's not just the right business move; it's also the right thing to do.
Most agencies will say that their people are their competitive advantage. If that's the case, why wouldn't they invest in their people? If "agency life" is the industry norm, how can "people" be a competitive advantage? Especially if the team doesn't know if they will have a job in six months or if their cube-mate will be different based on agency wins and losses. How can "people" be an agency's competitive advantage or become great employees if they don't have a balance between work and life?
Nebo's competitive advantage is our culture, and that's not just marketing or messaging; it's our mission. We're trying to change a dehumanized digital industry into a more human-centered one. That's our purpose. That's why we started Nebo, and to us the only way to do this is to respect, love, and grow the team.
I know some may question why I'm sharing some of Nebo's secrets to success in this post. What if others copy us? My answer is simple: good.
Nebo's goal has never been to be the biggest agency in the world. Our goal was to do great work while attempting to bring humanity back into digital agency life. And if others copy us, well, that just means we've accomplished our goal.
CommentsAdd A Comment
Yep. Been operating this way since 2006. Glad to see this mindset spreading. It's the right way to be. ;)
I laughed out loud when I read "And if others copy us, well, that just means we’ve accomplished our goal."
Seriously, none of these points are anything new.
I love this approach to business. In "agency life" clients will come and go, but it is the talented people the agency can retain that will bring new clients. At the end of the day it should be about building the agency name by delivering quality work, not massive billable hours.
Love this approach. It's not one that's going to produce big results quickly but offers more in the way of sustainability. Judging by overall quality of work and not focusing as hard on the billable hours has to help the morale in a workplace. Great, great agency read.
Eric - I just hope we can inspire other agencies to shift their views a bit. Thank you for reading the post and for the compliments!
I'm proud to have worked in several agencies with this approach. It does work. I've tried to create an agency (or two, maybe 3?) along this approach, too. It's hard. My first agency experience was in an off-the-grid market. Nonetheless, the leader of the agency took this approach and 'Johnny Appleseed-ed' it as the leader of multiple offices for one of the original international giants. So keep doing it. Keep working it. Agencies are, by their nature, volatile and dynamic. We all admire W+K -- one of their fundamentals has always been to keep your business orderly so you can be wildly (not purposelessly) creative. Amen to you for adding more positive proof. BTW, the last time I spoke with the principal from that off-the-grid agency he was returning from some international conference where he presented how they opened the first western agency in China. I had accomplished a few things, too (HA) and was telling him about it. He nodded and offered some great advice, "Just remember, It's supposed to be fun." Thanks for sparking that reminder. Sounds like you all are doing just - having fun and proud of it.