Tuesday, May 15, 2018

Five Easy Ways For Every Company To Keep Its Best Employees and Lower Turnover

These are  simple and inexpensive ways to help improve employee retention.  When employees stay, profitability increases.

1     1)    Communication is the key
Every employee must feel important.  Management must communicate; in person is better, but emails are important.  These communications must come on a timely basis and from the CEO, but especially if there is a crisis or some other event which might start rumors.  Pre-formatted company newsletters are no substitute for a single subject email.  When there is an issue, it must be addressed specifically and immediately.

In ad agencies, when the trade press reports and account in review, particularly a large one, management must immediately deal with the issue.  Best to have a meeting and say that there is no plan but that you will get back to employees as soon as one is in place.  Then follow-up is critical and necessary.  Employees feel better when they are spoken to.

Communication doesn’t have to be from an issue or problem.  At an ad agency, showing the new work on a monthly basis builds pride and excitement.

2     2)    Give raises and promotions when they are due
Every employee, no matter their level of seniority, looks forward to their salary increases.  They should never be put off.  Every employee knows that wage freezes are merely an excuse.  They also know that they are meaningless.  As someone once told me, “All any valued employee has to do is threaten to interview and their pay increase will miraculously appear.” 

Most people don’t leave companies solely over raises, but they will leave over an overdue promotion.  Failure to get a new account is not an excuse.

Spot bonuses are a great management tool to let valuable employees know that they are valued. If raises cannot be given, a small spot bonus will keep employees motivated and loyal.

Unfortunately, ad agencies which have not gotten new business in a while, use that failure as an excuse not to give raises or promotions. Every employee understands the issue, but when it happens multiple times during a short period of time (one year or eighteen months), forgiveness turns to anger.  There is no reason that rotations or new assignments cannot be given; it requires more work on the part of HR and management, but it will keep good employees motivated and loyal.

3     3)    Making employees feel valued is essential
Make sure that valued employees know that they are valued.  Telling someone they are important, doing a good job and have a bright future mean a lot.  Asking a junior into a very senior meeting makes those people feel like they are on top of the world.

A dinner with a spouse or a short weekend away does wonders for morale. 

Feeling important and wanted can lower turnover at very little cost.

4     4)    Giving an employee extra responsibilities goes a long way
As a young account supervisor I was asked on to the agency’s new business committee.  I met with the chairman, CEO, creative director and many others.  Imagine how valued I felt.  Think about this or similar perks for valued employees.  Showing recognition by giving added responsibilities is a sure way to keep valued employees

5     5)    Recognition Is essential
When someone does something important, the whole agency should be told.  Creating pride goes a long way towards building loyalty. Giving recognition for a good job goes a long way – it is why some companies have awards – but giving an occasional award does not go far enough.  I remember once being secretly chosen to go to the agency’s condo in St. Croix for a week.  I felt like a king and it cost the agency cost nothing. I had to pay airfare for my family. 

Establishing special training really helps.  Sending employees for career counseling, presentation skills and other non-traditional training is inexpensive and smart.  I know one agency that sends its mid-level and senior employees for investment training and seminars.  How smart is that?

Believe it or not, all agencies used to announce new hires to the entire company; there was generally a memo and a accompanied by a photo.  Somehow this important recognition has been forgotten.  How nice it used to be to walk down the hall during the first week and have someone recognize and welcome you.

Tuesday, May 8, 2018

Training Programs Need To Be Reinstated Properly

During the forties, fifties and well into the sixties ad agencies had real training programs which involved both the agency and its clients. Those training programs were for every department. The best of those programs lasted six months or longer, where new recruits spent weeks in each of the major departments – account management, creative, research, media and production. They learned what each department contributed and how they functioned; people in those training programs were given real responsibility and tasks.  Account managers also spent time on the road with their clients – I spent six weeks going out with Lehn & Fink route drivers, (Lysol, Beacon Wax, Stridex Pads and other well-known brands), checking and loading inventory, setting up end-isle displays, installing shelf-talkers and basically learning what is today called shopper marketing.

Over the years, these training programs kept being reduced.  By the 1980’s, they were diminished to the point where they had become a series of lectures, mostly about the various departments of the agency. The lectures were generally given by agency executives who, for the most part, might have been interesting but were not teachers (running a department does not mean being a good teacher).  Since then, almost all ad agencies have ended their training programs claiming they did not lower turnover nor do much to foster the loyalty of employees.

The problem, I believe, was not the concept, but the execution. The truth is that if 50 employees started these abbreviated programs and in two years only ten remained at the agency, the program is/was for those ten; however, however agencies didn’t see it that way.  For most, it was merely a time consuming expense  with little benefit.  Agencies never examined that if so many people left the agency, the company needed to examine itself in order to determine why turnover was so high, which probably had little or nothing to do with the training.  

However, I would like to deal with the training programs themselves.

As the training programs evolved they developed into two categories.  In the first, senior agency executives gave lectures on their departments and functions, occasionally accompanied by case histories.  In the second, some lectures were given about the different functions and then the trainees were split into groups consisting of people from each of the agency’s departments and were given a case history or problem to solve together.  Those results were presented by the teams to a panel of agency executives.  The winning team got some sort of prize and/or recognition.  

Neither was particularly effective and actually taught very little about advertising.  People who went through these programs tell me that in retrospect they were boring and had no relationship to the day-to-day problems of the business.  And therein lies the problem.

There is a story told to me by a copywriter which is illustrative of the problems resulting from the lack of training.  The agency was the old Jordan, McGrath, Case and Taylor.  A client asked the agency to create a coupon ad for a reformulated product.  The agency presented an ad which essentially said, “25 cents off…” The account supervisor, who had been in the business about ten years, presented the ad and sold it, but a day later came back and said the client wanted to add that the product had a great reformulated taste (I wonder if she knew that in the first place?).  So the copywriter wrote, “25ȼ off great new taste.”  This, too, was approved.  But then the AS came back and told the writer that the client wanted to add something about its new packaging.  This time the writer said no, the message had become too muddled and they could not do 25ȼ off new taste in a new package.  The account supervisor and the writer got in a big hassle because the writer explained that this simple coupon ad now had too many elements to be effective.

The ensuing argument was one of those small things that got out of hand and ended up in Jim Jordan’s office.  Jim looked at the supervisor and said, “You’ve been in the business long enough to know that an effective ad should only contain a single communication or message.”  The supervisor’s response was stunning – “I never heard that, how should I know it?” 

And therein lies the issues with training programs or lack of them.

As training programs evolved they did nothing to contribute to the creative product or to good advertising.  Agency employees really learned nothing about advertising and what makes it good and effective. (I remember being in the print production department and being taught how to view and evaluate retouching.)

These programs should have taught advertising that matched the agency’s philosophy and should have been be taught by professionals, not a creative director whose mind is on too many other issues (and who sent a substitute most of the time).  And while bringing in professionals – perhaps from local colleges and universities – is expensive, the results could be significant.

If juniors knew more about their business and how it really operates, clients would be far more accepting of their contributions and require less time of seniors.  This, in turn, would increase agency profitability and, in turn, pay for the investment in real training.  And, of course, juniors have this amazing habit of becoming more senior.

Tuesday, May 1, 2018

Clients Actually Running Their Agencies

When ad agencies earned commissions they were profitable, independent and marketing partners for their clients. Then, in the 1970’s consultants came in and started cutting commissions – first network TV buying and planning, then spot television, then, gradually all other services, even production.

The problem is fees. 

There are several issues with fees, these are the same for the large, worldwide agencies and small independents.  First, there is always an agency somewhere that will cut fees and take the business at a lower cost.  Fees, in this way, have commoditized the business, making one agency, in the minds of many clients, the same as any other since they are only looked at in terms of dollars.

The second issue is that money rarely takes into account the talent working on a client’s business.  Fees do not guarantee that money paid to an agency will guarantee the best people for that particular account.  Client’s demanding a lower and lower blended rate (the aggregate of all salaries, stated on an hourly basis) have made it difficult if not impossible for agencies to provide the best, most talented staffing on their account (that is not to say that paying more money is a guarantee of the best talent, but it does mean that the stars may  not be affordable for the client).

And this brings up the biggest and most important issue.  With fees, clients are actually in charge and running their own agencies.  It used to be said that commissions (usually 15%) were paid to guarantee objectivity. Agencies were able to be honest with their clients about the necessities of the business.  For those too young to remember, commissions were paid by the media, not the client.  The media billed the agency gross, and the client paid the net (less the 15%).  Consequently, agencies tended to be objective and, when they felt it necessary, disagree with their clients.  It also meant that the agency controlled its staffing on any particular account, giving the account the people they deemed best and most appropriate for the business – ad agencies could determine who could best service any particular client.

I have always understood this issue, but one day, about 15 years ago, it came home.  One of the major agencies was about to hire a group director to run a particularly large and visible account.  As a courtesy, they sent the person to meet the client; she already had an agreed upon compensation package and a start date.  Her meetings at the client were pleasant and quick.  After the meetings the agency called me to tell me that they could not hire this person – the client decided that they no longer needed anyone on their business who was this senior.  Period.  End of story.  The client dictated the level and experience of the person who should be running their business, right or wrong.  They agency disagreed but felt that they could do little about it.  A year later, the agency lost the account because the client did not feel it was getting the best work.  True story.

Sadly, at most large agencies, the job of the group director is to keep the dollars in line and insure that the agency is adhering to the client’s financial guidelines and dictates. It is why agencies no longer spend enough time visiting their clients and walking the halls, or making necessary market visits (store checks) or calling on merchandise managers with their senior clients. 

This means that in every aspect, including creative, the client is now in charge of its own business.  Despite the strength of some agencies, it makes it extremely difficult for any company to tell its master that the master is making a mistake.

In essence, fees have made many agencies into in-house agencies.  Pity. The big loser is the client.

Tuesday, April 24, 2018

Good Business Comes From The Top Down

After reading about Sir Martin Sorrell’s resignation as CEO of WPP, I decided to look at the composition of boards of all the major holding companies.  It was a revelation, but not surprising.

First, let’s understand the function of boards.  They are there to set policy and priorities for a company.  This includes a multitude of items from finance, dealing with the financial community, personnel policy, compensation, moral leadership and many other areas of policy.

Looking at the members of each of the holding company boards reveals what we have known for a long time.  The holding companies, despite recently establishing cross-function agencies to pitch and handle major accounts which report directly to executives of the holding companies (e.g. WPP’s Red Fuse which was established to handle Colgate worldwide is an example).  The holding companies are definitely not advertising companies.  Not even remotely.  They are financial firms. And most have 
no board members who know anything about advertising, communications or people management.

All the major holding companies have similar boards.  They are made up of investment bankers, fund managers, an occasional senior executive from an advertiser.  With the sole exception of Omnicom, there is not one single board member with an advertising agency background.  There are no real human resources professionals (“our assets go down the elevator every evening”).  Although one company has an executive recruiter on the board, but that person was not an advertising recruiter.  All the emphasis appears to be on making and managing money. 

The irony is that before the holding companies came along, there were plenty of agencies which were highly profitable and extremely well managed.  Just look at Grey, Bates, even Deutsch.  They were money machines.  But no longer.  The holding companies have stripped away their essence, leaving almost all the big agencies the same.

No wonder things are as they are. 
There is no emphasis on the work.  There is a lack of creativity.    Salaries are out of line with similar industries (entry level salaries are particularly poor so that agencies rarely attract the best and brightest young talent).  There is tremendous employee turnover. Salary freezes are the rule rather than the exception ; raises are delayed, forcing talented executives to look for new jobs in order to make a livable wage. Profits in advertising are actually low compared to other businesses.  Morale at most of the major agencies is, at best, only fair.   

I have no sense that the holding companies are dealing with any of these issues. Rather, what we hear about is dealing with Wall Street.

It is time for the holding companies to encourage creativity among their agencies.  P&G and Publicis demanding that their agencies work together to make a better product is laughable since threats don’t make good ads.  While working well together is admirable, good work comes from a strong self-positioning, employee belief in the work and the willingness to fight for it.  Doing better work comes from not being afraid of clients and fighting for what is right rather than simply giving in because it might affect the profit level to be turned over to their holding companies.  BBDO is a perfect example of this.

It is time for the silos to end.  And that can only happen when digital and above the line are all under the same roof and all working together.  Almost every agency president I have talked to agrees with this, but being able to affect this change is complicated by the holding company ownership.  All it takes is for there to be one appointed leader who controls the entire process and has both the authority and responsibility to make it happen.

Agencies are managed for profit, but they would be more profitable if they were managed to encourage growth and creativity.  This includes fighting back against the procurement departments of prospective clients; agencies must be allowed to make a reasonable pre-tax profit which will fund growth. It means turning down accounts if a reasonable profit is being denied to them.  But the holding companies are looking at additional revenue at any cost – even losing money on new accounts. By procurement insisting on lower costs, they are precluding their agencies from pushing back for better, work – the holding companies demand keeping business at all costs.  I know one story where an agency was losing money on an account and resigned the business, which actually made the agency more profitable.  The president of the agency had his wrists slapped by the holding company CFO and was told it was beyond his scope of responsibilities (despite his contract called for maximizing the agency’s profits).  The company wanted the revenues and actually didn’t care about the profits.

It is time to address the excessive turnover among advertising employees.   If people are the principal assets, they should be treated that way.  Training programs for juniors are a thing of the past.  There is  some training for very senior executives, but these represent an elite few.  Employees cannot obtain timely promotions and rotations.  Once upon a time not so long ago, these were built into agency operating philosophy, but now that clients can dictate who can work on their business and how much they get paid, this is also a thing of the past. Constant wage freezes, in order to generate and maintain profit for the holding companies, forces aggressive and high-functioning employees to leave. 

The list goes on.

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