Thinking Outside the Cubicle
“Management needs to have a mindset that asks why people should come here and stay and not think it's a privilege to be hired,” says Larry Star, chairman and CEO of Harrison & Star. “The labor environment is just too competitive for that kind of arrogance. [We need to think about] what we can do to make this a more attractive place. Everyone could make three calls in a half hour and get interviews.”
Cumulative cost of turnover is enormous—it's expensive, though most agencies report the financial expense pales in comparison to the disruptive toll it takes on clients and culture.
“An agency is an assembly of minds, and when you keep changing your minds all the time no one knows who you are,” says AbelsonTaylor president and CEO Dale Taylor. “It's important to maintain a core for a long time if we're going to differentiate ourselves. Turnover [irritates] clients to no end. It's one of the most common reasons why an agency gets fired, and one of the most common reasons why we get hired.” AbelsonTaylor, founded 26 years ago, has 350 employees and very low turnover (about 8% for creative and account people and zero at the senior level). Average tenure is 17 years for creative directors and 13 years for account directors.
Corbett Worldwide Healthcare Commuications has maintained founding and largest client Bristol-Myers Squibb for 45 years. The agency's second-largest client, Alcon Pharmaceuticals, has been around almost 30 years. One Corbett employee recently retired after 45 years of service. “We value clients for life and employees for life,” says Corbett president Elaine Eisen, who reports less than 10% turnover (headcount is just under 200). “We become the history and continuity on brands because clients are switching employees constantly. They rely on us to do that.”
Ed Wise, chairman and CEO Cline Davis & Mann, anticipates about 15% voluntary turnover this year (the 23-year-old agency employs about 850 people). Average executive management tenure is 12-14 years. Wise agrees, “clients want institutional knowledge and a stable team.” He also notes that employees take “considerable training investments” with them when they leave.
Harrison & Star has 270 employees, and turnover for the first half of 2007 is 7% (down from 12% in 2006). The majority of employees (52%) have 1-4 years tenure, 30% have been there a year or less; and 18% have 5-20 years tenure. Star says out-of-pocket cost (excluding hours and salary of internal HR staff) for hiring is currently $5,000 per employee. That's lower than past years, in part because employee referrals have been as productive as professional recruiters. Though this is just one measure of expense, it's clear that the cost of churn—on all levels—adds up quickly and rises exponentially with agency size.
Goble & Associates currently has the highest number of employees in its 25-year history (68), and EVP and principal Mark Goble reports “little turnover.” About one-third of the staff has been around 10-plus years. For Goble, time is “probably more expensive” than other turnover costs because “time spent interviewing people is time taken away from clients.”
Palio Communications enjoys less than 10% turnover (workforce is about 125). Average tenure is just under 5 years, which is good considering the agency is less than 9 years old. President Mike Myers believes “expenses are secondary to the disruption to chemistry, approach and work product.”
Culture is crucial in retaining staff. Agencies that recognize the importance of culture and invest in its cultivation are well positioned to weather the churn of a lopsided job market as well as the mercurial nature of the healthcare industry they serve.
“Top down imposition of culture is not as effective as culture that's built from the staff,” says Anne Devereux, CEO of both LyonHeart and TBWA World Health. “If turnover is high, you [must] constantly teach the values rather than having staff constantly creating value.”
Headcount at LyonHeart (formerly LLNS) is just over 200, with turnover under 15% (down from 17.5% in 2006). The agency is 25 years old, and average tenure is about 9 years. Last year marked a dramatic cultural revolution that resulted from applying TBWA's “Disruption” process to the agency. Changes include the new name, which Devereux notes reflects “relentlessness, passion and never settling for status quo.” A junior copywriter conceived the name—testimony to increased inclusiveness and empowerment at all levels within the agency.
“Advertising is [about] moving people from unaware to actively involved,” Devereux notes. “A good agency does that when looking at retaining people.”
LyonHeart interviewed everyone—current clients, former clients potential clients and employees—to determine strengths and weaknesses. “We had to look hard at ourselves [and] ask tough questions,” Devereux says. “The transformation could only happen if people in the company could identify what [change] meant and how to make it happen. When people own the change, they can't leave because they're leaving themselves.” Devereux adds that a “more familial environment” has resulted. “Our culture went from a lemming-like behavior to really empowered,” she says.
Two-and-a-half years ago Palio also did some soul searching. Though all outward measures indicated a very strong agency, Myers says leaders felt something “wasn't right.” A consultant surveyed employees, with the ultimate aim of defining employee-driven values.
“We felt we weren't going to be where we wanted in 15 years, let alone 3 years,” Myers says. “[The process helped us understand] what we stand for, who we are, and what [employees wanted] us to be about. Usually, [coming] up with values [is] management buzz trying to put a band-aid on something. We've gone to opposite extreme.”
Palio employees defined values as great work; teamwork; continuous learning; fun; and work/life balance. Myers says the agency's strong culture was made “stronger [with these] reference points.”
Wise believes culture has an “enormous” impact on retention. “We have well-defined values because it's important to be explicit about values and what defines culture,” he says. “We're trying to build that into the interviewing process.”
Goble notes that culture “one of biggest reasons” talent seeks and sticks with his agency. “We provide autonomy and freedom to excel,” he says. “There aren't a lot of barriers to [success]. We've proven as our size has increased that we can scale this approach.”
Taylor believes independence helps maintain a healthy culture. “Once you're part of a holding company, your goals are someone else's goals, which are often financial,” he says. “That puts a different spin on how employees are treated. When we lose an account, no one tells us to cut cost.”
Devereux notes, “there are [many] business cases that prove a direct correlation between employee satisfaction and profitability.” She says Omnicom executives learn about the “relationship between good culture and good business” each year from professional service firm management expert David Maister.
“Solely financially driven people might believe the harder people work, the more profitable the business will be,” Devereux explains. “[When under] huge pressure to deliver profit to shareholders, you can become blinded by that goal. You're looking to squeeze numbers and work people longer. It becomes very demanding top-down and short sided. It's easy to drop the ball on long term investments like building a solid culture.”
Elements of a Solid Culture
Commitment to career development is an extremely important cultural asset. Thirty-year-old Draftfcb Healthcare employs about 400 people in New York and has less than 15% turnover. COO Harold Corbran says, “the organization is extremely loyal in making sure that people feel comfortable and develop a career.”
Draftfcb president and co-CEO Dana Maiman adds that career pathing and proactive career management are top priorities. “[New employees] cannot believe we proactively approach them and tell them it's time to become more well-rounded, or that we would approach the client and disrupt something that is working well,” she says. “It's harder for us because we [must tell] the client that it's time for [an employee] to move on, but this prevents [employee resignations].”
Star also prefers to move people and then “manage client disappointment” rather than lose talent. “You have to listen when an employee needs a new challenge,” he says.
Open-mindedness is necessary to help people navigate careers. “It's not just looking at folks from an upward mobility standpoint,” Maiman says. “[An employee who is] very successful may want to try something else. We do [a lot of] home-growing, but it's first having open-mindedness to move people between disciplines and [global network] offices.”
Listening is critical to understanding what employees want and need. “The biggest secret to retention is to listen more than talk,” Devereux says. “By listening, we've been able to help individuals achieve career growth goals. That makes everybody so much happier to be here.”
Training programs are key to career development and retention. Most of AbelsonTaylor's account staff and copywriters are homegrown. The agency has many formal training and mentoring programs, which Taylor says are “important to pass on knowledge and a good way of keeping [junior employees] in touch with the culture.”
CDM reports that employees who participate in CDM University (CDMU) are more likely to stay. In 2006, employees who left CDM received only 6 credits (52% lower than average), and those who were promoted received 17 CDMU credits (37% higher than average).
Harrison & Star University teaches both job skills and management skills. “People are [often] promoted because they have good technical skills, but no one has taught them how to manage,” Star says. “People leave because they hate their boss—not the executives, the company or the client. The better we become at [training managers], the better we will be at retention.”
Goble & Associates conducts weekly lunch-and-learn programs for younger account managers. Some employees also attend Dale Carnegie Training to learn how to present themselves and their ideas.
Continuously learning and adapting is a core value at Corbett, and its senior people play a big role in teaching. “So much of the knowledge is experiential,” Eisen says.
Taylor believes that culture evolves from a solid core. “I don't think you build a culture by creating an implementation plan,” he says. “You build culture by evolving ways that work for you and by making sure everyone understands how we will behave. One reason this is possible is because senior people have stayed so long. I don't think I could change it now if I wanted to.”
Open communication is a tenet at Goble & Associates, which doesn't have voicemail or doors (save the bathroom and conference room). “We're in the communications business,” Goble says. “A client should be able to call and talk to people. That rolls into internal communications that we foster. We incent people to talk to each other.…From top down, [we have] a communicative environment.”
Star believes in collaboration and getting to know employees. “It blows me away that people can be so focused on one dimension and not see their employees as human beings that they might want to get to know,” he says.
Many agency leaders agree that recognition is essential. Corbett has recognition programs which are tied to its nine shared values. Awards are monetary and publicly celebrated. The agency recently started its own internal awards program called the “Gallery Awards.” Work was voted, on and winners were unveiled at a local art gallery.
Palio also displays its work. Every two weeks, pieces rotate around the office. “Showcasing our work and stimulating staff is important,” Myers says. “We show work that we did 8 years ago, 8 minutes ago.“
Corbett also recognizes major anniversaries in company-wide events. “We give people enormous checks,” Eisen notes. “It's the corniest Price is Right thing you can image. We make a big deal of people who invest in us. Compensation is structured to award employees who invest in us—it's rooted in long-term programs like profit sharing, rather than year-end bonuses.”
Obviously, competitive compensation and benefits are requisite, though many believe money isn't a main reason that employees leave.
“At the end of the day, money is not that critical,” Star says. “It's sort of the price of entry. You have to be competitive. We are in a service business, and people work very, very hard—sometimes insanely hard. Spot bonuses and comp time show people that you appreciate it, and you're paying attention.”
Devereux notes, “there's always opportunity to get more money somewhere else,” and she believes people typically make jumps for money when they “don't understand the value of the culture or they're too young to have experienced any difference.”
Often, problems with work/life balance cause talent to look for new employers. “It's usually not about money, and it's usually not about the nature of the work,” Star says. “It's about being stretched too thin. Someone recently told me that when talking to her boss about her work/life balance, her boss [told her] to outsource things. He wasn't talking about her work—he was talking about her family.”
Star is constantly looking at ways to relieve pressure, and he doesn't want employees to conclude that the only option is to leave if they're unhappy about work conditions. “People can change things here,” Star says. “[But if you don't] talk, it's not going to change. A big part of my job is getting people to express what they want. Maybe I can work it out. The only thing we won't change is values. I'm not wed to process.”
Work/life balance is also a priority at Palio. “I don't believe you have to work 180 hours a week to do great work or have successful operations,” Myers says. “If you don't need to be here, get out of here because we're looking for balance. We've been able to attract and retain in a different way because of our belief in that.”
Most agency leaders are aware that little things go a long way. AbelsonTaylor has free lunches every Friday. Palio provides an array of fun stuff, including a game room, guitars and a piano. Parties are important for bonding, as well as blowing off steam. Supporting charitable causes fosters altruism and also helps employees get to know each other.
To celebrate it's 25th anniversary this year, Goble & Associates took its entire staff and their guests on an all-expenses-paid Bahamian cruise. “The success of the agency depends on its people,” Goble says. “[The cruise was] a reflection of the appreciation we have for them. The longevity we've had with clients is direct result of employee retention.”
Perhaps the ultimate testimony to culture is the return of former employees. Draftfcb actively cultivates re-hires, and 15 returned in the last year. “If [employees] leave, usually it's short term,” says Tom Domanico, Draftfcb's chairman, co-CEO and worldwide creative director. “Sometimes they need that experience. Once they get a taste of somewhere else, they want to come back.”
Six former employees have returned to LyonHeart in the last year and a half. Devereux thinks the biggest challenge to retention is to continuous evaluation and improvement, noting that it's easy to “miss pockets of unhappiness” in big agencies.
“[Retention] reinforces to management that we have the right values and that we're doing things right,” Devereux says. “Aside from bottom-line, we get very little day-to-day feedback about how we're doing, and retention is one of the looser measures of doing things right.”
SIDEBAR: 10 Tips for Retaining Staff
1. Offer stability
“People have a pretty firm knowledge that if they're working hard and performing, they're not going to get fired because we lost an account.”
—Dale Taylor, AbelsonTaylor
2. Train effective, involved managers
“Senior management should be seen as people who are involved in client work—who roll up their sleeves, take part in conversations and contribute to the work product—not people in some ivory tower.”
—Larry Star, Harrison & Star
3. Recognize employees
“Recognition is taken to the point where it's not only a fun event, but also a meaningful event. Telling people that they do good jobs everyday and recogniz[ing] them on a professional level is important.”
—Harold Corbran, Draftfcb Healthcare
4. Listen to employees
“Listening creates an atmosphere where people feel safe to speak up.”
—Larry Star, Harrison & Star
5. Be willing to change
“Be willing to experiment with what you think may work. Often corporations are unwilling to try. [Our] culture [is such that] we're willing to try.”
—Mike Myers, Palio Communications
6. Provide opportunity
“Giving employees opportunities try other parts of the business creates much more satisfaction.”
—Anne Devereux, LyonHeart/TBWA Worldhealth
7. Define values and live by them
An organization must live what it says it's about. Our motto is life is too short. We're about helping people better understand the choices they have with medications. It's an important job. We need to walk that talk. We do a lot of charitable donations, and we're very public about that.” —Elaine Eisen, Corbett Worldwide
8. Empower employees to make decisions
“We do a lot of things to try and push down decision making to level where it should be. If someone is working on an account that employee feels [a decision needs to be made] they're empowered to do that.”
—Larry Star, Harrison & Star
9. Talk about the importance of the work
“We have an advantage in this industry dealing with issues that relate to life and health. Remind people that they're helping people survive and have a better life.”
—Ed Wise, Cline Davis & Mann
10. Provide competitive compensation and good benefits
“I don't think all these people would come to work every day if I didn't pay them.”
—Mark Goble, Goble & Associates