Why Valuing Employees is Key to Holding Company Growth

Putting people at the center

Why treating employees and clients better is the engine

for holding company growth.

By Tim Ringel, Global CEO of next-generation international advertising group Meet The People.

How many failed acquisitions will it take before holding companies realize that their current operational models are broken?

Again and again agency groups go through the process of buying ad agencies for what they can bring in value to the company — but then proceed to lay off a large number of these newly acquired, but now “redundant,” staff members, which in turn forces the remaining employees to work twice as hard. Meanwhile, these now bloated structures end up costing the clients more money in redundant billing and inefficient processes. It’s simply bad business. And to answer my question above, there’s no end in sight.

What we need is a smarter model for growth. One that values employees and their contributions. One that makes us wiser about our acquisition choices. And one that gives the client the efficiency of a truly integrated structure.

Valuing Employees

In my 26 years of building, running, merging, and scaling agencies, I’ve found that there is simply no shortcut around the need for happy employees in order to have satisfied clients.

If employees feel unappreciated, they will probably leave. If they’re afraid they’re going to be laid off, even many of the one’s you’d like to keep will still start looking for another job, too. And if they’re feeling like they’re just making money for you without any mechanism for creating value for themselves, they’ll find someplace that gives them the credit they think they deserve.

As for clients, they rely more and more on the personal relationships they have with the agency staff they already know, value and trust. So when we disrupt these relationships and force them into unfamiliar processes, we might as well be saying, “We don’t care about you.”

As an industry, we need to start valuing people again. Whether it’s as simple as making sure that good work is recognized enthusiastically by management, or we get creative with a system that allows the employee to earn and share value within the organization as it grows, we must do more to help employees feel cared for and supported.

What’s more, we need to care for the whole person. An overworked and stressed-out employee always has an expiration date attached to them. But when we create a good work environment of progression, respect and empowerment, an employee can thrive, often producing far more work in far less time for happier clients.

Valuing Smarter Integration

We have a history in this business of chasing after shiny objects, when it comes to acquisitions. We see a hot new trend or a cool new technology gaining traction in the press and we’re immediately pulling out the checkbook and doing a deal.

It’s time we move past this toward a more rigorous process of evaluating whether we’re making the right acquisitions in the first place. After all, few, if any, of the past “trendy acquisitions” of large holding companies have resulted in a fundamental change to their business model. Innovation may be valuable to clients and the market, but smarter integration of your total package of services is far more important.

When we acquire new companies, we need to focus more on service gaps within our existing structure. Integrating agencies is more than just assembling a collection of marketing disciplines. It’s listening to real client needs and coordinating services to achieve comprehensive solutions. Which means when we’re considering an acquisition target we need to be less enamored with pie-in-the-sky possibilities and more aware of how we can improve the client’s experience.

And when it comes to integrating new acquisitions, let’s agree to not start from a deficit in our incentives for working together within our own organizations. We need to consider cultural fit among the individual agencies, and reward cooperation and collaboration across the organization, as much as individual agency performance. No brand gets any real value from a 50,000+ employee holding company anyway, if those employees don’t work well together. In fact, I would argue that a smartly integrated 5,000 employee agency group could outperform any of the larger holding companies under their current models.

It all comes down to being more intentional about our choices. We always tell clients to have clear objectives before they act. We should always be doing the same when building our holding companies, as well.

Simplification of Services

Finally, we need to consider more carefully how we handle overlap of skills and services among partner agencies.

Clients bear the brunt of inefficient consolidation of services. Whether it comes in the form of overcharging because of operational redundancies across the agency group or duplication of consulting service between individual agencies, clients are usually the ones left eating the costs. But through alignment of skill sets, you can streamline these costs, which can benefit both the company’s overhead and the client’s fees.

While some might argue that charging less makes little sense, I would claim it’s more profitable in the long run — including for shareholders. Doing more for less is a win-win for everyone. It keeps employees satisfied and focused while clients stay loyal to an operation that actually has their best interests at heart. And most importantly, everyone saves money.

Marketing is all about people — brand professionals working with agency consultants to deliver thoughtful and targeted communications that inspire customers. And as such, it’s time for holding companies to embrace this principle in their acquisition practices or risk alienating the very people they’re trying to reach.