This is a post I have been meaning to write for a long time. It is on a topic rarely discussed; a problem that every agency faces. Running operations at SEOgadget I faced this problem daily and it has been a constant thread in discussions on operations with agency owners.

Over the last few years, there have been increasing complaints from agency bosses that marketers are difficult and expensive to hire and hard to keep once hired.

Speaking to Wil Reynolds from SEER Interactive at Search Love in London, it was a sentiment he echoed. When opening his San Diego office, he moved Philly staff there to make sure the new office started with the Seer attitude, and with people loyal to Seer and what they are trying to achieve.

Wil also told me a story of a business in Silicon Valley who was hiring entry-level UX staff. They found that as Facebook, LinkedIn, and tons of startups got money to grow and grow fast either via IPOs or VC investments, they were able to "overpay" for entry level-talent. This ultimately puts a lot of pressure on boutique agencies that have to compete with those expectations in competing offers or in folks leaving these companies.

As a marketer who has run operation for agencies and worked extensively for startups, I see very clear structural business reasons for this.

The competition for staff is not driven by businesses, but by business models.

The three business models competing for your staff

The Agency - What an agency can pay a staff member is based on days per month worked and what you can charge per day. There is therefore a very hard ceiling to the amount you can pay someone working in an agency.

eg - 20 days per month, charged out at £600 per day. The maximum you can make per employee is £12000. Given business costs and overheads and the fact that they are likely to work less than 20 billable days a month, £3000 - 4000 per month is a hard limit for most agencies.

The Company with Scale - based on what they think you can do for them within a flexible range - medium ceiling.

eg - Vodafone Marketing Manager - this is a position which provides scale in a large business that sells products at scale. Their income is based on phones and contracts sold - there is not such a hard limit to what they can pay.

Those two business models are the two traditional competitors for marketers - basically in-house or agency. But in London, New York and increasingly in other metropoles, there is now a third competitor with a completely different business model hoovering up talent.

The Startup - Startups are funded by venture capital and pay is not linked to business model - there is no ceiling for the right person. Recently funded, cash rich startups place premium on talent for two reasons - their immediate need to solve the problems that will enable them to scale and to have the right CVs on board for the next round of funding.

e.g. Snapchat - no business model yet but with a valuation of £3bn. Why would they pay market rate for the person they want and risk losing them? They can offer significantly higher incentivisation in terms of pay and options than any agency ever could, ensuring they attract and keep the best marketers.

What you can do when paying more is not an option?

I decided to ask some of the people running agencies and dealing with this on a daily basis what their experiences were. So a hearty Thank You! to Rand, Wil, Will, Kevin, Simon, Allen and Frank for sharing their business experience and insights below.

1. Build a working environment that suits a specific type of person

Distilled and SEOgadget have completely different office environments, but both are good environments for the type of people they each employ. If you find a certain type of person works well in your organisation, hire more like them and build an internal community of like-minded people.

I asked Will Critchlow about how Distilled builds their office environment.

Stephen: Do you hire for a certain type of person at Distilled?

Will: We talk a lot about "smart and gets things done" (a concept we shamelessly stole from Joel Spolsky). We base a lot of our recruitment process on finding those people. You can understand more about the kind of person we're looking for by reading our manifesto.

We have quite a wide range of types of person in terms of interests, hobbies, backgrounds etc. but they are united by this.

Stephen: Do you think having a group of similar people works to retain them?

Will: Depending what you mean by "similar", yes. One of the biggest trends we see in the feedback from our team is that the rest of the team is the thing that keeps them at Distilled. People like being surrounded by smart people who are striving to do their best work.

Stephen: Do you think your staff appreciate the environment/colleagues they have to work with - compared to colder large agencies or startups where they would work alone?

Will: We have only had a handful of team members leave for startups (and a much smaller number leave for other agency work - only one that I recall). Based on the numbers and on the qualitative feedback we get regularly from the team I would say yes - both of those factors are at play. Our team like to be surrounded by great colleagues but also like the relatively small and collegiate nature of our teams.

Stephen: Do you think your big events work to draw your whole team together?

Will: Staff retention and development wasn't one of the reasons we started running our conferences, but it's been an unexpected benefit. It's a little harder in the US where we run conferences in different cities to our office, but in the UK, our major London conference is a big benefit for the staff. I think they also enjoy our smaller meet-ups. They definitely enjoy sharing our team's knowledge and being part of an organisation that can run that kind of event.

2. Empower staff with responsibilities

This will only protect you against other vanilla large agencies, as startups are all about giving responsibility.

I recently consulted at ROImedia in Cape Town to help them reform their business units around people in their business taking direct responsibility for specific clients.

Giving staff ownership and accountability starts a positive feedback loop. From my experience, the more ownership staff feel over their clients, the more invested they are in getting results and putting in long-term effort that they will be bought into staying around to deliver. I asked Allen Jaffe about his experience with this.

Stephen: What impact do you think giving staff responsibility has had on their attitudes/performance/retention?

Allen: The minute you give staff responsibility, you give them accountability. When staff are strictly focused on tasks and not direct client outcomes, it greatly affect their motivation and output. We split a large team into four distinct business units, all working on clients' results and it allowed each person to be more responsible and motivated.

Stephen: Does it simplify your business management?

Allen: Business management is slightly higher as you have additional teams to manage, however the productivity and results are much greater justify the shift. You also are crafting new managers of specific teams and in the long run the process should simplify business management.

Stephen: Do you think ownership of key accounts can be used to keep staff or even tempt new hires from other companies?

Allen: Absolutely, one of the major issues that kept coming up from the staff was a lack of growth opportunities. We have now created multiple new management roles and each team competes against each other, thus creating healthy competition.

One of the big breakthroughs was besides vertical management of a team, we also created horizontal management where specific users who were not team leaders, could become experts / team leaders of specific roles such as outreach.

The key is also the "right accounts". When I had dinner with Will, we both discussed a similar scenario of having to scale with the right clients and relating to the 80/20 principle with clients paying 20% of your revenue and producing 80% of the hassle factor. Your team will give their all to great brands where their hard work gets noticed. Sign a bad client and it becomes toxic for the team and your business.

Stephen: Does giving staff responsibility give underperformers no place to hide?

Allen: The weak people in the team are quickly noticed and the team get's uncomfortable carrying them. The minute the team was restructured there was some fallout due to this. The replacements are also now strictly vetted by the individual teams and head of divisions.

3. Showcase Staff

Give them opportunities to showcase their talents - I was delighted to see Andy Miller from Blueglass speaking at a Linkdex meetup recently. These are not opportunities that 1,000 people agencies or startups give their new marketers. I asked Kevin Gibbons about it.

Stephen: Do you encourage staff to do public speaking and posting?

Kevin: Absolutely. I find that while blogging and speaking isn't really something we recruit for directly, these are skills that people are often keen to develop. I guess in some ways this isn't surprising, given that we look to hire people who are passionate about digital marketing, so as a result these often go hand-in-hand.

I definitely find it important to encourage people in the right way. Public speaking isn't always for everyone, in which case allowing them to develop blogging is likely to be a better method of sharing experiences, certainly initially. Likewise, I've worked with people who are excellent verbally and in client meetings - but not as suited to writing in-depth reports or blog posts. So it's important to encourage people in the right way, providing them with the experience and confidence to develop personally, rather than just throwing them in at the deep end and hoping they can swim!

Stephen: How do you make sure they are trained and their content is good enough to represent BlueGlass?

Kevin: As an agency, word-of-mouth referrals via clients and industry relationships/reputation has always been our biggest source of generating new business and qualified leads. Blogging and speaking was our biggest marketing activity in 2013 by far, and will be again in 2014. The only way to scale this is to spread the load across the team, ensuring that content shared is in-line with our company vision but from each individuals own personal experiences and skill sets.

We've run public speaking training for our team and will continue to do so, we also have an editorial process and blogging guidelines. However, I mainly find that great blogging/speaking comes as a result of doing great work - where people can work together, develop and be supported along the way. I know plenty of my best blog posts and presentations in the past have been triggered by conversations and emails with clients.

With great results often comes interesting stories to tell - which leads into blogging, speaking and media opportunities, which of course we'd love to share when possible to represent us externally.

Stephen: What impact do you think public speaking on behalf of BG has on retaining them?

Kevin: Personally, I think retention and job satisfaction falls under a number of aspects in an agency model. Working with exciting clients and being surrounded with people you can learn from, and enjoy a strong working environment with, would be very high on that list.

Building an agency is all about people, and in order to continue growing BlueGlass it's pretty simple, we need to hire and retain the best people possible!

In order to do that as a company, we need to align our goals to give everyone as much opportunity as we can to allow them to grow individually too. Speaking and blogging can play a large role in career and personal development, it's certainly something I feel that I've benefited from, and no one wants to hear from me every time so it makes sense to share this across the team!

Stephen: Do you worry about the increased exposure for staff members means they are likely to be targeted by other companies/recruiters?

Kevin: Of course - it can definitely be a catch 22 situation. Public speaking is as much personal branding as it is company reputation building, if not more. It's only natural that speakers are going to build stronger relationships and this means they will get on the radar of agencies/brands and recruiters.

Sometimes you do have to accept that people will move on and need a new challenge, especially in big cities like London with no shortage of opportunities available. There are always risks both ways though - my biggest fear is always in-action and standing still, and to spin the previous question to "what impact do you think not allowing people to speak on behalf of BlueGlass would have?" and it would have to be a negative one. We've been relatively fortunate in this so far, the people who have left have often come on to start their own thing and one person’s response was that you can either risk that people may end up leaving because they develop, or you risk that they don't develop and they stay! That's very true.

I've said this before, but the proudest moment I take from my work is seeing the people I have recruited develop and grow into who they are today. And the more my own role has developed, the more I've realised it's my job to give them the tools to succeed and grow, so that we can get the best out of the team and so that they can achieve everything they want to personally with us. Building your own personal profile is often a key part of this.

It is also worthwhile having a read of Kevin’s post on Econsultancy about agency business models.

http://econsultancy.com/blog/63021-integrated-vs-specialist-have-agency-models-changed-in-2013

4. Give Staff Wide Experience

Startups generally solve one company’s problems - although you get a deep knowledge of marketing around a single product or problem, you do not get the variety of learning experiences across clients like you do in an agency.

However, I also know good people in agencies who are frustrated at their lack of clients and who feel they are constantly servicing the same clients and not learning widely enough.

5. Get out of Startup areas

Zazzle Media in Peterborough in the UK might not be exactly in the middle of nowhere, but they can see it from their offices. This is a double-edged sword as it is harder to attract staff but they dominate the local talent pool and it is easier for them to keep staff as there is less local competition. They also benefit from lower salaries compared to companies in London (who generally have to pay up to 20% more to cover the cost of living in London).

I asked Simon Penson, the CEO of Zazzle about his experiences hiring outside of a big city.

Stephen: What benefit do you have by being outside of major cities - generally does this make life easier or more difficult with regards to hiring?

Simon: There are advantages and disadvantages but for us the advantages outweigh the 'issues'. Peterborough is only 45 minutes from Kings Cross for one, so we have access to some London talent without being 'in it' and having to deal with the churn. We also have a fresh pot to 'pick' from and interestingly the area is VERY strong for content talent, which is the core of our business. Several large publishers have existed in the area for 50 years or more and so lots of talent has been attracted to that.

Stephen: Is it cheaper to find staff?

Simon: Yes. You can buy a nice three bed house here for about £150k and the standard of living is so much higher than having to eke out a living in London. That is reflected in salary to a degree but everything is relative and ultimately I don't think you can argue that the standard of living is higher here.

Stephen: Can you find good quality staff or what are the issues with finding staff?

Simon: There is high demand for technical people, whether that is dev or technical SEO talent, throughout the UK so it is probably no different here than anywhere else. Great content people are more abundant here and we are really lucky in that sense.

Stephen: Do staff stay longer?

Simon: If they fit yes!

Stephen: Can you still get big name clients?

Simon: I think so yes. There are plenty of great agencies, including ours, outside of the capital with some amazing brand names. We are generally cheaper also so they get more bang for their buck with no drop in service levels.

Stephen: Have you found pressure from startups or big companies to hire away your staff and what do you do to keep them?

Simon: There is always pressure but it is not all about salary. We work really hard on culture, making Zazzle a great place to work. And while we have table tennis etc. that doesn't mean it's simply a case of lavishing gifts. It's just as important to be really clear on strategy and direction; why we're fighting so hard and what the end goal looks like. People buy into that and it creates a motivated environment.

6. Give staff a career path

A career path is often difficult for smaller agencies to provide. Normally in business you reward people by promoting them and making them manage other people. I think we need to consider what to do when your company is too small for this or the person is not suited to managing other people.

Google has an interesting model for developers where they wanted to give experienced developers a career path and recognition that did not necessarily relate to them managing more people in the traditional sense. Matt Cutts is a great example of this as he is a Distinguished Engineer. Quora has a list of positions that illustrate this.

7. Change business model to one with scale

Moz is a great example - now they don’t compete for great marketers - they compete for developers and they have a very interesting problem for developers to solve. I asked Rand how he felt about hiring now with Moz as a SaaS providers vs when they were a marketing agency.

Stephen: What advantage has the business model move given you with regards to hiring?

Rand: Being a software company initially didn't have a huge impact on the types and calibers of people we could hire, but over time, as revenue has increased with much higher gross margins, we've been able to hire more folks at much more competitive salaries and with greater benefits than we could have as a consulting-based business.

Stephen: Is hiring easier or tougher now?

Rand: It's still a big challenge, but sourcing candidates now is certainly easier than in our early days as a consulting business.

Stephen: Do you feel you compete more or less with agencies/startups for talent?

Rand: We compete almost exclusively with other startups and larger technology companies (Amazon, Google, Microsoft, and Facebook are almost always mentioned as places our most desirable candidates are also interviewing).

Stephen: Is the Moz brand as helpful in the new hiring field (devs) as it was for marketers?

Rand: Interestingly enough, we've found that hiring for both positions has been equally challenging over the years. There are certainly more marketers aware of Moz, but sadly very few with any self-service SaaS experience, and even fewer who can combine the skills and values we seek. The same holds true for engineers. We've had to become comfortable with the idea that hiring will probably always be hard, and though our brand can help with the earliest phases (like getting applications to a job ad), the filtering. interviewing, and onboarding processes will remain difficult.

8. Change business model to one with easy staff training

One of the questions I had to answer when starting Firstconversion was “what services do I want to offer”. One of the drivers for offering Social Media advertising is that while I know it takes two years to develop a great SEO, I can train decent Facebook ad people in two weeks.

This meant that as a business I would not be weighed down by long training periods and having to continuously increase pay to keep trained staff.

9. Automate your staff

Orchidbox is an agency led by Frank Vitetta, an SEO and developer who over the years has tried to automate the distribution of link building work. To do so, Frank built Outreachr - initially an in-house tool but now a public-facing piece of online software - which allowed his agency to automate most of his link building processes. He now has staff around the world (allowing them to operate almost 24/7) who perform the simpler tasks such as replying to emails and filling in contact forms, allowing the skilled staff in London to look after the SEO strategy and manage global clients across 12 different languages.

Stephen: You built outreachr to help with the outreach process - how many members of staff do you think that cuts down for you?

Frank: I think we can say that it has sped up the process significantly – I will say one person can do the job that four people used to do before.

Stephen: Does it drive efficiency in any other ways?

Frank: Yes – it makes sure repetitiveness is taken out of the daily job and hopefully making the content marketing task more strategic and less robotic.

Stephen: Does having Outreachr allow you to use people in cheaper parts of the world? What is your saving

Frank: Yes we can extract mechanical tasks from technical so that we can either assign mechanical tasks to a computer or to a low cost resource somewhere else. For example we have cheap resources that are in charge of filling contact forms on websites in 12 languages.

Stephen: What do you still find you need people for?

Frank: We always are looking for good content production – so copywriters and translators. These sort of skills can’t be automated.

Stephen: What do impact does such a process driven environment have on retaining staff?

Frank: It isn’t easy to keep staff happy. I don’t think there are many agencies that can deliver 500 links a month in over 15 language across the world with eight permanent staff members. We have tried to create a culture of a constant learning / self-improvement and we do give incentive when someone has done exceptionally well. Staff feedback on technology is also essential to improve their daily tasks and the quality of work that gets delivered.

Here are some useful further reading and points to consider

How Buffer talks about transparency in calculating salaries. They say this has increased their number of job applicants and that this also allows them to get a better cultural fit with people that apply for jobs.

How King.com’s vigourous US-style pursuit of trademarks could be perceived negatively by UK developers considering whether they should join the company or not.

I also asked each person if they had any books or readings that they had found helpful for hiring and wanted to share.

Will

More about working with the team once you have them: 5 dysfunctions of a team by Patrick Lencioni UK amazon link | US amazon link.

Kevin

Good to Great definitely changed my way of thinking about hiring - and the importance of getting the right people on the bus, as the very first step, before you can get to that flywheel effect of achieving success.

I read Delivering Happiness by Zappos CEO Tony Hsieh a few years ago, which is a great example of how culture built around providing outstanding customer service should be done!

Simon

Experience is the only true way to learn but also to spend money quickly on HR training for not just you but anyone that manages people or process in the organisation. This will help you agree what is and what is not acceptable behaviour for your organisation, and to be very consistent in managing that. Once everyone is trained and knows the line, it is much easier to run a performance led organisation.

I hope this has been useful, please share if it has

Thanks to @wilreynolds @randfish @Frankseo @simonpenson @wilreynolds @allenjaffe @kevgibbo @firstconversion.