A recurring theme at the 4A's annual Transformation event in Austin, Texas, was talent - or, specifically, the lack of it. The advertising industry's inability to attract and retain the best staff was touched on by several speakers, including a heated debate between the heads of some of the biggest agency holding groups in the world.
The trigger for much of this discussion was a 'Transforming Talent Management' presentation from Andrew Bennett, Global CEO, Arnold Worldwide and global chief strategy officer of Havas Worldwide.
Andrew Bennett, Arnold Worldwide
Picture: Karl Leslie (2011)
The findings of the study - jointly sponsored by Arnold and the 4A's - were somewhat enigmatic. Said Bennett: "We are a major driving force of US GDP. We steward 60% to 80% of our clients' marketing spend. Our industry revenue is comparable to investment-banker revenue and every dollar invested in advertising results in $20 economic output."
But the evidence is clear: despite such statistics, the agency business is not the kind of "talent magnet" that one might expect.
"While some [agencies] are very focused on [training], professional talent consultants cluster marketing-service companies with media companies… as laggards in the professional war on talent. They find it curious that there is such resistance to performance measurement in our industry."
One reason for the disconnect, Bennett offered, is that "several factors were taking hold that would permanently shift the consumer mindset… These factors have led to the emergence of a new consumer" - and, by consequence, a new kind of employee - "who is more empowered, more informed, more mindful and more engaged with businesses."
A study supporting the report included both what Bennett called "quantitative rigor" (more than 3,000 agency employees and 500 agency executives in 35 states, representing such disciplines as public relations, direct marketing, digital, graphic design, media, and full-service agencies) as well as "qualitative depth" (interviews with 30 executives, more than 20 mid-level managers, more than 20 students, and five consultants).
To give context to the findings that would allow comparison with other service enterprises, the Talent Management study included C-suite interviews with such talent-centric organizations as McKinsey & Co, Goldman Sachs, and the US Marine Corps.
The top-line explanation between soaring potential and paltry performance included such cultural considerations as:
In short, Bennett offered, "We are not taking our own advice."
To reinforce that broad-stroke observation, Bennett quoted the president of a media agency: "We wouldn't advise a client to ignore what their customer wants; we wouldn't tell them to ignore what the competition is doing; but that is exactly what we're doing when it comes to attracting and keeping talent."
Presenting the 4A's audience with a "dire" review of its talent-management practices, Bennett focused on three aspects of the industry's human resources: retaining, attracting and developing great talent.
For the first point, Bennett served up some quantitative evidence that it's no longer easy to keep employees on a one-agency career path. Specifically:
As one agency managing director reported in the Talent Management survey: "The new reality is that you can't keep them for life. You have to engineer for the fact that they are going to leave you. You are not buying a car you drive for 15 years. You are leasing it and trading it in for a new model every three years."
Added Bennett, "Some of us simply accept these defections as the new reality. What with LinkedIn and Facebook, it is easier than ever to build a career network. We adjust our operating expectations accordingly."
In recent years, agency employers have discovered a new kind of competition for talent. It's not just competitors who are grabbing talented staff but also entrepreneurially minded technologists (35% of the sample said they would consider employment at Google, another 18% at Apple and 6% at Facebook).
In other words, many agencies are not hiring and developing their own talent. They're hiring their next generation of leadership from the competition. Said Bennett, "A lot of us are losing them to each other. There is infighting across holding companies and cut-throat competition across disciplines."
For those who do leave - for another industry for another agency - what are the drivers? One number flashes back to a previous finding: 70% walk out the door because they want guidance. If no one else will help them take care of their careers, they'll do it themselves.
Bennett drilled deeper on the data, telling the 4A's gathering that 60% of the people who want to leave are looking for better compensation. And, the report revealed, compensation is a particularly hot button: "Employers often claim they are helpless to do anything about it… But one middle manager spotlighted at least part of the challenge: 'They know that on these contracts, the clients are paying for significantly fewer hours than they are actually working.'"
Right behind compensation - cited by 50% of respondents as one of their top concerns - is an issue that strikes at what many see to be a cross-industry failing: the lack of training, and the associated lack of a career path within the agency, for even the people with the most potential. Left to their own devices, they develop their own priorities about what's important to them in their work.
Respondents to the Talent Management survey prioritized the following:
Many of Bennett's findings spilled over into a 4A's Transformation session that featured holding company CEOs Michael Roth (Interpublic), Sir Martin Sorrell (WPP) and John Wren (Omnicom). All picked up on the survey's conclusions about the treatment - and in certain instances, mistreatment - of employees.
Sorrell pointed out, "We don't reward young people" by offering them a clear path of career development. "A 20-year-old associate at Goldman Sachs or McKinsey gets a 360-degree review that breeds an attitude of cooperation, of ambition, of doing good things. The structures we have in place don't do that."
Sir Martin Sorrell, CEO of WPP Group
Picture: Karl Leslie (2011)
When managers take the time to understand the concerns of their workers however, the rewards seem to justify the effort. "For us, it is all about the social graph," the CEO of one digital agency observed to the 4A's/Arnold study team. "We know who our employees are. We know how they interact… We work hard to make the experience of being here great in every dimension, and they reward us by spreading the word."
What makes an agency attractive to a potential new employee? According to the Talent Management Survey, such factors as creativity, the kind of work the agency does, the people in the agency, and the work environment.
But the magic of the business seems to be the story of another generation. And, according to some of the potential sources of new talent, the industry, as a whole, has been lax in reinventing itself for a new generation of practitioners.
Said the president of one educational institution (the former chief creative officer of a global agency), "We're seeing the same number of applications to agencies. It just isn't the same talent base. The top talent is going elsewhere because the industry is not doing anything to promote itself."
Commented another educator more succinctly: "You're really missing the boat."
And, even more to the point, Bennett told the 4A's audience, "We are no-shows on campuses. And, when some of the most important career influences to the best students in the 18-to-24 group are the professors on those campuses, no one's there to tell the agency story."
Even for some of America's largest - and most prestigious - agency groups, finding talent is a problem. "No one wakes up in the morning and says, 'I want to be in advertising,'" so the Interpublic agencies, according to Michael Roth, Interpublic CEO, need to go out and find talent.
Michael Roth, Interpublic CEO
Picture: Karl Leslie (2011)
Critical to that process, he said, are issues of diversity and inclusion: "We have to do a much matter job of responding to their actual marketplace - of where the future will be - to communicate for (and with) our clients… If we don't respond to needs of clients with diversity and inclusion, we'll be missing the boat and someone else will take over our part."
To keep the talent pool fresh, Roth said, "Our networks and people are compensated on how well they do with diversity and inclusion. If they do well, they're rewarded. And they're penalized if they're not doing a good job."
But the 4A's/Arnold study demonstrated that the idea of an agency proactively seeking out and training an elite group of young employees remains more of a theory and less of a practice. "In the last decade," Bennett said, "the job of training has been absorbed by schools. And, incidentally, the cost of [that training] has been born by entry-level employees - and their parents - as agencies have all but eliminated their own investment."
"With all the changes in technology," added Omnicom's Wren, "our environment is moving at a very rapid pace. And we've done a very bad job of educating people" - both people in the agency business and those who might be attracted to it. "We spend very little time educating our staff. People do get experience on the job," he added, but that the agency managers need to "make a renewed commitment to educating and attracting good people".
John Wren, CEO of Omnicom Group
Picture: Karl Leslie (2011)
"The missed opportunity here is that agencies could play a much greater role in shaping entry-level employees who come to them by getting more directly involved with the schools," Bennett continued. "The way one prominent digital agency does this is not just to engage with college career services to recruit on campus, but to get directly involved in formulating the school curriculum at a select number of schools. Essentially, they are building their own talent in partnership with the schools. This is one of the reasons they say they are 10 years ahead of everyone else."
And, although one might think that the agencies with a presence on campus would guard this competitive advantage, Bennett said the report revealed that "these few that are involved on campus actually wish others in the industry [would participate as well]". The head of a digital agency that has been active in shaping curricula commented, "Nobody else is here. So students don't even know what a digital agency is, much less why they should come here instead of Apple. Or Google."
"It's a criminal regret that we don't recruit regularly like the best companies," WPP's Sorrell told the 4A's convention. "We're not at the best universities. We're not at the best design schools or art schools." And, he added, until such recruitment programs become part of the industry's standard practices, "We will be challenged."
One remark from a graduate business student at the University of Virginia suggested, in fact, that the American agency industry's approach to fresh - but inexperienced - talent verged on arrogance: "You can be at the top of your class at the top school. It doesn't matter. Not only will they not come knocking on your door. When you knock on theirs, they won't answer."
In addition to ignoring the beginning of the career pipeline, Bennett said that the Talent Management survey showed that the current generation of agency doesn't realize the aspirations of their employees. Young workers - people between the ages of 18 and 25 - certainly care about learning, but they want to balance such experience with "fun". Staff members between the ages of 35 and 64, he said, desire success but also want "simplification, relaxation, and optimism".
The Arnold/4A's survey pointed to the need to understand that different currency motivates different employees at different life stages. A loyal hand might be rewarded with a month-long sabbatical after five years; more flexibility in working conditions through such options as flexitime, job-sharing, and freelancing is also evidence of a company that gives as well as takes. "Older workers might consider their work a job, not a career," he said. And one way to motivate younger employees is to better engage their superiors. "All [options] should be at our disposal."
One early indicator of job dissatisfaction, especially among young employees: "If they're unhappy, they won't recruit their friends." The new chief talent officer of a public relations agency knew he had a problem when, "I noticed very low referral rates for new recruits… so I offered a $4,000 bonus for referrals. You would have thought that I had offered free, cold day-old oatmeal in the cafeteria."
Bennett said that the report reinforced the insight that, "In the new world, your brand is as powerful as you make it among your employees - your closest relationships." And, to drive the point home, he cited the difference in talent-management styles. "The first invested in building a reputation as a great employer brand by investing in the internal brand experience." The second - the public relations company that offered the referral incentive - just kept pushing ahead with a business-as-usual mandate, "which is why the new chief talent officer had such a hard time attracting new talent."
In addition to identifying weaknesses in retaining and attracting talent, the 4A's/Arnold study identified an attitudinal difference in what managers and employees thought the company was doing for its staff.
The study found a discrepancy between the views of employers and employees. Employers thought "they are doing better than average". But the workforce disagreed, claiming that "only a few have access" to on-the-job training.
The truth, it would seem, rests on the employee side of the argument. As opposed to the $16,000 a firm such as McKinsey invests in an employee program that begins on the first day of work, advertising agencies typically spend less on training their people than Starbucks does on its baristas.
Another sign of the disconnect: only 25% of the agency executives who participated in the Arnold/4A's said that their employees had to "figure things out on their own". By sharp contrast, almost all the staff people in the survey (95%) said that they had to use their own wits to work their way into the agency.
Added Interpublic's Roth, "We have to provide the opportunity for career development. And diversity is an important part of that process. Promoting from within is an issue. It's something we only started addressing only five years ago. We really had done a lousy job. We have to find a way to develop role models."
To reverse the ongoing practice on employee mismanagement, Bennett said that the 4A's/Arnold report had identified five immediate steps:
1. Let's Go Back to School
The reason is simple: "Invest early to get better talent. And that, in turn, will save you money later on." The operational specifics, Bennett added, include committing senior agency management to partner with top-of-the-line universities in proactive programs that "go beyond career services".
One service provider, he said, that would welcome agency support is the Advertising Education Foundation (AEF), which describes itself as "a provider and distributor of educational content to enrich the understanding of advertising and its role in culture, society, and the economy".
Said Bennett, "The 4A's will help connect agencies to schools." And the AEF can use agency managers who are willing to help grow its programs.
2. Let's Promote Cross-Training
"If we don't help our people learn different disciplines," the Arnold CEO said, "they will do it themselves." The solution, the Talent Management survey poses, it to promote "continued robust training at every level", and, at the same time, share training sessions through employee exchanges that can share both the wealth and the expense of such programs.
3. Let's Introduce New Incentives
Every agency culture differs. And, within that culture, "different motivators work for different people at difference times," according to the 4A's/Arnold report. Some options include:
Whatever option an agency chooses, Bennett emphasized the importance of working with the 4A's to "monitor the effectiveness" of ongoing initiatives and providing guidelines for future efforts.
4. Let's Fix Performance Management
"It's common sense," Bennett told his 4A's Transformation Conference audience, "but it's not common practice. Just do it."
5. Let's Engage Employees in the Conversation
"Employees drive employer brands, just as consumers drive consumer brands," according to the study. And agency managers - people who spend their business lives consumed with management of their clients' brands - need to understand that insight and involve employees in decisions. "Solicit their ideas and listen - facilitate bottom-up innovation."
About the author:
Geoffrey Precourt is the US Editor of Warc.
You can read all his papers and reports from recent marketing events at www.warc.com/precourt.