Selecting your agency’s team structure and finding the right people is one of the most difficult parts of setting up an agency. Too many agencies don’t put enough thought into the structure or they change their structure at the flip of a dime. As a result, they don’t have the proper organization to sustain them in the long-term. The following steps guide you through how to setup your management team.
Note that the actual titles vary depending on the organization. For sake of this discussion, I am referring to the person in charge of the organization as the CEO. Other typical titles for this person are President, Managing Director and General Manager.
Step 1: Understand (or develop) your organization’s vision and subsequently your strategy
Developing a vision is one of the most important parts of setting up an organization. Everything starts with the vision, the strategy needs to drive from that vision, and every action that the organization makes needs to be on-strategy (and conversely on-vision). The vision should be real and something that everyone in the organization can grasp; a rallying cry so that everyone understands and more importantly, that they believe in. I’ve seen way too many organizations with a lack of vision, resulting in no cohesiveness across departments and each department trying to build its own empire instead of working together under a common vision.
Once the vision has been established, it is important to define your company’s strategy for achieving that vision. The strategy (and subsequently the tactics) defines how the vision will be achieved. Michael Porter in his book, On Competition, puts it best:
Strategy is creating fit among a company’s activities. The success of a strategy depends on doing many things well – not just a few – and integrating among them. If there is no fit among activities, there is no distinctive strategy and little sustainability. Management reverts to the simpler task of overseeing independent functions, and operations effectiveness determines an organization’s relative performance. (p 62-63)
Step 2: Determine your organization’s structure
With your company’s vision in mind, determine how to best structure the team. The CEO should have four to seven direct reports. With more reports, they lose the ability to manage effectively. In determining which departments should report to the CEO, think about which are the critical departments that need direct access to the CEO, while which ones are support departments. For example, should the QA team report to the CEO, the head of technology, the head of creative, or the head of operations?
There are many ways to organize teams. Most agencies use a matrix model so that their employees report to both a functional department manager (i.e., account services, creative, media, planning/strategy, project management, technology) and to client (or project) teams. Some larger agencies prefer to follow a model where the members only report into a client team and there is none (or very little) interaction across client teams. There are pros and cons to each. Decide which makes sense for you.
In determining the structure, take into consideration what the CEO does well and what they don’t do well. For example, the CEO may excel at sales and marketing but may not lack in the ability to execute. In this case, it is important to partner the CEO with a COO who can manage execution across the organization.
Step 3: Find the right people
After determining the organization’s structure, it is time to find the right people. Start by hiring the department managers. Be selective in the search and don’t accept mediocrity. Even though you may be pressured to fill the gaps quickly, it is more important to find the right people. If necessary, temporarily fill any gaps with consultants.
Also look to hire department managers who have a background different from the CEO and other managers. They should not be all mini-CEO’s. Look for independent thinkers; people who would rather go for forgiveness than permission. You want your department managers to be leaders. Find a mix of creative thinkers who will challenge the boundaries and executioners who like to stay within the lines. Go for a balanced approach. If you are too heavy on either side, you lose the ability to come up with great ideas or to turn a profit.
When hiring, trust is mandatory. If your intuition tells you to avoid someone, then do not hire them. You need people who you will trust and who will not stab you in the back.
Step 4: Analyze your strategy and your team. Make alignments as necessary
Every six months, I recommend that you analyze your strategy and your team structure based on market and business factors. Make adjustments to your team as needed. You will find that you need to grow in some areas while you shrink in others. For example, many agencies initially neglect analytics but perhaps it is time to add analytics capabilities.
If you find that your vision is changing often, then this is a red flag. While it is fine to tweak your strategy based on market factors, if your strategy does a 180 every six months, then this is a symptom that you do not have a long-term sustainable strategy.