Managing small agency employees to maximize performance

This SAGA Member Webinar is available only to individuals with active memberships. Login or join to gain access.

This webinar explores how to use goals, performance reviews, and regular 1-on-1’s to get the most from your team.

Chip Griffin discusses what works — and what doesn’t — based on his experience managing hundreds of employees over the past 25 years.

This session provides practical steps you can start to implement now to help your employees grow.

Topics covered include:

  • Employee goals
  • Performance reviews
  • Effective 1-on-1 meetings with direct reports
  • Performance Improvement Plans (PIPs)
  • Incentive compensation
View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Hello and welcome to today’s webinar, Managing Small Agency Employees to Maximize Performance. I am Chip Griffin. I am the founder of the Small Agency Growth Alliance or SAGA. And today we’ll be taking a look at some of those challenging issues that we all have in getting the best performance out of our team and delivering the results that our clients need.

So let’s go ahead and jump into a couple of housekeeping items. First, I always like to get started here. The recording and the deck will be made available to all of the attendees. And of course, there is a full library of webinar replays that are available to all SAGA standard, pro, and coaching members.

If you haven’t checked out the benefits of those memberships, please go ahead and go to sagaimpact.com to learn more about them. The Q& A function here is what you should use to ask questions. Feel free to use it at any time throughout the course of the webinar, and I will try to answer as many as I can at the conclusion of the presentation.

Let’s see, if you have questions for me, you can email chip@smallagencygrowth. com. Happy to answer them. I won’t be monitoring it during the presentation today, but I will certainly be looking at it. Afterwards, if you’d like to tweet about this webinar, feel free to do so. I would just encourage you to use the hashtag agency leadership, which is what we try to tag most of our content with so that it’s easy for you to discover.

And again, I’ve already mentioned the website. So. That will conclude the housekeeping items for today. I do want to tell you about a few upcoming webinars that we have scheduled. There’s business development for agency owners who hate sales, which I know is many of you. I know that I never got into the agency world because I loved sales so much, but eventually you have to figure out how to do it if you are going to grow.

So that will be the topic that we’ll discuss on Thursday, February 4th. On Tuesday, February 9th, we’ll talk about client retention strategies. That’s again, something that I know is near and dear to the heart of you listeners. It’s something that I talk with a lot of my coaching and advisory clients about on a regular basis, because after all, the longer that you can keep clients around, the more repeat business that you can get from your clients, the better off you’re going to be, the more profitable your agency will be. And then finally, how to onboard new agency clients will be the topic on Tuesday, February 16th. And as is often said, you never have a second chance to make a first impression. And so onboarding is particularly important and it really feeds into the client retention one. So I think it’s a natural, natural, follow on, see if I can speak clearly today.

Not a good start, right? Okay. So those are some upcoming webinars. But what are we talking about today? What are the specific things that I’ll be addressing in order to give you some practical advice that hopefully will help you to manage your small agency team better? There are basically five things that I want to go over today and I will cover each of them with three things that you can take away, as well as some additional items that hopefully will be informative as you’re thinking about how to structure, how to manage your team.

And so the first thing we’ll talk about is employee goals. That’s something that you may have already done for this year with your employees, or perhaps you’re a little late out of the gate and you’re still working on it. Or perhaps you’re on a different, planning schedule than simply using the calendar year.

Whatever it is, we can talk about how to set those employee goals so that they help get the results that you’re looking for. Performance reviews. Those are something that are absolutely critical to giving the feedback to your team members to help them grow and to help them get the highest level of performance for you and your clients.

One on ones. I think It’s right in the middle of today’s webinar, and it’s really because to me, it is the cog that drives employee performance, particularly in the agency environment where we are all about our people. We love to say it, but do we really mean it? And if we do really mean it, then it comes down to making sure that we’re working hand in hand with all of our team members, and so one on ones will be the key, I think, to today’s webinar if you pay attention during that session.

Then we’ll talk about PIPs, or Performance Improvement Plans. You know, just as we talk about high performance, we have to talk about how to address low performance. And finally, we’ll talk about incentive compensation, because this is a question that I get quite frequently. It’s come up in a couple of the open Q& A sessions that I’ve had recently.

It came up in a conversation in a webinar not too long ago with Patrick Rogan, who is an HR consultant that I’ve worked with a lot over the years. All right, so let’s go ahead and we will jump into big picture here and the thing that you have to remember, the thing that you have to consider as a small agency owner is that you don’t have an HR team.

You may have an org chart, you know, maybe you’ve got 5, 10, 15 employees, something like that, maybe a little bit more, but it’s highly unlikely that you have a dedicated HR team. Many of you though came from larger organizations, larger agencies, where you had that kind of support. Even if you didn’t have formal HR support, you had additional managerial support.

You probably had your own supervisor who helped you out and helped you work through some of those employee management questions. There were systems already in place that you were simply working within. There was probably a performance management, a performance review program already in place. There was a system for handling PIPs.

There were compensation plans already there. There was a culture that was built up around you, and you fed into that. And now you’ve managed to take some of the ideas that you have from that. You’ve gotten a feel for what you liked and what you didn’t like as A manager and as an employee, and now you’re getting a chance to apply it yourself.

The reality is that most agency owners are accidental agency owners. Most of you started out as independent consultants, solos, doing work. You simply kept growing the business, maybe with the intention to eventually grow it into an agency. Maybe not. Maybe it just sort of happened because so much work came along.

You had no choice, but to hire contractors first and then employees. However you got to where you are now, odds are you didn’t think from the outset before you had employee number one, what your systems would be. And those systems need to be in place. Those, those processes need to be in place. And so what we’re going to talk about today are some of the key things that you need to be thinking about, and some of these things will evolve.

Some of these systems work better with one or two people, but then when you get up to, say, 15 or 20, maybe there are some adjustments that are needed. Some of the systems will work better when you’ve got everybody reporting to you, you’ve only got a handful of employees. Others work better when you’ve got layers.

So we’re going to talk through some of those challenges and how you might address them for each of the five areas that I laid out in the agenda. So let’s go ahead and we’re going to move into the first one, which is employee goals. And I think when you’re thinking about employee performance, it’s one of the key things that you have in your mind.

I need to set some goals for my team members. I need to help them know what I expect out of them. And that’s absolutely true. You do need to set expectations if you want to accelerate growth. And ultimately, that’s what goals are about. It’s about taking your team from point A to point B as quickly as possible.

And your goals are all about what that point B is for that individual. And so you need to tailor them to that individual. You need to customize those goals so that they work to help you get the most out of that individual. You can’t have one size fits all goals that you simply say, Every account executive is going to have this set of goals.

Every, vice president is going to have these. Certainly, there are going to be some categories in which there may be some similarities, but if you’re going to get the most out of them, you really do need to tailor it. But it all does start with thinking about what your overall team goals are. What are your agency goals?

And you need to have clarity on that. If you’re a sole owner, you should take some time go off by yourself at least once a year and start thinking about some of these issues. Maybe you’re working with a coach like me or an outside advisor. Maybe you’ve got some trusted advisors that you can talk to leading up to this process.

If you’ve got more than one owner of your agency, if you’ve got partners, you should be doing regular partner retreats, but one of them should be an annual one where you’re doing that kind of goal setting. Because employee goals all have to feed into that bigger picture. But you can’t feed into a bigger picture that you can’t see.

The puzzle pieces that you’re pulling together from all of your individual team members, from all of your clients, from all of the specialties and expertise that you’re building as an agency owner, all need to come together. And so you need to start by coming up with those agency goals and having them trickle down.

As you get bigger, those those agency goals will become team goals, whether those are client service teams or service delivery area teams or whatever. It all needs to come together. And that’s how you start thinking about your individual employee goals and team goals. You may have heard of SMART goals.

SMART goals are something that are incredibly popular today. It’s sort of like, you know, OKRs are all these terms and acronyms that people throw around when it comes to employee performance and thinking about how you set goals for employees. And I think SMART goals are a good thing to consider. And SMART is an acronym that stands for specific, measurable, achievable, , timely, and relevant.

And so all of those things can come together to help you put together employee goals. And that’s very important. And having measurable goals can really help you to work with your team members so that when you have your performance reviews, which we’ll talk about a little bit later, they all tie together with those individual components.

They tie together with those measurable items that you have. And so smart goals, I think, are a good foundation. For your individual employee goals. They’re great for team goals because it’s a good way to be able to assess your overall performance, but I would also tell you that as much as I love data as much as I love measuring and I have a background in data analysis and those kinds of things.

I also have to tell you that there’s real value in having softer goals. So just as you might lay out that you want someone to, grow the, the revenue that they’ve brought in from clients by X percent, or they want, you want them to stay within X percent of budget on their client projects, or that you want them to deliver all work within X number of days from the client request or whatever, all of the different things that you can come up with, and measure as part of SMART goals.

I think it’s just as important to have some soft goals with your employees so that there are things that you can have a conversation about during the performance review. That’s not just a black and white, but is really talking about the individual growth that that employee is having. And one of the key things that we’re going to talk about when we talk about performance reviews are things that are related to to coaching and career advancement.

And a lot of those are not things where you can necessarily have a specific measurable objective in all cases, but they’re all things that you need to be thinking about and all things that you want your team members to be focused on as they grow. Because you have to remember most of you are only going to have these employees for a period of their career.

The days of someone coming to work for you and staying with you for 20 years, they still happen. I’ve had employees who have stuck with me for over a decade, It does happen, but the reality is in the current work environment. It’s more common for people to move on from one employer to the next. And that’s not necessarily a bad thing.

You want to be careful that you don’t have too much turnover, but no turnover can be just as damaging to your agency because you’re not bringing in fresh blood. You’re not having that opportunity to make some changes and adjustments to what you’re doing every time an employee leaves. Yes, it’s tough, but it’s also an opportunity.

It’s an opportunity to think about how you might reimagine your team and how you deliver your services by bringing in someone with a slightly different skill set, because the reality is every business evolves and you need your team to evolve. And that means either you’re working with the individual goals and the performance and all the things we’re going to talk about today, or it means bringing in new team members who have those skills, who have those specialties and can help you make those improvements, those enhancements.

So as you’re setting goals, think about those three things that we’ve just talked about. Think about how it is that you tie in your individual goals to your team goals. Think about how you use your goals to drive people in one direction to another. Think about how you can combine both smart and soft goals together to get the most performance.

So those are the key things that you need to set. Those are things that you want to set with your employees on an annual basis. And you want to review them on at least a quarterly basis in a more formal way so that you can adjust progress as needed you can make adjustments as the business changes. And that’s where performance reviews come in and performance reviews are something that I know many of you dread.

You don’t want to sit down and have these. I know that when I was running businesses with large numbers of employees, I would always sit there and I would see a circled on my calendar, the window in which I was supposed to do my performance reviews. And I would sit down with, you know, other managers and HR people and look at the forms and blah, blah, blah.

Performance reviews, they need to have a process. They shouldn’t be bureaucratic. You should view them as an opportunity just as you do your goals to find ways to enhance, the results that your team is producing for your agency, for your clients, and for themselves. And I know I’ve already stressed that under goals, but it’s so important to be thinking about the individual.

As part of this process. And so the first rule that I have for performance reviews and the thing that I will tell every new manager that I have: never, ever, ever should a performance review have big surprises for either the employee or the manager. The things that you’re talking about in a performance review may get to a level of detail that’s different from what you might be having in your regular one on ones or other meetings with your employees.

But they should never bring up something new. You never want to blindside your employee by bringing up some aspect of their performance that you haven’t already addressed. The performance review is not the place that you bring up any of these things for the first time. It’s a place where you need to be reinforcing the messages that you’ve already delivered.

It’s a place where you can tie up neatly with a bow, all of the conversations that you’ve had over the last quarter of the last year, the last six months, whatever frequency we’re using. And we’ll talk about that in a moment too. It’s tying it all together. It’s painting a picture and a plan forward. It’s not about breaking news to somebody for the first time.

So if you find that your performance reviews are surprising your employee, or worse, your employee is raising something with you that you’ve never heard before, that means that you have a failure somewhere else in your process. It may be in your goals. Most likely it’s in your one on ones, and that’s where you need to address that particular problem.

So it never happens again, because this is not a look that you want to have on your face or see on your employee’s face during your performance reviews. The second critical thing and the big mistake that I see made in a lot of performance reviews is there’s talk about money and performance reviews absolutely feed into compensation conversations, bonus conversations raises all that kind of thing, but you need to have a separate compensation conversation, absolutely distinct from the performance review. Because the performance review is about coaching and advising your team member on how to improve.

It tells them what they’re doing well and what they need to work on. It helps you figure out what they’re looking for from you as an employer, what they’re looking for from their career and how you can fit into all of that. If you start bringing money into this conversation, if the expectation is that they’re being reviewed on their performance and it’s tied into compensation, it immediately puts the employee on the defensive.

And so this is, again, a mistake that I’ve made in the past. I’ve had these conversations together, and so you need to be crystal clear with your employees from the get go that your process separates those two things. It doesn’t mean that they’re separated and unrelated. I mean, you’re not going to give big raises, big bonuses, presumably, to employees who are not performing well.

But you want to have that constructive dialogue first, because you don’t want to put them in a position where they’re sitting there and not being receptive to the feedback that you’re giving them, not receptive to the plan that you’re putting in place, because they believe that if they agree with you, that it’s going to harm their ability to get the compensation that they’re looking for.

So leave money out of the performance review. Have that conversation, a healthy separation afterwards. Might just be a week or two, but that’s enough so that you can use that. performance review to focus on the things that matter about the performance that you’re looking for from them. I think the, the key thing, and this is, this is probably the biggest piece of advice that I could give to any new manager, seasoned manager.

You need to view yourself as a coach. Okay, you need to view yourself as someone who’s trying to figure out how to get the most out of your team. And so that might mean that you use someone more in one area than another. You know who your expert is in dealing with certain kinds of clients or on certain deadlines.

You know who has what expertise and how to deploy them. But just as important, you need to know who can get that a little bit more just by working with them. What words can you say in the performance review? What goals can you set for them? How can you nudge them forward? How can you give them the education, the knowledge, the skills that they need to be able to deliver for you, for your clients and for themselves?

Those are the things that you need to think about as a coach, and you need to step away from the idea that as a manager, you’re the boss, you’re an enforcer, you’re, I was talking with one agency owner not too long ago who said that there needed to be consequences for an employee who was underperforming.

That’s absolutely the wrong way to look at it. You want to be looking at it as, how do you cajole absolutely every last bit that you can get out of somebody? How can you motivate them to perform? And the performance review is a critical part of that. And you should view yourself as an advisor to that employee about how they can improve, about how they can grow.

But just as important, you need to listen. You need to be paying attention to what they’re telling you. You can’t just sit there and say, you know, these are the three things that you need to work on. This is not that kind of meeting. It really needs to be a give and take and you need to update your knowledge about where they want to go.

What are they trying to achieve? Are they trying to improve their writing skills? Is their goal to own their own agency someday? By the way, that’s not a bad thing. I know a lot of agency owners get freaked out when an employee says, well, I’m thinking about, you know, You know, starting my own agency one day, then they immediately start viewing them as a potential competitor and, and freeze them out of certain conversations.

No, that’s great. You, you want, I mean, I know it’s cheesy, but a rising tide does lift all boats and you want to get the maximum out of everybody and you want to drive forward, but that’s where coaching comes in. You’re not a referee. I’m a sports official, right? I’m used to calling ball strikes safe out, ejecting people, giving people penalties, whatever.

Those are not the kinds of things that you need to do as a manager. It’s not something if you’ve got multiple layers of management that you should be encouraging or accepting from any of your middle managers. You need to be working with them to make sure that they’re seeing themselves as coaches. And don’t assume that any of them know what they’re doing even if they’ve come to you from a different environment.

You have to have your way as an agency of running things, of having these goals, performance reviews, one on ones et cetera. So focus on those things. Focus on being a coach in the performance reviews, and you will get better results than if you’re sitting there as the scolding teacher or official or government bureaucrat or whatever.

You want performance. You want to help. So, the three things to take away from performance reviews, no big surprises. No money. And be a coach. Those are the three things. And if you, if you think about those things, you don’t need to worry about having these complicated forms. And I know that there are a lot of folks who have come from larger organizations where they do 360 reviews, or they have every team member review, every other team member.

And you’ve got all these check boxes. And I know some agencies score employees and give a numerical value. That’s over complicating it. Performance reviews are conversations. They are about you communicating what you expect. It’s about you listening to what the employee is looking for and figuring out how the two of you can meet and continue on that rocket ship forward that you’ve put together as part of their goals.

So how do you do this on an ongoing basis? How do you make sure there are no surprises? My big favorite thing, and every coaching client of mine knows that I harp on this repeatedly, one on ones, so absolutely critical, so important. And I don’t care whether you’re the agency owner or you’re a junior manager, new to managing, the one on ones are the most valuable management tool that you have.

They are something that you absolutely need to focus on. And the very first thing you need to focus on is actually having them. You need to have one on ones like clockwork. Every week. every direct report. You need to be having these meetings. They will generally become shorter over time. If you’re doing well, because it means you’ve got open lines of communication.

I don’t care if you’re talking to that employee twice a day, every day for other things, you still need to have a separate one on one meeting with that individual. Those meetings Are how you will make sure that there are no surprises at performance review time. Those meetings are where they will surface things that they didn’t think were important enough to bring up in a separate conversation or a separate email.

You will learn a tremendous amount about your team, about your team members, about your business, about your clients, all because you took the time to spend 15, 20, maybe 30 minutes with each employee that you have as a direct report every week. Now, if you’re in a slightly larger agency and not everybody is a direct report, so you’ve got more than just a handful of employees, you should still be looking to have one on ones.

You just won’t have them weekly with your non direct reports. But anyone who’s listening, if you’ve got an agency with 25 or fewer employees, there’s no reason why you as the owner, or you as a partner in that agency, shouldn’t know pretty well everyone on your team. Now you can’t meet with them every single week, but if you’ve got 10 employees, it’s reasonable to have a one on one with each of them once a quarter.

And again, you want to try to get as much information from these as you can. And it’s particularly valuable when you’ve got middle managers. When you’re talking a layer below them, because you’ll start to learn more about their management techniques, because the way they interact with you is not always, in fact, frequently, it is not how they interact with their own direct reports.

And so you want to make sure that you’re getting the kinds of feedback you need so you can become a better coach and help them become better managers. And remember, they’re taking their cues from you. So if you’re not having your one on ones with them like clockwork, I guarantee you they won’t be doing that with their own direct reports.

So you need to set the example and you need to have them. Now, the biggest reason, the biggest complaint that I hear from agency owners about why they don’t have one on ones regularly is because it takes too much time. And there’s two reasons why it takes too much time. The first is too many direct reports.

You should not have more than five direct reports. Maybe there’s an exception where you can have a sixth or something like that, right? But five is the magic number. If you have more than five direct reports, it’s very difficult for you to give them the oversight, the advice, the coaching, the help, the responses to their approval requests, all those.

It’s hard to do that when you have more direct reports than five. So you need to work on setting up a structure where you don’t have more than that. And if you have five, you could break it up so that you have a one on one every day of the week. And so it’s only 30 minutes a day, 15 minutes a day. Once you get into a routine. It might be that you You decide to have them , all in a burst, right?

You just do a two and a half hour block on Monday, Friday, Wednesday. I don’t care when it is, doesn’t matter. It’s whatever works for you and your team, but you need to be having these. And it’s particularly important now that so many of your team members are probably remote because you’re not having the water cooler conversations or the other intelligence gathering opportunities that you might otherwise have.

You don’t eavesdrop on things accidentally and hear things where you can jump in and say, Hey, I want to head this off at the pass. I want to help you out with this, that I just heard you talking to so and so about. Right? So the one on ones have taken on an increased significance in the remote work world. And I don’t care if you were an agency that was remote to begin with, or you had to go remote because of the pandemic, this is something that you need to be thinking about, how you can have these one on ones to more effectively manage and communicate with your team members.

So the first big problem as far as these going too long is, they’re taking too much time is that you have too many. The second is that they take too long. The reason why they usually take too long though, almost every time I have an agency owner say these meetings just take too long, it’s because they’re not doing them regularly.

And if you, if you only have a one on one once a month, once a quarter, those kinds of things with your direct reports, they’re going to have so many things to talk about. You’re going to have so many things to raise with them that it’s naturally going to go more than 15 or 20 minutes. If you do it every week, like clockwork, like I talked about in the last step, the meetings should become progressively shorter and more focused.

And so you’re able to move through them more swiftly because you’re having them regularly, so your total time will actually decrease by having them with the right frequency. Now, what’s the actual setup of these one on ones? These one on ones should be employee driven. And that’s different than what most folks do when they’re managing and doing a one on one, right?

The agenda should really be driven by the individual. Your focus should be on listening. You should be listening for what’s said and what’s unsaid. You should be using this as an opportunity to allow your team members to bring up any concerns. Any opportunities that they perhaps see, maybe they’re talking with a client and they say, Hey, you know, you should know Chip that they’re interested in a website.

Maybe we should be talking to them about that in addition to the social marketing that we’re doing for them. Or maybe they will, they will raise an issue about a concern that they have about, a team member, or about the client. Maybe they’re saying the client’s getting very difficult to deal with.

Didn’t think it was important enough to bring it up as a separate conversation with you. But just wanted to let you know that this particular client is being more demanding or, or whatever. And those are, those are valuable data points for you to get, and you can address them a lot better before they bubble up and become so big that that employee says, I have to schedule a meeting to talk about this particular subject.

You also want to make sure that this is an opportunity for them to tell you about any obstacles that they have, particularly ones that are related to you. So, I always have on my one on one agendas the opportunity for someone to raise the things that I’m holding up. Because I didn’t approve something, because I didn’t give the right resources, because I said to wait, you know, whatever it is.

And so you want to make sure that you’re using this as an opportunity for the team members to get things unstuck. Now, this shouldn’t be a reporting thing. This is not one of those things where the employee should be going through a list of all 75 things they accomplished over the last week. You can use weekly reports or other written materials or emails or project tracking systems to get all of that data.

This is conversational. Okay. And so this is an opportunity for you to get those learnings in there. You should be talking about the clients that they’re working on. You don’t necessarily need to review every client every week, but you might ask them, you know, what, you know, which are the, the clients that are having the most activity, anything unusual going on with them.

You might ask them if there’s anything going on with the client contact, if they’re the direct client account manager. Those are all things that you can start stockpiling information on and learning from and making adjustments both tactically and strategically as a business owner. If you listen. If you’re having these meetings.

So these one on ones are absolutely crucial to that. The one on one should also be an opportunity for you to bring things up proactively. I just want you to move that to the latter part of the meeting. So don’t drive the agenda by starting out with any concerns that you might have or things that you want them to focus on.

The only thing I would, I would preempt them talking about first is if there’s some big news about the agency that you need to share. I would start with those so that it’s not just hanging over the meeting because people hear rumors, right? So, you know, if you’ve got a new employee coming in or employee leaving or, you know, new client coming in or, you know, any kind of big picture conversation, something that, that, you know, would drive everybody’s focus.

Do share that up front so that it’s, it’s clear and that you’ve gotten that on the table, but don’t dwell on it. Make sure that you have an opportunity to focus on the other things in that one on one. The one on one is also something that In the once we get post pandemic and you are meeting with people individually, either every week for the one on one or, you know, perhaps remote for a lot of them, but occasionally in person, I encourage them to be held outside of the office, at least periodically getting out of the normal environment is often an opportunity to get people together.

to open up more. So, in the past, I had, an executive who worked for me and I would generally get the best feedback from him when we would go out for coffee or breakfast or something like that. And he would cause him to just relax more and be more forthcoming. And the one on ones are really, really valuable from that perspective.

And it’s also your opportunity to share things with them, share what your concerns are. Not just about them, but about the agency as a whole, and I’m not saying that you need to use this as a therapy session and dump it all out there. But, you know, there is a human connection that’s going to be made here.

And we have to be careful that even though we’re running small businesses, we don’t Put ourselves in an insulated cocoon where we’re not willing to share and open up with our team members. We need to have a level of transparency to have that healthy conversation, and I would encourage you to be looking at these one on ones as a good, safe place for those conversations to take place.

Those are the nitty gritties for one on ones. Make sure you have them like clockwork every single week. Make sure that you don’t have too many direct reports. Make sure that you keep your meeting short by having them regularly. And make sure that you are spending most of your time listening by allowing your team member to drive the conversation.

Those will all help you get better, more effective one on ones. Good one on ones lead to much better employee relationships. It leads to much higher quality performance reviews, and it generates a much better foundation for both setting, tracking, and meeting their goals. Now let’s go ahead and talk about both the upside and the downside of employee performance.

First, we’ll focus on the downside. So we get to end on a little bit more of a high note. And so on the downside. So if you, I mean, let’s say you’re going through these one on ones, you’re having them religiously, you’re You’re doing good performance reviews, you’re setting good goals. The reality is that you’re still going to have underperforming employees from time to time.

And even the best managers are not perfect at hiring. The best managers are still probably going to swing and miss at least one out of every three employees. Some of those will be bad enough that you need to part company. Some of them will be not too bad. You just kind of need to massage it a little bit.

And then there’s this gray area. And that’s where PIPs, Performance Improvement Plans, come in. And I’m going to start by telling you that I hate PIPs. I hate them not just because It means that you’ve got to deal with an underperforming employee and everything that entails, but I also hate them because I don’t think they’re particularly effective.

I’ve used them or been forced to use them a number of times over the course of my career, and I can tell you that the level of success, you’d frankly be better off buying a scratch ticket. And hoping to win a million dollars off that scratch ticket. Much higher chance of success off of that than just about any performance improvement plan PIP that I’ve seen.

It doesn’t mean that you don’t still have a place for a PIP in your business. But the biggest reason to have a PIP Is not so much because you think it’s actually going to work. But because it’s something that you want to do from a paperwork standpoint to prove that you’ve done absolutely everything you can to rescue this employer employee relationship and I know that sounds especially harsh But the reality is that once you’ve gotten to the point of saying that you need a PIP, it usually means that you’ve already gone through, assuming that you’re doing even halfway basic decent management, you’ve already gone through some feedback, you’ve already gone through some corrective steps.

The PIP is just formalizing it. The PIP is putting into a memo something that says, you’ve got three months or one month or whatever period of time you set to correct these specific deficiencies. Okay. It’s not going to generally make a huge difference in the performance of that individual. Usually what it is is simply a precursor to making a change.

And so if you think about it from that perspective, it can help soften the transition. It can help you as the employer figure out, you know, what direction do you want to go next? How do you want to solve this staffing issue that you’re creating by having what is likely to be a failed performance improvement plan?

Okay, but it also gives that employee some time to adjust to the concept, and you basically put them on notice that if they’re not making the changes that are needed, you’re going to make a change. I mean, that’s fundamentally, that’s sort of performance improvement plan is. You say, you have to make these changes in this defined period of time, or we will separate you from the company.

Okay. So it’s not a, you have to do it by this time. And then we’ll kind of see, I mean, it’s, it’s generally that specific that it’s corrected by this date or you are done. So it does give the employee and the employer both sometime to figure out how they’re going to handle the transition at the end of it.

Now, if you happen to, to win that scratch ticket lottery and the performance improvement plan works out fine, you can shelve your transition plans, but I can tell you again from experience, I think in all of my 30 years of working and having seen a performance improvement plans or, or having employees who’ve worked for me, on those plans, there’s, maybe one circumstance where it worked out and even in that particular case, it really only bought another six months or so before, , the, the company and the individual ended up parting ways anyway.

So, unlikely to be successful, but it can demonstrate. That you’ve gone through every, , possible step to make an accommodation and to get them to, deliver the performance that’s needed. , it can be particularly helpful if you’ve got an employee who’s in some sort of protected or semi protected class.

It’s the kind of thing where if you’re working with an HR consultant, they may advise you to do a PIP before you do a termination. Just to make sure that, you know, you’ve got all of the documentation that you need if you should ever be challenged on it. So. I always encourage anytime you’re thinking about a termination, work with an HR consultant.

If it’s someone in a protected class, you may even want to deal with an employment attorney, just to make sure. It’s short dollars to get that kind of insurance up front. You don’t ever want to have a claim made against you because you, you know, you didn’t cross the T’s and dot the I’s. And so that may be the PIP that’s needed in order to get you there, in order to deliver what’s needed to be delivered.

on the up and up, shall we say, and to, to, to be as protected as, as possible. But it also does allow the employee to really get it into their mind that their time with your agency may be coming to an end soon. And again, just like performance reviews shouldn’t be surprises, terminations should never be surprises.

You never want to sit down with somebody and I’m not talking a layoff layoff, sir. A whole different ball game. And we could probably do a separate webinar at some point on that if you’re interested. But from a termination standpoint, you never want to walk into that meeting and have the employee completely blindsided.

They have no idea why they’re being let go. That’s not just as a performance review. You shouldn’t have that, you know, bug eyed look. You don’t ever want to have the employee have that look when you’re having a termination conversation because it will take the conversation completely sideways. It’ll be incredibly unpleasant for everybody.

And so if a PIP helps you get there, it helps you get over that hurdle. If it makes that conversation easier for you, it may be worthwhile. Now, the downside to the PIP, you have to keep this in mind, is effectively, if someone is not working out, you’re certain they’re not going to work out, or pretty certain they’re not going to work out, a PIP means that they’re on your payroll for longer.

Because a PIP is not severance. It is not garden leave. And so you’re still expecting them to work. You’re expecting them to work to improve themselves. And assuming that they, you know, don’t just phone it in, assuming that they are making, you know, some sort of even halfway reasonable effort, you know, you need to view that as they’re continued to be employed by you.

So when you do end up letting them go, you need to be looking at putting together some sort of a reasonable severance package for them at that point. Certainly, I think it would be reasonable to, to keep in mind that you’ve given them some advanced warning. So they, there’s no way they’ve been blindsided and factor that in a little bit when you’re coming up with you know, whatever scheme you want to have for, severance, but, but do keep in mind that it is going to increase your total expense. So make sure that it’s something that you feel like you absolutely need to do from a documentation standpoint, or it’s something that you really need in order to get yourself over that hurdle to make the change that’s likely to be coming.

With that, final words on PIPs. The three things to keep in mind, they have a very low success rate. They may be necessary or useful for documentation purposes to prove best effort, at resolving the situation, short of termination. And they do give you and the employee some time to, to prepare for the transition, both psychologically as well as, all of the other operational or financial things that you and the individual may want to be thinking about.

All right, enough of. Painful pip conversations. Let’s talk about incentive compensation. And this is, as I mentioned, during performance reviews, compensation is always a question when it comes to employee performance. And a lot of employees like the idea of incentive compensation of some kind, they will often ask you for it.

And so you need to think about. how you want to use incentive compensation with your agency to get the most out of your team. The first thing I will say is incentive compensation plans done poorly are a good way to create a hash out of your overall, compensation structure at the agency. So you need to be careful that you’re not making things so complicated that you just turn into a mess.

And there are some hashes, this corned beef hash here on the screen. Look, I mean, it looks delicious to me. I, I’m a sucker for corned beef hash. This one, this one looks pretty good. I could sit down and eat this right now. In fact, I wish I had some corned beef hash here that I could cook up right after this webinar is over. But a lot of hash can just be nasty and messy, difficult to look at and not something that you really want. So keep that in mind. And as you’re putting together incentive compensation plans, there are some key things that you need to think about. One of the things that you need to think about is that whatever you’re incentivizing, Is what you’re likely to get.

And that makes sense on one level. You sit there and say, well, duh, of course that’s, that’s why I’m incentivizing it, right? Cause I want that performance metric. And so, you know, laying the seeds of that makes perfect sense. If I want more revenue, I’m going to give you a percentage of revenue, right? I mean, that’s, that’s what my goal is as an agency.

If I’ve got a vice president that I want generating new business, I’ll give him a percentage of the revenue. No brainer, easy peasy. Right? Yes and no. The problem is that you’re getting exactly what you incentivize and what you incentivize may not be what you have in your mind. It’s what’s actually on paper.

And so if you’re incentivizing someone to bring in new revenue, you have to be careful because that doesn’t necessarily mean profitable revenue. And so I’ve had plenty of salespeople over the years who have done a slam dunk job of bringing in new clients. Unfortunately, they bring in new clients at all costs, right?

Their goal is to close business. And so that means that they may cut corners on setting the right expectations or getting the price right, or getting the timing right, or any of those kinds of things that are so critically important to having long term success, high lifetime value, high client satisfaction.

So you need to be careful when you’re setting these incentives that you understand what’s the flip side of this? How could it go wrong? Because the next key thing to keep in mind about incentive compensation is that the devil is in the details. It’s how you define things. How do you define revenue growth?

How do you define profitability? How much is it really in the control of that individual? Versus other members of the team or the client or other things. How might you put together multiple incentive streams to counteract the problem that you might be creating in another place? And you’ve got to be careful because you do want to follow the keep it simple, stupid method here.

You don’t want to overcomplicate things. You don’t want to turn it into a hash, but at the same time, it might be worthwhile to give a vice president both a profit incentive and a revenue incentive. And so that the only way that they really max out is if they’re getting them in tandem. So what you’re doing is you’re trying to figure out how you can add variable B to variable A so that, so that you’ve got a nice, healthy combination, a nice, healthy mix that’s delivering the kind of business that you want.

But the devil is also in the details on how you handle unusual situations, right? So, if you’re going to put together an incentive comp plan, you need to think through, you know, what can go wrong outside of actually hitting the numbers. So, what happens when an employee is terminated? Either for cause or not for cause, or they depart on their own.

They resign. How do you handle any outstanding incentive comp payments? And if it’s an annual incentive comp plan, that’s probably a little bit simpler to deal with because if they’re not there at that point in time. It doesn’t matter. If you’re dealing with an ongoing basis where you every new client they get X dollars or they get X percent.

How do you handle that after they leave? These are things that you want to make sure that you iron out in your definition of your comp plan in advance. Don’t wait until an employee is leaving or is terminated to try to solve these things. It gets so much more complicated at that point. So think through what your structure is.

Think through whether you’re going to simply do quarterly, annual, monthly payments as things happen, or is it going to vest? Is it going to go into a pool that maybe they can’t touch for two or three years? There’s a lot of different approaches that you can take to incentive comp plans. And, and this webinar is not where we’re going to cover every single possible option and how you put them together, but it’s starting to plant the seed with you that you need to be thinking through how you want to pull these different things together to get the performance from your team that you’re looking for.

You also need to be thinking about, you know, are you, are you creating a reverse incentive for someone to stay? So, In the case where I talked about either a vesting plan where things build for three years or your, you’ve got something where you pay out your bonuses every March or December or whenever it is, you need to keep in mind that, generally speaking, when you put those in place, there’s a period of time right after they receive that payment where employees are much more likely to be leaving.

So I used to work for an organization where every March,.. Everybody got their bonuses. The bonuses were pretty substantial. So most people who were eligible for those bonuses would stick around until March. But then in April, there was a big bubble of people leaving because people stuck around to get that check before they left.

Same thing happens when a business is bought. Usually you see the owners will stick around for, you know, whatever the defined earn out period is while they’re still collecting part of the purchase price, say two or three years. And then after that, the vast majority leave. The same thing can happen with vesting, right?

So if you’ve got a three year vesting thing and at three years, the employee can take everything out. If that’s the way the plan is set up, well, then you’re going to have a risk period where it’s more likely that they might leave because they might have been holding on just to get there and generally speaking, you’re not going to know it.

But if you’re doing effective one on ones, not to beat that dead horse, if you’re doing effective one on ones, you’re going to start to pick up some of the signals of these things that will help you be less surprised when they do occur. If they do occur. Now, on the flip side of that, if you’re looking to do retention, right?

If your goal is to keep people around, which might be your goal, if you’re looking to sell the agency over the next couple of years, you might want, if I want to sell the agency in two years, I might want to have at least a three year vesting program for my top people so that they’re encouraged to stick around, at least until that point in time.

And then maybe the acquirer will put in a new, you know, long term retention plan to try to keep them to stay and smooth the transition after that. But so you can use some of these incentive compensation things, not just to get short term performance, but also to try to keep people for a defined period of time.

Into the future that can give you some stability that can set you up for the things that you’re looking for as a business owner. And can help you meet some of your your larger strategic goals But do keep in mind that while they they can be effective at keeping people for that window It also does create that opening at the end where that could change and and so you just need to be prepared for that so that you know that that’s a vulnerable period.

And so you want to be specifically focused on those individuals and working to retain them, assuming that, that that is still your goal at that point in time, whenever that incentive comp or vesting plan kicks in. So things to think about with incentive compensation,, first do no harm. , don’t make a hash of it.

Keep it simple. Make sure that you’re really trying to incentivize the right things. When I talk about incentivizing the right things, Know that what you incentivize is what you’re probably going to get. Know what the opposite side of that. Know what the, what, what the downside to incentivizing one particular metric is.

Consider having a plan that incentivizes the offsetting metric so that you’re in a situation where you don’t have a problem, where you’re only driving the behavior that may cost your business over time, right? So focus on. Not just the increasing revenue, but getting the right revenue. Focus on, not just profitability, but also client satisfaction, figure out, you know, if one thing has that, you know, that, that equal and opposite force, try to incentivize both to balance it out, but try to keep it as simple as possible.

So you don’t end up with that hash I talked about. And finally, Devils in the details, think through very carefully, you know, what all of the potential outcomes are. Think about the different scenarios. Generally speaking, most of this, you only have to nail once. If you get the details about how you’re going to handle, terminations and departures and all that kind of stuff, you, you can reuse a lot of that.

It’s worth having, this reviewed by an HR consultant, by an employment attorney, someone like that, who can make sure that, that. you’re covering the things that they’ve seen, that you’re covering the things that might be required by any local laws that you have. It’s often very important, you know, whether you’re in a particular state or if you’re in a different country of the United States, have someone who’s familiar with, the specifics of those jurisdictions, because some folks have different rules about things like commissions and things like that.

And so you want to make sure that, that you’re on the side of the angels as the employer and you’re not getting yourself into trouble accidentally. All of those things come together, and I guess what I’d like to do now is sort of tie this all up. Because what we’ve talked about today are five key things that when brought together will help you get the most performance out of your small agency team.

It starts with setting goals first for the agency and then for the individuals. You have to check in on those goals and overall performance through performance reviews. You have to do coaching as part of that. You have to figure out how to get people to where they want to be in their careers. You need to make sure that the performance reviews are really just a checkpoint along the way, but you’re regularly having conversations with your employees through the one on ones that you’re having every single week, that you’re having those conversations so that there are no surprises when it comes to performance reviews, so that you know exactly what’s going on as it relates to goals.

And then when you do all of those things and you have an underperforming employee. You may use a performance improvement plan. It’s unlikely to work. So you need to know what your next step is after that and use the PIP process to prepare yourself for that. If you hit the lottery and you get performance, fantastic.

You’ve managed to rescue an employee. I’m not going to say that those never happen. They do. So let’s look on the bright side and then on the really bright side. Incentive comp, it’s something that a lot of employees ask for. It’s something that a lot of you are interested in because it puts less money at risk.

You can pay people a base salary, come up with incentive comp so that if, if the agency wins, the employee wins, and so you’re not putting as much of your own capital at risk. Because, I mean, keep in mind, as small business owners, Every penny that goes out is a penny that comes out of our pockets, particularly for the sole owners.

So I know that all of you are paying much more careful attention to that money than you did, perhaps when you were a manager in a larger organization or anyone who’s a manager in a large organization that they’re not the sole owner of does. So if you put these five things together, you will get a high level of performance from your team.

You will deliver the results that your clients are looking for. You will have team members who are hopefully, both doing well, from a performance standpoint, but doing well financially, but also frankly, they’re satisfied. They’re satisfied with what you’re doing and giving to them to help them grow and to help them on their own career path.

So. Hopefully this has given you some good insights for how you can pull it all together. I’ve gone a bit longer in the presentation than I planned to. If you do have a question, I could probably get maybe one question in here. If you do have it, I’m gonna bring up the window here to look at the, the question and answer window to see if anybody has sent anything in so far.

Normally I would pause at this point so that you have more of an opportunity to type something in. I don’t see anything here right now. I will give you just a moment. I’m to see if anybody put something in here, but in the meantime, while we’re looking or while I’m looking for the possibility of a question coming in, I do want to make sure that you all know that you can reach me at chip@sagaimpact.com.

Any questions that you may have that I wasn’t able to get to since I didn’t leave as much time as I would have liked for Q and A about this topic. If you have suggestions for other webinar topics, I would be happy to hear those as well. Would you like me to go into deeper depth on a webinar where I look at any of the five things we talked about today?

Goals, performance reviews, incentive comp, PIPs, or one on ones. You know, those are all topics that probably could be the subject of their own webinars to go into more detail than I was able to cover today. I did, of course, tell you about a number of the webinars coming up. I would encourage you go to sagaimpact.com/webinars to see those upcoming webinars, register for them. Everyone who attended this webinar will get access to the replay as well as the deck with all of those pretty pictures that I included. And of course, if you are a SAGA standard pro or coaching member, you will have access to the full, replay library of all of the webinars, that I’ve done and will continue to do so.

You’ll have access to those on demand anytime. And so go ahead and check those out at sagaimpact.com/join. And so with that, I see, nothing came in. I’m sure I rushed you all. I’m sorry about that, but, hopefully there’s been a lot of good information here. Hopefully it’s all stuff that will be things that you can apply to your own agency, to your teams, and get the most out of it.

So, with that, we will draw today’s webinar to a close. Again, I’m Chip Griffin, the founder of the Small Agency Growth Alliance. Thank you for joining me, and I look forward to seeing you back here on another webinar very soon.

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Hello and welcome to today’s webinar, Managing Small Agency Employees to Maximize Performance. I am Chip Griffin. I am the founder of the Small Agency Growth Alliance or SAGA. And today we’ll be taking a look at some of those challenging issues that we all have in getting the best performance out of our team and delivering the results that our clients need.

So let’s go ahead and jump into a couple of housekeeping items. First, I always like to get started here. The recording and the deck will be made available to all of the attendees. And of course, there is a full library of webinar replays that are available to all SAGA standard, pro, and coaching members.

If you haven’t checked out the benefits of those memberships, please go ahead and go to sagaimpact.com to learn more about them. The Q& A function here is what you should use to ask questions. Feel free to use it at any time throughout the course of the webinar, and I will try to answer as many as I can at the conclusion of the presentation.

Let’s see, if you have questions for me, you can email chip@smallagencygrowth. com. Happy to answer them. I won’t be monitoring it during the presentation today, but I will certainly be looking at it. Afterwards, if you’d like to tweet about this webinar, feel free to do so. I would just encourage you to use the hashtag agency leadership, which is what we try to tag most of our content with so that it’s easy for you to discover.

And again, I’ve already mentioned the website. So. That will conclude the housekeeping items for today. I do want to tell you about a few upcoming webinars that we have scheduled. There’s business development for agency owners who hate sales, which I know is many of you. I know that I never got into the agency world because I loved sales so much, but eventually you have to figure out how to do it if you are going to grow.

So that will be the topic that we’ll discuss on Thursday, February 4th. On Tuesday, February 9th, we’ll talk about client retention strategies. That’s again, something that I know is near and dear to the heart of you listeners. It’s something that I talk with a lot of my coaching and advisory clients about on a regular basis, because after all, the longer that you can keep clients around, the more repeat business that you can get from your clients, the better off you’re going to be, the more profitable your agency will be. And then finally, how to onboard new agency clients will be the topic on Tuesday, February 16th. And as is often said, you never have a second chance to make a first impression. And so onboarding is particularly important and it really feeds into the client retention one. So I think it’s a natural, natural, follow on, see if I can speak clearly today.

Not a good start, right? Okay. So those are some upcoming webinars. But what are we talking about today? What are the specific things that I’ll be addressing in order to give you some practical advice that hopefully will help you to manage your small agency team better? There are basically five things that I want to go over today and I will cover each of them with three things that you can take away, as well as some additional items that hopefully will be informative as you’re thinking about how to structure, how to manage your team.

And so the first thing we’ll talk about is employee goals. That’s something that you may have already done for this year with your employees, or perhaps you’re a little late out of the gate and you’re still working on it. Or perhaps you’re on a different, planning schedule than simply using the calendar year.

Whatever it is, we can talk about how to set those employee goals so that they help get the results that you’re looking for. Performance reviews. Those are something that are absolutely critical to giving the feedback to your team members to help them grow and to help them get the highest level of performance for you and your clients.

One on ones. I think It’s right in the middle of today’s webinar, and it’s really because to me, it is the cog that drives employee performance, particularly in the agency environment where we are all about our people. We love to say it, but do we really mean it? And if we do really mean it, then it comes down to making sure that we’re working hand in hand with all of our team members, and so one on ones will be the key, I think, to today’s webinar if you pay attention during that session.

Then we’ll talk about PIPs, or Performance Improvement Plans. You know, just as we talk about high performance, we have to talk about how to address low performance. And finally, we’ll talk about incentive compensation, because this is a question that I get quite frequently. It’s come up in a couple of the open Q& A sessions that I’ve had recently.

It came up in a conversation in a webinar not too long ago with Patrick Rogan, who is an HR consultant that I’ve worked with a lot over the years. All right, so let’s go ahead and we will jump into big picture here and the thing that you have to remember, the thing that you have to consider as a small agency owner is that you don’t have an HR team.

You may have an org chart, you know, maybe you’ve got 5, 10, 15 employees, something like that, maybe a little bit more, but it’s highly unlikely that you have a dedicated HR team. Many of you though came from larger organizations, larger agencies, where you had that kind of support. Even if you didn’t have formal HR support, you had additional managerial support.

You probably had your own supervisor who helped you out and helped you work through some of those employee management questions. There were systems already in place that you were simply working within. There was probably a performance management, a performance review program already in place. There was a system for handling PIPs.

There were compensation plans already there. There was a culture that was built up around you, and you fed into that. And now you’ve managed to take some of the ideas that you have from that. You’ve gotten a feel for what you liked and what you didn’t like as A manager and as an employee, and now you’re getting a chance to apply it yourself.

The reality is that most agency owners are accidental agency owners. Most of you started out as independent consultants, solos, doing work. You simply kept growing the business, maybe with the intention to eventually grow it into an agency. Maybe not. Maybe it just sort of happened because so much work came along.

You had no choice, but to hire contractors first and then employees. However you got to where you are now, odds are you didn’t think from the outset before you had employee number one, what your systems would be. And those systems need to be in place. Those, those processes need to be in place. And so what we’re going to talk about today are some of the key things that you need to be thinking about, and some of these things will evolve.

Some of these systems work better with one or two people, but then when you get up to, say, 15 or 20, maybe there are some adjustments that are needed. Some of the systems will work better when you’ve got everybody reporting to you, you’ve only got a handful of employees. Others work better when you’ve got layers.

So we’re going to talk through some of those challenges and how you might address them for each of the five areas that I laid out in the agenda. So let’s go ahead and we’re going to move into the first one, which is employee goals. And I think when you’re thinking about employee performance, it’s one of the key things that you have in your mind.

I need to set some goals for my team members. I need to help them know what I expect out of them. And that’s absolutely true. You do need to set expectations if you want to accelerate growth. And ultimately, that’s what goals are about. It’s about taking your team from point A to point B as quickly as possible.

And your goals are all about what that point B is for that individual. And so you need to tailor them to that individual. You need to customize those goals so that they work to help you get the most out of that individual. You can’t have one size fits all goals that you simply say, Every account executive is going to have this set of goals.

Every, vice president is going to have these. Certainly, there are going to be some categories in which there may be some similarities, but if you’re going to get the most out of them, you really do need to tailor it. But it all does start with thinking about what your overall team goals are. What are your agency goals?

And you need to have clarity on that. If you’re a sole owner, you should take some time go off by yourself at least once a year and start thinking about some of these issues. Maybe you’re working with a coach like me or an outside advisor. Maybe you’ve got some trusted advisors that you can talk to leading up to this process.

If you’ve got more than one owner of your agency, if you’ve got partners, you should be doing regular partner retreats, but one of them should be an annual one where you’re doing that kind of goal setting. Because employee goals all have to feed into that bigger picture. But you can’t feed into a bigger picture that you can’t see.

The puzzle pieces that you’re pulling together from all of your individual team members, from all of your clients, from all of the specialties and expertise that you’re building as an agency owner, all need to come together. And so you need to start by coming up with those agency goals and having them trickle down.

As you get bigger, those those agency goals will become team goals, whether those are client service teams or service delivery area teams or whatever. It all needs to come together. And that’s how you start thinking about your individual employee goals and team goals. You may have heard of SMART goals.

SMART goals are something that are incredibly popular today. It’s sort of like, you know, OKRs are all these terms and acronyms that people throw around when it comes to employee performance and thinking about how you set goals for employees. And I think SMART goals are a good thing to consider. And SMART is an acronym that stands for specific, measurable, achievable, , timely, and relevant.

And so all of those things can come together to help you put together employee goals. And that’s very important. And having measurable goals can really help you to work with your team members so that when you have your performance reviews, which we’ll talk about a little bit later, they all tie together with those individual components.

They tie together with those measurable items that you have. And so smart goals, I think, are a good foundation. For your individual employee goals. They’re great for team goals because it’s a good way to be able to assess your overall performance, but I would also tell you that as much as I love data as much as I love measuring and I have a background in data analysis and those kinds of things.

I also have to tell you that there’s real value in having softer goals. So just as you might lay out that you want someone to, grow the, the revenue that they’ve brought in from clients by X percent, or they want, you want them to stay within X percent of budget on their client projects, or that you want them to deliver all work within X number of days from the client request or whatever, all of the different things that you can come up with, and measure as part of SMART goals.

I think it’s just as important to have some soft goals with your employees so that there are things that you can have a conversation about during the performance review. That’s not just a black and white, but is really talking about the individual growth that that employee is having. And one of the key things that we’re going to talk about when we talk about performance reviews are things that are related to to coaching and career advancement.

And a lot of those are not things where you can necessarily have a specific measurable objective in all cases, but they’re all things that you need to be thinking about and all things that you want your team members to be focused on as they grow. Because you have to remember most of you are only going to have these employees for a period of their career.

The days of someone coming to work for you and staying with you for 20 years, they still happen. I’ve had employees who have stuck with me for over a decade, It does happen, but the reality is in the current work environment. It’s more common for people to move on from one employer to the next. And that’s not necessarily a bad thing.

You want to be careful that you don’t have too much turnover, but no turnover can be just as damaging to your agency because you’re not bringing in fresh blood. You’re not having that opportunity to make some changes and adjustments to what you’re doing every time an employee leaves. Yes, it’s tough, but it’s also an opportunity.

It’s an opportunity to think about how you might reimagine your team and how you deliver your services by bringing in someone with a slightly different skill set, because the reality is every business evolves and you need your team to evolve. And that means either you’re working with the individual goals and the performance and all the things we’re going to talk about today, or it means bringing in new team members who have those skills, who have those specialties and can help you make those improvements, those enhancements.

So as you’re setting goals, think about those three things that we’ve just talked about. Think about how it is that you tie in your individual goals to your team goals. Think about how you use your goals to drive people in one direction to another. Think about how you can combine both smart and soft goals together to get the most performance.

So those are the key things that you need to set. Those are things that you want to set with your employees on an annual basis. And you want to review them on at least a quarterly basis in a more formal way so that you can adjust progress as needed you can make adjustments as the business changes. And that’s where performance reviews come in and performance reviews are something that I know many of you dread.

You don’t want to sit down and have these. I know that when I was running businesses with large numbers of employees, I would always sit there and I would see a circled on my calendar, the window in which I was supposed to do my performance reviews. And I would sit down with, you know, other managers and HR people and look at the forms and blah, blah, blah.

Performance reviews, they need to have a process. They shouldn’t be bureaucratic. You should view them as an opportunity just as you do your goals to find ways to enhance, the results that your team is producing for your agency, for your clients, and for themselves. And I know I’ve already stressed that under goals, but it’s so important to be thinking about the individual.

As part of this process. And so the first rule that I have for performance reviews and the thing that I will tell every new manager that I have: never, ever, ever should a performance review have big surprises for either the employee or the manager. The things that you’re talking about in a performance review may get to a level of detail that’s different from what you might be having in your regular one on ones or other meetings with your employees.

But they should never bring up something new. You never want to blindside your employee by bringing up some aspect of their performance that you haven’t already addressed. The performance review is not the place that you bring up any of these things for the first time. It’s a place where you need to be reinforcing the messages that you’ve already delivered.

It’s a place where you can tie up neatly with a bow, all of the conversations that you’ve had over the last quarter of the last year, the last six months, whatever frequency we’re using. And we’ll talk about that in a moment too. It’s tying it all together. It’s painting a picture and a plan forward. It’s not about breaking news to somebody for the first time.

So if you find that your performance reviews are surprising your employee, or worse, your employee is raising something with you that you’ve never heard before, that means that you have a failure somewhere else in your process. It may be in your goals. Most likely it’s in your one on ones, and that’s where you need to address that particular problem.

So it never happens again, because this is not a look that you want to have on your face or see on your employee’s face during your performance reviews. The second critical thing and the big mistake that I see made in a lot of performance reviews is there’s talk about money and performance reviews absolutely feed into compensation conversations, bonus conversations raises all that kind of thing, but you need to have a separate compensation conversation, absolutely distinct from the performance review. Because the performance review is about coaching and advising your team member on how to improve.

It tells them what they’re doing well and what they need to work on. It helps you figure out what they’re looking for from you as an employer, what they’re looking for from their career and how you can fit into all of that. If you start bringing money into this conversation, if the expectation is that they’re being reviewed on their performance and it’s tied into compensation, it immediately puts the employee on the defensive.

And so this is, again, a mistake that I’ve made in the past. I’ve had these conversations together, and so you need to be crystal clear with your employees from the get go that your process separates those two things. It doesn’t mean that they’re separated and unrelated. I mean, you’re not going to give big raises, big bonuses, presumably, to employees who are not performing well.

But you want to have that constructive dialogue first, because you don’t want to put them in a position where they’re sitting there and not being receptive to the feedback that you’re giving them, not receptive to the plan that you’re putting in place, because they believe that if they agree with you, that it’s going to harm their ability to get the compensation that they’re looking for.

So leave money out of the performance review. Have that conversation, a healthy separation afterwards. Might just be a week or two, but that’s enough so that you can use that. performance review to focus on the things that matter about the performance that you’re looking for from them. I think the, the key thing, and this is, this is probably the biggest piece of advice that I could give to any new manager, seasoned manager.

You need to view yourself as a coach. Okay, you need to view yourself as someone who’s trying to figure out how to get the most out of your team. And so that might mean that you use someone more in one area than another. You know who your expert is in dealing with certain kinds of clients or on certain deadlines.

You know who has what expertise and how to deploy them. But just as important, you need to know who can get that a little bit more just by working with them. What words can you say in the performance review? What goals can you set for them? How can you nudge them forward? How can you give them the education, the knowledge, the skills that they need to be able to deliver for you, for your clients and for themselves?

Those are the things that you need to think about as a coach, and you need to step away from the idea that as a manager, you’re the boss, you’re an enforcer, you’re, I was talking with one agency owner not too long ago who said that there needed to be consequences for an employee who was underperforming.

That’s absolutely the wrong way to look at it. You want to be looking at it as, how do you cajole absolutely every last bit that you can get out of somebody? How can you motivate them to perform? And the performance review is a critical part of that. And you should view yourself as an advisor to that employee about how they can improve, about how they can grow.

But just as important, you need to listen. You need to be paying attention to what they’re telling you. You can’t just sit there and say, you know, these are the three things that you need to work on. This is not that kind of meeting. It really needs to be a give and take and you need to update your knowledge about where they want to go.

What are they trying to achieve? Are they trying to improve their writing skills? Is their goal to own their own agency someday? By the way, that’s not a bad thing. I know a lot of agency owners get freaked out when an employee says, well, I’m thinking about, you know, You know, starting my own agency one day, then they immediately start viewing them as a potential competitor and, and freeze them out of certain conversations.

No, that’s great. You, you want, I mean, I know it’s cheesy, but a rising tide does lift all boats and you want to get the maximum out of everybody and you want to drive forward, but that’s where coaching comes in. You’re not a referee. I’m a sports official, right? I’m used to calling ball strikes safe out, ejecting people, giving people penalties, whatever.

Those are not the kinds of things that you need to do as a manager. It’s not something if you’ve got multiple layers of management that you should be encouraging or accepting from any of your middle managers. You need to be working with them to make sure that they’re seeing themselves as coaches. And don’t assume that any of them know what they’re doing even if they’ve come to you from a different environment.

You have to have your way as an agency of running things, of having these goals, performance reviews, one on ones et cetera. So focus on those things. Focus on being a coach in the performance reviews, and you will get better results than if you’re sitting there as the scolding teacher or official or government bureaucrat or whatever.

You want performance. You want to help. So, the three things to take away from performance reviews, no big surprises. No money. And be a coach. Those are the three things. And if you, if you think about those things, you don’t need to worry about having these complicated forms. And I know that there are a lot of folks who have come from larger organizations where they do 360 reviews, or they have every team member review, every other team member.

And you’ve got all these check boxes. And I know some agencies score employees and give a numerical value. That’s over complicating it. Performance reviews are conversations. They are about you communicating what you expect. It’s about you listening to what the employee is looking for and figuring out how the two of you can meet and continue on that rocket ship forward that you’ve put together as part of their goals.

So how do you do this on an ongoing basis? How do you make sure there are no surprises? My big favorite thing, and every coaching client of mine knows that I harp on this repeatedly, one on ones, so absolutely critical, so important. And I don’t care whether you’re the agency owner or you’re a junior manager, new to managing, the one on ones are the most valuable management tool that you have.

They are something that you absolutely need to focus on. And the very first thing you need to focus on is actually having them. You need to have one on ones like clockwork. Every week. every direct report. You need to be having these meetings. They will generally become shorter over time. If you’re doing well, because it means you’ve got open lines of communication.

I don’t care if you’re talking to that employee twice a day, every day for other things, you still need to have a separate one on one meeting with that individual. Those meetings Are how you will make sure that there are no surprises at performance review time. Those meetings are where they will surface things that they didn’t think were important enough to bring up in a separate conversation or a separate email.

You will learn a tremendous amount about your team, about your team members, about your business, about your clients, all because you took the time to spend 15, 20, maybe 30 minutes with each employee that you have as a direct report every week. Now, if you’re in a slightly larger agency and not everybody is a direct report, so you’ve got more than just a handful of employees, you should still be looking to have one on ones.

You just won’t have them weekly with your non direct reports. But anyone who’s listening, if you’ve got an agency with 25 or fewer employees, there’s no reason why you as the owner, or you as a partner in that agency, shouldn’t know pretty well everyone on your team. Now you can’t meet with them every single week, but if you’ve got 10 employees, it’s reasonable to have a one on one with each of them once a quarter.

And again, you want to try to get as much information from these as you can. And it’s particularly valuable when you’ve got middle managers. When you’re talking a layer below them, because you’ll start to learn more about their management techniques, because the way they interact with you is not always, in fact, frequently, it is not how they interact with their own direct reports.

And so you want to make sure that you’re getting the kinds of feedback you need so you can become a better coach and help them become better managers. And remember, they’re taking their cues from you. So if you’re not having your one on ones with them like clockwork, I guarantee you they won’t be doing that with their own direct reports.

So you need to set the example and you need to have them. Now, the biggest reason, the biggest complaint that I hear from agency owners about why they don’t have one on ones regularly is because it takes too much time. And there’s two reasons why it takes too much time. The first is too many direct reports.

You should not have more than five direct reports. Maybe there’s an exception where you can have a sixth or something like that, right? But five is the magic number. If you have more than five direct reports, it’s very difficult for you to give them the oversight, the advice, the coaching, the help, the responses to their approval requests, all those.

It’s hard to do that when you have more direct reports than five. So you need to work on setting up a structure where you don’t have more than that. And if you have five, you could break it up so that you have a one on one every day of the week. And so it’s only 30 minutes a day, 15 minutes a day. Once you get into a routine. It might be that you You decide to have them , all in a burst, right?

You just do a two and a half hour block on Monday, Friday, Wednesday. I don’t care when it is, doesn’t matter. It’s whatever works for you and your team, but you need to be having these. And it’s particularly important now that so many of your team members are probably remote because you’re not having the water cooler conversations or the other intelligence gathering opportunities that you might otherwise have.

You don’t eavesdrop on things accidentally and hear things where you can jump in and say, Hey, I want to head this off at the pass. I want to help you out with this, that I just heard you talking to so and so about. Right? So the one on ones have taken on an increased significance in the remote work world. And I don’t care if you were an agency that was remote to begin with, or you had to go remote because of the pandemic, this is something that you need to be thinking about, how you can have these one on ones to more effectively manage and communicate with your team members.

So the first big problem as far as these going too long is, they’re taking too much time is that you have too many. The second is that they take too long. The reason why they usually take too long though, almost every time I have an agency owner say these meetings just take too long, it’s because they’re not doing them regularly.

And if you, if you only have a one on one once a month, once a quarter, those kinds of things with your direct reports, they’re going to have so many things to talk about. You’re going to have so many things to raise with them that it’s naturally going to go more than 15 or 20 minutes. If you do it every week, like clockwork, like I talked about in the last step, the meetings should become progressively shorter and more focused.

And so you’re able to move through them more swiftly because you’re having them regularly, so your total time will actually decrease by having them with the right frequency. Now, what’s the actual setup of these one on ones? These one on ones should be employee driven. And that’s different than what most folks do when they’re managing and doing a one on one, right?

The agenda should really be driven by the individual. Your focus should be on listening. You should be listening for what’s said and what’s unsaid. You should be using this as an opportunity to allow your team members to bring up any concerns. Any opportunities that they perhaps see, maybe they’re talking with a client and they say, Hey, you know, you should know Chip that they’re interested in a website.

Maybe we should be talking to them about that in addition to the social marketing that we’re doing for them. Or maybe they will, they will raise an issue about a concern that they have about, a team member, or about the client. Maybe they’re saying the client’s getting very difficult to deal with.

Didn’t think it was important enough to bring it up as a separate conversation with you. But just wanted to let you know that this particular client is being more demanding or, or whatever. And those are, those are valuable data points for you to get, and you can address them a lot better before they bubble up and become so big that that employee says, I have to schedule a meeting to talk about this particular subject.

You also want to make sure that this is an opportunity for them to tell you about any obstacles that they have, particularly ones that are related to you. So, I always have on my one on one agendas the opportunity for someone to raise the things that I’m holding up. Because I didn’t approve something, because I didn’t give the right resources, because I said to wait, you know, whatever it is.

And so you want to make sure that you’re using this as an opportunity for the team members to get things unstuck. Now, this shouldn’t be a reporting thing. This is not one of those things where the employee should be going through a list of all 75 things they accomplished over the last week. You can use weekly reports or other written materials or emails or project tracking systems to get all of that data.

This is conversational. Okay. And so this is an opportunity for you to get those learnings in there. You should be talking about the clients that they’re working on. You don’t necessarily need to review every client every week, but you might ask them, you know, what, you know, which are the, the clients that are having the most activity, anything unusual going on with them.

You might ask them if there’s anything going on with the client contact, if they’re the direct client account manager. Those are all things that you can start stockpiling information on and learning from and making adjustments both tactically and strategically as a business owner. If you listen. If you’re having these meetings.

So these one on ones are absolutely crucial to that. The one on one should also be an opportunity for you to bring things up proactively. I just want you to move that to the latter part of the meeting. So don’t drive the agenda by starting out with any concerns that you might have or things that you want them to focus on.

The only thing I would, I would preempt them talking about first is if there’s some big news about the agency that you need to share. I would start with those so that it’s not just hanging over the meeting because people hear rumors, right? So, you know, if you’ve got a new employee coming in or employee leaving or, you know, new client coming in or, you know, any kind of big picture conversation, something that, that, you know, would drive everybody’s focus.

Do share that up front so that it’s, it’s clear and that you’ve gotten that on the table, but don’t dwell on it. Make sure that you have an opportunity to focus on the other things in that one on one. The one on one is also something that In the once we get post pandemic and you are meeting with people individually, either every week for the one on one or, you know, perhaps remote for a lot of them, but occasionally in person, I encourage them to be held outside of the office, at least periodically getting out of the normal environment is often an opportunity to get people together.

to open up more. So, in the past, I had, an executive who worked for me and I would generally get the best feedback from him when we would go out for coffee or breakfast or something like that. And he would cause him to just relax more and be more forthcoming. And the one on ones are really, really valuable from that perspective.

And it’s also your opportunity to share things with them, share what your concerns are. Not just about them, but about the agency as a whole, and I’m not saying that you need to use this as a therapy session and dump it all out there. But, you know, there is a human connection that’s going to be made here.

And we have to be careful that even though we’re running small businesses, we don’t Put ourselves in an insulated cocoon where we’re not willing to share and open up with our team members. We need to have a level of transparency to have that healthy conversation, and I would encourage you to be looking at these one on ones as a good, safe place for those conversations to take place.

Those are the nitty gritties for one on ones. Make sure you have them like clockwork every single week. Make sure that you don’t have too many direct reports. Make sure that you keep your meeting short by having them regularly. And make sure that you are spending most of your time listening by allowing your team member to drive the conversation.

Those will all help you get better, more effective one on ones. Good one on ones lead to much better employee relationships. It leads to much higher quality performance reviews, and it generates a much better foundation for both setting, tracking, and meeting their goals. Now let’s go ahead and talk about both the upside and the downside of employee performance.

First, we’ll focus on the downside. So we get to end on a little bit more of a high note. And so on the downside. So if you, I mean, let’s say you’re going through these one on ones, you’re having them religiously, you’re You’re doing good performance reviews, you’re setting good goals. The reality is that you’re still going to have underperforming employees from time to time.

And even the best managers are not perfect at hiring. The best managers are still probably going to swing and miss at least one out of every three employees. Some of those will be bad enough that you need to part company. Some of them will be not too bad. You just kind of need to massage it a little bit.

And then there’s this gray area. And that’s where PIPs, Performance Improvement Plans, come in. And I’m going to start by telling you that I hate PIPs. I hate them not just because It means that you’ve got to deal with an underperforming employee and everything that entails, but I also hate them because I don’t think they’re particularly effective.

I’ve used them or been forced to use them a number of times over the course of my career, and I can tell you that the level of success, you’d frankly be better off buying a scratch ticket. And hoping to win a million dollars off that scratch ticket. Much higher chance of success off of that than just about any performance improvement plan PIP that I’ve seen.

It doesn’t mean that you don’t still have a place for a PIP in your business. But the biggest reason to have a PIP Is not so much because you think it’s actually going to work. But because it’s something that you want to do from a paperwork standpoint to prove that you’ve done absolutely everything you can to rescue this employer employee relationship and I know that sounds especially harsh But the reality is that once you’ve gotten to the point of saying that you need a PIP, it usually means that you’ve already gone through, assuming that you’re doing even halfway basic decent management, you’ve already gone through some feedback, you’ve already gone through some corrective steps.

The PIP is just formalizing it. The PIP is putting into a memo something that says, you’ve got three months or one month or whatever period of time you set to correct these specific deficiencies. Okay. It’s not going to generally make a huge difference in the performance of that individual. Usually what it is is simply a precursor to making a change.

And so if you think about it from that perspective, it can help soften the transition. It can help you as the employer figure out, you know, what direction do you want to go next? How do you want to solve this staffing issue that you’re creating by having what is likely to be a failed performance improvement plan?

Okay, but it also gives that employee some time to adjust to the concept, and you basically put them on notice that if they’re not making the changes that are needed, you’re going to make a change. I mean, that’s fundamentally, that’s sort of performance improvement plan is. You say, you have to make these changes in this defined period of time, or we will separate you from the company.

Okay. So it’s not a, you have to do it by this time. And then we’ll kind of see, I mean, it’s, it’s generally that specific that it’s corrected by this date or you are done. So it does give the employee and the employer both sometime to figure out how they’re going to handle the transition at the end of it.

Now, if you happen to, to win that scratch ticket lottery and the performance improvement plan works out fine, you can shelve your transition plans, but I can tell you again from experience, I think in all of my 30 years of working and having seen a performance improvement plans or, or having employees who’ve worked for me, on those plans, there’s, maybe one circumstance where it worked out and even in that particular case, it really only bought another six months or so before, , the, the company and the individual ended up parting ways anyway.

So, unlikely to be successful, but it can demonstrate. That you’ve gone through every, , possible step to make an accommodation and to get them to, deliver the performance that’s needed. , it can be particularly helpful if you’ve got an employee who’s in some sort of protected or semi protected class.

It’s the kind of thing where if you’re working with an HR consultant, they may advise you to do a PIP before you do a termination. Just to make sure that, you know, you’ve got all of the documentation that you need if you should ever be challenged on it. So. I always encourage anytime you’re thinking about a termination, work with an HR consultant.

If it’s someone in a protected class, you may even want to deal with an employment attorney, just to make sure. It’s short dollars to get that kind of insurance up front. You don’t ever want to have a claim made against you because you, you know, you didn’t cross the T’s and dot the I’s. And so that may be the PIP that’s needed in order to get you there, in order to deliver what’s needed to be delivered.

on the up and up, shall we say, and to, to, to be as protected as, as possible. But it also does allow the employee to really get it into their mind that their time with your agency may be coming to an end soon. And again, just like performance reviews shouldn’t be surprises, terminations should never be surprises.

You never want to sit down with somebody and I’m not talking a layoff layoff, sir. A whole different ball game. And we could probably do a separate webinar at some point on that if you’re interested. But from a termination standpoint, you never want to walk into that meeting and have the employee completely blindsided.

They have no idea why they’re being let go. That’s not just as a performance review. You shouldn’t have that, you know, bug eyed look. You don’t ever want to have the employee have that look when you’re having a termination conversation because it will take the conversation completely sideways. It’ll be incredibly unpleasant for everybody.

And so if a PIP helps you get there, it helps you get over that hurdle. If it makes that conversation easier for you, it may be worthwhile. Now, the downside to the PIP, you have to keep this in mind, is effectively, if someone is not working out, you’re certain they’re not going to work out, or pretty certain they’re not going to work out, a PIP means that they’re on your payroll for longer.

Because a PIP is not severance. It is not garden leave. And so you’re still expecting them to work. You’re expecting them to work to improve themselves. And assuming that they, you know, don’t just phone it in, assuming that they are making, you know, some sort of even halfway reasonable effort, you know, you need to view that as they’re continued to be employed by you.

So when you do end up letting them go, you need to be looking at putting together some sort of a reasonable severance package for them at that point. Certainly, I think it would be reasonable to, to keep in mind that you’ve given them some advanced warning. So they, there’s no way they’ve been blindsided and factor that in a little bit when you’re coming up with you know, whatever scheme you want to have for, severance, but, but do keep in mind that it is going to increase your total expense. So make sure that it’s something that you feel like you absolutely need to do from a documentation standpoint, or it’s something that you really need in order to get yourself over that hurdle to make the change that’s likely to be coming.

With that, final words on PIPs. The three things to keep in mind, they have a very low success rate. They may be necessary or useful for documentation purposes to prove best effort, at resolving the situation, short of termination. And they do give you and the employee some time to, to prepare for the transition, both psychologically as well as, all of the other operational or financial things that you and the individual may want to be thinking about.

All right, enough of. Painful pip conversations. Let’s talk about incentive compensation. And this is, as I mentioned, during performance reviews, compensation is always a question when it comes to employee performance. And a lot of employees like the idea of incentive compensation of some kind, they will often ask you for it.

And so you need to think about. how you want to use incentive compensation with your agency to get the most out of your team. The first thing I will say is incentive compensation plans done poorly are a good way to create a hash out of your overall, compensation structure at the agency. So you need to be careful that you’re not making things so complicated that you just turn into a mess.

And there are some hashes, this corned beef hash here on the screen. Look, I mean, it looks delicious to me. I, I’m a sucker for corned beef hash. This one, this one looks pretty good. I could sit down and eat this right now. In fact, I wish I had some corned beef hash here that I could cook up right after this webinar is over. But a lot of hash can just be nasty and messy, difficult to look at and not something that you really want. So keep that in mind. And as you’re putting together incentive compensation plans, there are some key things that you need to think about. One of the things that you need to think about is that whatever you’re incentivizing, Is what you’re likely to get.

And that makes sense on one level. You sit there and say, well, duh, of course that’s, that’s why I’m incentivizing it, right? Cause I want that performance metric. And so, you know, laying the seeds of that makes perfect sense. If I want more revenue, I’m going to give you a percentage of revenue, right? I mean, that’s, that’s what my goal is as an agency.

If I’ve got a vice president that I want generating new business, I’ll give him a percentage of the revenue. No brainer, easy peasy. Right? Yes and no. The problem is that you’re getting exactly what you incentivize and what you incentivize may not be what you have in your mind. It’s what’s actually on paper.

And so if you’re incentivizing someone to bring in new revenue, you have to be careful because that doesn’t necessarily mean profitable revenue. And so I’ve had plenty of salespeople over the years who have done a slam dunk job of bringing in new clients. Unfortunately, they bring in new clients at all costs, right?

Their goal is to close business. And so that means that they may cut corners on setting the right expectations or getting the price right, or getting the timing right, or any of those kinds of things that are so critically important to having long term success, high lifetime value, high client satisfaction.

So you need to be careful when you’re setting these incentives that you understand what’s the flip side of this? How could it go wrong? Because the next key thing to keep in mind about incentive compensation is that the devil is in the details. It’s how you define things. How do you define revenue growth?

How do you define profitability? How much is it really in the control of that individual? Versus other members of the team or the client or other things. How might you put together multiple incentive streams to counteract the problem that you might be creating in another place? And you’ve got to be careful because you do want to follow the keep it simple, stupid method here.

You don’t want to overcomplicate things. You don’t want to turn it into a hash, but at the same time, it might be worthwhile to give a vice president both a profit incentive and a revenue incentive. And so that the only way that they really max out is if they’re getting them in tandem. So what you’re doing is you’re trying to figure out how you can add variable B to variable A so that, so that you’ve got a nice, healthy combination, a nice, healthy mix that’s delivering the kind of business that you want.

But the devil is also in the details on how you handle unusual situations, right? So, if you’re going to put together an incentive comp plan, you need to think through, you know, what can go wrong outside of actually hitting the numbers. So, what happens when an employee is terminated? Either for cause or not for cause, or they depart on their own.

They resign. How do you handle any outstanding incentive comp payments? And if it’s an annual incentive comp plan, that’s probably a little bit simpler to deal with because if they’re not there at that point in time. It doesn’t matter. If you’re dealing with an ongoing basis where you every new client they get X dollars or they get X percent.

How do you handle that after they leave? These are things that you want to make sure that you iron out in your definition of your comp plan in advance. Don’t wait until an employee is leaving or is terminated to try to solve these things. It gets so much more complicated at that point. So think through what your structure is.

Think through whether you’re going to simply do quarterly, annual, monthly payments as things happen, or is it going to vest? Is it going to go into a pool that maybe they can’t touch for two or three years? There’s a lot of different approaches that you can take to incentive comp plans. And, and this webinar is not where we’re going to cover every single possible option and how you put them together, but it’s starting to plant the seed with you that you need to be thinking through how you want to pull these different things together to get the performance from your team that you’re looking for.

You also need to be thinking about, you know, are you, are you creating a reverse incentive for someone to stay? So, In the case where I talked about either a vesting plan where things build for three years or your, you’ve got something where you pay out your bonuses every March or December or whenever it is, you need to keep in mind that, generally speaking, when you put those in place, there’s a period of time right after they receive that payment where employees are much more likely to be leaving.

So I used to work for an organization where every March,.. Everybody got their bonuses. The bonuses were pretty substantial. So most people who were eligible for those bonuses would stick around until March. But then in April, there was a big bubble of people leaving because people stuck around to get that check before they left.

Same thing happens when a business is bought. Usually you see the owners will stick around for, you know, whatever the defined earn out period is while they’re still collecting part of the purchase price, say two or three years. And then after that, the vast majority leave. The same thing can happen with vesting, right?

So if you’ve got a three year vesting thing and at three years, the employee can take everything out. If that’s the way the plan is set up, well, then you’re going to have a risk period where it’s more likely that they might leave because they might have been holding on just to get there and generally speaking, you’re not going to know it.

But if you’re doing effective one on ones, not to beat that dead horse, if you’re doing effective one on ones, you’re going to start to pick up some of the signals of these things that will help you be less surprised when they do occur. If they do occur. Now, on the flip side of that, if you’re looking to do retention, right?

If your goal is to keep people around, which might be your goal, if you’re looking to sell the agency over the next couple of years, you might want, if I want to sell the agency in two years, I might want to have at least a three year vesting program for my top people so that they’re encouraged to stick around, at least until that point in time.

And then maybe the acquirer will put in a new, you know, long term retention plan to try to keep them to stay and smooth the transition after that. But so you can use some of these incentive compensation things, not just to get short term performance, but also to try to keep people for a defined period of time.

Into the future that can give you some stability that can set you up for the things that you’re looking for as a business owner. And can help you meet some of your your larger strategic goals But do keep in mind that while they they can be effective at keeping people for that window It also does create that opening at the end where that could change and and so you just need to be prepared for that so that you know that that’s a vulnerable period.

And so you want to be specifically focused on those individuals and working to retain them, assuming that, that that is still your goal at that point in time, whenever that incentive comp or vesting plan kicks in. So things to think about with incentive compensation,, first do no harm. , don’t make a hash of it.

Keep it simple. Make sure that you’re really trying to incentivize the right things. When I talk about incentivizing the right things, Know that what you incentivize is what you’re probably going to get. Know what the opposite side of that. Know what the, what, what the downside to incentivizing one particular metric is.

Consider having a plan that incentivizes the offsetting metric so that you’re in a situation where you don’t have a problem, where you’re only driving the behavior that may cost your business over time, right? So focus on. Not just the increasing revenue, but getting the right revenue. Focus on, not just profitability, but also client satisfaction, figure out, you know, if one thing has that, you know, that, that equal and opposite force, try to incentivize both to balance it out, but try to keep it as simple as possible.

So you don’t end up with that hash I talked about. And finally, Devils in the details, think through very carefully, you know, what all of the potential outcomes are. Think about the different scenarios. Generally speaking, most of this, you only have to nail once. If you get the details about how you’re going to handle, terminations and departures and all that kind of stuff, you, you can reuse a lot of that.

It’s worth having, this reviewed by an HR consultant, by an employment attorney, someone like that, who can make sure that, that. you’re covering the things that they’ve seen, that you’re covering the things that might be required by any local laws that you have. It’s often very important, you know, whether you’re in a particular state or if you’re in a different country of the United States, have someone who’s familiar with, the specifics of those jurisdictions, because some folks have different rules about things like commissions and things like that.

And so you want to make sure that, that you’re on the side of the angels as the employer and you’re not getting yourself into trouble accidentally. All of those things come together, and I guess what I’d like to do now is sort of tie this all up. Because what we’ve talked about today are five key things that when brought together will help you get the most performance out of your small agency team.

It starts with setting goals first for the agency and then for the individuals. You have to check in on those goals and overall performance through performance reviews. You have to do coaching as part of that. You have to figure out how to get people to where they want to be in their careers. You need to make sure that the performance reviews are really just a checkpoint along the way, but you’re regularly having conversations with your employees through the one on ones that you’re having every single week, that you’re having those conversations so that there are no surprises when it comes to performance reviews, so that you know exactly what’s going on as it relates to goals.

And then when you do all of those things and you have an underperforming employee. You may use a performance improvement plan. It’s unlikely to work. So you need to know what your next step is after that and use the PIP process to prepare yourself for that. If you hit the lottery and you get performance, fantastic.

You’ve managed to rescue an employee. I’m not going to say that those never happen. They do. So let’s look on the bright side and then on the really bright side. Incentive comp, it’s something that a lot of employees ask for. It’s something that a lot of you are interested in because it puts less money at risk.

You can pay people a base salary, come up with incentive comp so that if, if the agency wins, the employee wins, and so you’re not putting as much of your own capital at risk. Because, I mean, keep in mind, as small business owners, Every penny that goes out is a penny that comes out of our pockets, particularly for the sole owners.

So I know that all of you are paying much more careful attention to that money than you did, perhaps when you were a manager in a larger organization or anyone who’s a manager in a large organization that they’re not the sole owner of does. So if you put these five things together, you will get a high level of performance from your team.

You will deliver the results that your clients are looking for. You will have team members who are hopefully, both doing well, from a performance standpoint, but doing well financially, but also frankly, they’re satisfied. They’re satisfied with what you’re doing and giving to them to help them grow and to help them on their own career path.

So. Hopefully this has given you some good insights for how you can pull it all together. I’ve gone a bit longer in the presentation than I planned to. If you do have a question, I could probably get maybe one question in here. If you do have it, I’m gonna bring up the window here to look at the, the question and answer window to see if anybody has sent anything in so far.

Normally I would pause at this point so that you have more of an opportunity to type something in. I don’t see anything here right now. I will give you just a moment. I’m to see if anybody put something in here, but in the meantime, while we’re looking or while I’m looking for the possibility of a question coming in, I do want to make sure that you all know that you can reach me at chip@sagaimpact.com.

Any questions that you may have that I wasn’t able to get to since I didn’t leave as much time as I would have liked for Q and A about this topic. If you have suggestions for other webinar topics, I would be happy to hear those as well. Would you like me to go into deeper depth on a webinar where I look at any of the five things we talked about today?

Goals, performance reviews, incentive comp, PIPs, or one on ones. You know, those are all topics that probably could be the subject of their own webinars to go into more detail than I was able to cover today. I did, of course, tell you about a number of the webinars coming up. I would encourage you go to sagaimpact.com/webinars to see those upcoming webinars, register for them. Everyone who attended this webinar will get access to the replay as well as the deck with all of those pretty pictures that I included. And of course, if you are a SAGA standard pro or coaching member, you will have access to the full, replay library of all of the webinars, that I’ve done and will continue to do so.

You’ll have access to those on demand anytime. And so go ahead and check those out at sagaimpact.com/join. And so with that, I see, nothing came in. I’m sure I rushed you all. I’m sorry about that, but, hopefully there’s been a lot of good information here. Hopefully it’s all stuff that will be things that you can apply to your own agency, to your teams, and get the most out of it.

So, with that, we will draw today’s webinar to a close. Again, I’m Chip Griffin, the founder of the Small Agency Growth Alliance. Thank you for joining me, and I look forward to seeing you back here on another webinar very soon.

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