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June 18, 2003
Agency Management: An Oxymoron?

Advertising agencies, like many other professional firms, tend to be very well administered but poorly managed. Administrative topics, such as financial controls, cash flow management, target utilizations and the like, are in place almost everywhere, and deployed to great effect.

However, management in agencies suffers from four problems. First, the job of a manager (how he or she adds value and makes a difference) is ambiguous and not well understood. Second, agencies frequently use the wrong criteria in selecting managers. Third, few agency managers (at any level) receive training in managing. Finally, agency managers are paid on the wrong basis, creating perverse incentives.

The word manager derives from mediaeval French and, literally translated, means the holder of horses. The job of the manager is help the people in his or her group achieve more than they would if left on their own. The manager must cajole, nurture, challenge and inspire each group member to stretch for achievement. Beyond this, the manager must get the feisty broncos to function as a team.

What is often overlooked is that the job of management has almost nothing to do with intelligence, rationality, logic or IQ. The job is almost entirely about the ability to influence other people's emotions: to create energy, excitement, enthusiasm, passion and engagement.

Unfortunately, this is not the basis on which managers are usually chosen in ad agencies. People are promoted to department head, office head or higher agency management based on their technical skills, business development abilities or financial orientation. While it is critical that an agency possess significant amounts of these talents, none of them is a qualification for management.

Management is inherently a social skill, an interpersonal ability and one requiring large amounts of what today is called "emotional intelligence." The job of a manager is to get others turned on. Note that this requires that the manager has his or her ego under control: he or she must be content to focus on helping others do the work and get the glory. A manager who needs to do it himself or herself may be a great practitioner, but will be an ineffective manager.

How does a manager motivate people? One at a time! The only management worthy of the name is one-on-one. Everything else is window dressing. You don't excite advertising people by giving speeches or posting mission statements on the wall. Tom Peters was right when he said the essence of managerial effectiveness is "Managing By Wandering Around."

Managers in advertising, like managers everywhere, are almost entirely untrained in managing. They may receive training in business, but that's a different subject. Whether in small agency or large, how many agency managers know how to stop prima donna from demotivating the rest of the team. How many know how to get people staying late, doing their best work because they want to, rather than because the client is being demanding or there is a utilization target to reach? How many know how to suppress turf battles, and get creative, account management and media to function like real teams because "that's how we do it around here?" The answer, of course, is that there are some true "naturals" as managers out there who can pull all this off, and more. But if you're not a natural, there's nothing the agency provides to help you learn it.

Finally, reward systems for managers in advertising agencies are often dysfunctional. There's one logical way to evaluate and reward managers: since their job is to promote the success of their group, they should be evaluated and rewarded on how well their group has done. Unfortunately, it is still true in many agencies that group heads are given individual, personal targets for utilization and/or business generation. Accordingly, whenever there's a trade-off between meeting their targets and helping the group (and, of course, given the limited number of hours in a day, there's always a trade-off) the manager worries about his or her personal numbers first and the group performance second.

It's not difficult to see that this is the wrong choice. Slightly fewer personal billed hours by the group leader is a loss, but it's miniscule compared to the benefit of raising the group's performance even a small amount. The group contains many people (let's guess ten for illustration), and raising their contribution by, say, ten percent each would improve represent 100 percent improvement for an individual. The group leader would struggle to double his or her own performance to make an equivalent improvement. Why not manage instead?

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David Maister is widely acknowledged as one of the world’s leading authorities on the management of professional service firms. For 25 years he has acted as a (solo) consultant to prominent professional firms, around the world, on a wide variety of strategic and managerial issues. He spends about 40 percent of his time working in North America, 35 percent in Europe and 25 percent in the rest of the world.

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