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Should more agencies follow M&C Saatchi's lead and offer employees 'skin in the game'?

By Peter Reid, Chief Executive Officer and Co-Founder

April 18, 2016 | 5 min read

David Kershaw, the chief executive of M&C Saatchi, appears to be more aware than many of his counterparts of the importance of offering ownership stakes to senior agency teams.

By allowing executive members of the UK advertising agency to buy a stake in the business, he has given them a greater sense of empowerment and potential motivation than they could have ever have had as mere salaried employees – we’ll wait and see if it’s sufficient to turn around a situation that Kershaw himself has described as “disappointing”, but is definitely a step in the right direction.

The concept of having 'skin in the game' is a powerful one, and also one that too many agency groups, particularly medium-sized ones, neglect to do at their peril. The leadership teams of these agencies are, whether group management likes it or not, personally responsible for bringing in revenue to a greater degree than their rivals at larger networks, which have the benefit of global relationships.

Having a feeling of ownership – of participating and benefitting from a businesses success – is a powerful motivating factor that ensures that these management teams put in the hard work – the extra graft – the dedication and the skill to make that operation a success. It provides a long-term reason to keep staff when there are so many opportunities for them to work elsewhere.

It’s important to remember that this is rarely about one individual – in fact quite the opposite. Given that most agencies (like most companies) are the sum of their parts, in order to get a top team working together they must be treated as that and equity shared among all the main protagonists within a senior team.

But there’s no point just throwing money at a problem and hoping it will work. Any incentive structure should mirror your business strategy or reinforce what you are asking your teams to do.

For example, at MSQ we ask our agency leaders, firstly, to look to grow and develop their own individual agency through a compelling proposition, effective client services, sustained new business success etc. and secondly to collaborate with other staff and agencies to put together - for the right clients - true multi-disciplinary teams with individuals drawn from multiple agencies.

Therefore, we have two levels of incentive structure – firstly material rewards for successfully growing the individual agency brand, and, secondly, the opportunity for the 70 most senior individuals across the group to have a direct equity stake in the MSQ Partners Group.

This, combined with the appropriate level of autonomy we give our agency managers to shape the culture and identity of their individual agency, creates a proposition that feels genuinely entrepreneurial and motivating, despite sitting within a structure of a group.

The need for effective incentive structures is becoming even more important – both at a client and agency level - as we move into a world where effective collaboration and multi-disciplinary teams are becoming ever more in demand from a growing number of clients. Talking about our multi-disciplinary offer to clients, where agency teams complement rather than seek to compete against each other, seems to be an attractive proposition to clients as they watch the boundaries between traditional advertising disciplines blur and seek a sleeker, more effective solution. It’s why we think that our staff incentive structures works best for clients, as well as staff, as it motivates the collaborative behavior that our clients increasingly want.

However, no matter how effective the right incentive structure looks on paper, effective collaboration can only work with the right individual attitudes and outlooks. We have worked hard in ensuring that we have people at the top of our agencies who actually want to collaborate and have invested considerable time in enabling senior teams to get to know each other and, above all, trust in the quality of the work in their sister agencies and to want to make introductions (rather than to meet some kind of mandated KPI of two introductions per month).

There’s something reassuring to clients that a multi-disciplinary approach, where everyone has a shared stake in the success of the business, will actually produce a team that is fighting on the client’s behalf and not, as they have often seen, between themselves for a larger share of the available pie.

Peter Reid is chief executive officer and co-founder of MSQ Partners

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