Agency Blockers: Part 2 - Structure

This is the second part of my series on why some agencies seem to ‘bounce’ up against an invisible ceiling.

You might know the feeling (or recognise the trajectory). Constant, frustrating cycles of growth and contraction - growing until there's an invisible wall, and then contracting back to where things started.

This series aims to discuss some of the most common reasons why this could occur, and some next steps on how to start solving the core issues.

The first article was based around People, with 4 key blockers identified:

1. There's a Handbrake
2. 'Founders Syndrome'
3. The Replication Problem
4. Senior Team Misalignment

This article focuses on the system within which those people work – the organisation structure.

The lack of a suitable org structure is usually unintentional (we’ve grown/shrunk quickly and now the reporting lines are a bit messy) but can sometimes be by design. A flat structure can absolutely work if it’s designed well – but most of the agencies I’ve seen and heard about with a flat structure don’t execute it well and ‘flat’ is synonymous with ‘non-existent’.

This can feel like a non-issue if the agency is small (say <7 people) because you can all sit around a table and communicate. Once the agency gets larger than that, communication overheads can skyrocket - as demonstrated by the below image:

To get where you want to go, the agency needs to be structured in such a way to support the vision – not fight against it. One with too many layers is likely to be expensive, slow, and disempowering for junior staff. One that is too flat may feel chaotic and uncertain, with accountability passed around like a hot potato.

There’s no ‘right’ answer here, but the reasoning and execution needs to be sound whichever direction you go.

The 4 structural blockers identified that usually contribute to agencies ‘bouncing’ against that invisible ceiling are:

1. Overloaded Managers
2. Top Heavy
3. Ways of Working
4. Who do I go to for...

Article Structure

Blocker: A short summary of an identified blocker to agency success.

Symptoms: Sometimes it’s hard to see the forest for the trees. The symptoms are the trees – see enough of the same sorts of trees and you’re probably in a forest.

Next Steps: Obviously every business is different and the details of these challenges are unique. Broadly though, I’ve outlined some next steps to explore to help you get out of that forest.

Part 2: Organisational Structure

1: Overloaded Managers

Blocker:

Too many people reporting to too few managers (or managers lacking the experience to manage teams – this can look like a very similar problem depending on team size).?

Symptoms:

As people are added, lines of communication increase exponentially and there's a huge communication overhead (see the image posted earlier). Spare a thought for managers who see their teams go from 4/5 to 8/9 – double the people but more than triple the lines of communication in that team.

Unsurprisingly, this often shows itself via complaints by more junior members feeling ‘unheard’, complaints by managers feeling flat out, late deliverables by managers, higher than average churn/spend on recruitment, and complaints being escalated to more senior staff that should have been handled at a lower level.

Before assuming that the problem is the number of managers, it’s also worth assessing the managerial skill-level of your people-managers. Just because someone is a great individual contributor, that does not mean they already possess all the skills required to be a great manager. They received training on the former, so why not the latter? If the teams aren’t that big, look to upskilling your managers first.

Next steps:

Review existing org chart and the sizes of your teams. A commonly cited upper limit for reports is 7-8, but this does change based on the abilities of the manager. If there are more than that, look to add management capacity.

In addition (or if you’ve identified the true problem to be in skillsets rather than capacity) look to design a training course for management skills, and roll it out as part of your career progression in the agency.

?

2: Top Heavy

Blocker:

Too many managers, too few people.

Symptoms:

If you’ve got a comparatively high wage bill compared to the revenue being generated, this could be a sign that you’re carrying team members that are too expensive for the client value they’re producing. Management layers can be a huge contributor to this.

It can also take a long time for any changes you want to make (eg ways of working, policy changes etc) to filter down an oversized hierarchy, making it feel slow and inflexible. Our industry moves quickly, and you need to be able to be responsive to a changing environment.

Similarly, information can flow slowly the other way. You may find that you’re not hearing about problems or challenges as much as you used to, or that you’re getting a highly filtered/sanitised view of the truth. I mean, if it’s going through several pairs of hands before it gets to you, is that really so surprising?

Finally, a tall hierarchy can create psychological distance, so you could simply feel like there’s a distance between you and some of the team.

?

Next steps

Look at your org chart – how many layers are between you and your juniors? How many people reporting to each manager? How many people reporting to you?

It might be time to consolidate some teams or remove some management layers in a restructure project. This is a big, impactful piece of work, so tread carefully.

3: Ways of Working

Blocker:

Inconsistency in the quality of client work delivered.

?

Symptoms:

There are two parts to this problem – the work itself, and then the fact that it’s going to clients whilst not meeting the agency’s standards.

Every agency has a way of doing things. As you hire up (or lose tenured employees) this gets strained. If your agency structure doesn’t have some sort of work governance built in, it should be expected that unsuitable work gets sent to the client.

Typically, some of the signs will be client complaints, project overruns, complaints by team members of others not completing work properly, and a long time until new hires are productive.?

Overall, your clients are likely having an inconsistent experience with the agency – some love you, others simply do not get the hype.

Next steps:

There's a myriad of ways to manage this and the right solution is different depending on the type of work you're doing. For example, an agency built on delivering new and innovative work will deal with this differently compared to one that is built on being methodical, consistent, and efficient. Either way, consideration should be given as to whether there is an approval process to run through before work is shipped to clients.

At the very least, basic principles/processes should be written down. This can be as simple as creating checklists or as detailed as a full LMS.

Where work can be templated, it should be done (this will also save time).

For new hires, there should be an onboarding process to how you do things – don’t just expect them to know or pick it up on the fly. This will help them get up to speed and productive faster. Plus a positive onboarding experience has been shown to correlate with employee longevity.

?

4: Who do I go to for...

Blocker:

Unclear lines of reporting

Symptoms:

If an agency grows (or contracts) rapidly, it can become unclear who reports to who. For some personality types, this isn’t an issue – at least not immediately. For others, this uncertainty and confusion can cause a huge amount of stress. Not knowing who your manager is means you don’t have that person to go to with problems big or small.

If your team isn’t sure who to go to for things like one-on-ones (or you don’t run one-on-ones - you really should) or for questions about their work, this is a big red flag.

If you, or your team, are unable to easily plot the org structure on a piece of paper, that’s another one. For many in your organisation, their day-to-day interaction with the organisational structure is who they receive work/feedback from and who they go to with questions – their manager.

?

Next steps:

The org structure should work in furtherance of your vision for the agency, and where you want to go (whilst taking into consideration the realities of where you are).

Simplicity is best, without too much criss-crossing when drawn on paper. At an absolute minimum, everyone should know who they report to and who reports to them.

That's it for the second article on common agency blockers and why agencies 'bounce'. Let me know if you have any feedback or if there’s another blocker you think it would be worth discussing.

The first article on People is available here.

Sam is the Founder of OTTESU, a growth acceleration partner for ambitious agencies. OTTESU helps its clients achieve their strategic goals by ensuring they have the right systems, processes, and people in place.

He is a CEO and company director with extensive experience leading growing agencies in rapidly changing environments. A skilled communicator and problem solver, having had 12 years in the marketing/digital industries and formal qualifications in Law and Business, and from the AICD.