How to Incentivize Your Team With Agency Profit-Sharing

By Jason Swenk on September 11, 2019

Every agency wants its team to work smarter and hustle harder. But, the smart agencies know the best way to get results is with the right incentive program. On today’s show, we’re featuring an employee incentive model that may change the way you think about salaries and bonuses, as well as culture.

In today’s episode, we’ll cover:

  • 5 reasons to share 50% of agency profits.
  • Why agencies should only hire specialists
  • One big employee compensation secret
  • How to implement profit-sharing

Today, I talked with Tom Murray, Managing Director of Jump450 — a full-service marketing agency in Soho, NY. Tom’s agency does something a little crazy… they give 50% of profits to its employees. He’s on the show to share why and how this crazy strategy is actually growing the agency faster than ever.

5 Reasons to Share 50% of Agency Profits

Giving away 50% of your profits may sound more like a nightmare than a strategy but the thing is — it can work. Better yet, the agency is also paying employees a competitive base salary! Sounds crazy right? Maybe. But, it has a bunch of benefits you’re probably not even thinking about:

  1. You’ll get the best-of-the-best. Incentivizing your team with bonuses on 50% of the profit gives them insane salary potential. The best talent in the industry will flock to your agency for one simple reason — you pay more.
  2. Goodbye retention issues. Let’s be honest. Your team isn’t going to find better earning potential anywhere else if you’re offering them a huge cut of revenue.
  3. You can cut the fluff. The amount of motivation that profit-sharing programs give employees is mind-boggling. Some of the roles you’re currently utilizing (like project managers) may be able to be cut. This helps the agency stay lean and allows a cushion to share 50% of topline revenue.
  4. Everyone will be an ambassador. Giving your employees a direct stake in the agency will hype them up. It makes natural brand ambassadors for your agency.
  5. Clients know the team is motivated. Clients understand offering 50% to your team will get (and keep) them motivated. And that means clients rest assured the team is doing a great job at all times.

Why Agencies Must Only Hire Specialists

When you need someone to do SEO work, don’t just hire “someone” – hire an SEO expert. This may sound obvious, but most agencies aren’t following this rule. Tons of agencies just hire generalists and train for the skill. Try it the other way around.

If you pack your agency with people who are really good at one thing, everyone is going to be the best at their jobs. You can probably hire fewer people. And, best of all, your clients will get the best possible help.

Struggling to convince talent to come onboard? Consider filling in the holes with hyper-specialized freelancers.

One Big Employee Compensation Secret

Are you ready for the big secret? For most employees, it’s not all about the money. Your team has to show up every day for work. In fact, half their life is basically going to be spent there. So having the right atmosphere and breeding a good agency culture is crucial when it comes to motivating, inspiring, and engaging employees. Believe it or not, amazing culture is another way to compensate your team.

So, you can bonus your team or offer a profit-sharing incentive, but if your culture is garbage, the team is not going to engage. When you start thinking about salary, think culture first. You can make your team happy by providing an amazing place to work (first) and then think about the compensation model and any bonus structure.

How to Implement Profit-Sharing

For smaller agencies, changing the salary structure is a breeze. But, if your agency has over 10 team members, it can be difficult to make a wide-reaching change. If you’re just now considering a profit-sharing model, you’ll need to spend time forecasting. The key is to build out data models and track cash flow before implementing a profit-sharing model, so you can be sure the agency can support it.

In other words… it’s tough but, it’s definitely doable. Because — your salary structure could be the one thing holding back your agency’s success.

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