When it comes to winning agency models, it pays to pay attention to Elite SEM. After all, the digital agency recently won Ad Age’s 2015 Small Agency Award for Best Culture and Crain’s #1 Best Place to Work in NYC, and was ranked #1 in Entrepreneur’s rankings of top company cultures.
Elite SEM’s model is a disruptive model in the agency space in which it gives a large percentage of the fees to the account managers and making them all “intrapreneurs” – essentially entrepreneur but within an existing firm. Elite SEM’s model is based on the concept of intrapreneurship. “We are 140 intrapreneurs,” explains founder and CEO Ben Kirshner. Everyone owns their own book of business, gets a base salary, and the remainder of compensation is commission-based.
Many agencies in Elite SEM’s field have a 20-30% turnover rate. They mostly “churn and burn” by underpaying and overworking their employees. Thus, they’re always looking for a better opportunity. Elite SEM doesn’t have the turnover costs that other agencies have, which means the company has better margins too.
Kirshner knew he was onto something when he was pitching clients and they began saying things like “that is the best model we’ve ever heard of.” He recently walked into a pitch meeting and before he got to pitching, the clients were asking him to tell them about his business model.
“At the end of the day, what we do with digital marketing is all about people. It’s not about Ben or Elite SEM. It’s about ‘how is this guy doing?’ Is this guy sitting in his seat working and learning as best he can, or is he daydreaming about playing Madden, and leaving at 5:00pm? They’re motivated because they’re owners. They work as hard as I do. They work weekends nights, whatever makes their clients happy, because when they lose their clients, they feel it in their pocketbook.” So it’s a true meritocracy.”
The whole intrapreneur idea is definitely not for everybody, which is okay. “Google doesn’t stop working at 5:00,” Kirshner jokes. “We want to be different. We only got to this point because we are different.”
Elite SEM gets recognition for doing an impressive job building a strong corporate culture, but a lot of people might think of the idea of intrapreneurship as “everybody for themselves,” yet given the camaraderie at Elite SEM, it’s clearly not.
One key reason why transparency works at Elite SEM is transparency, particularly around the numbers. The rank and file is showed how much money is coming in and going out for new financial platforms, offices, televisions, and other expenses. Transparency builds a sense of camaraderie.
The importance of hiring
Of course, team chemistry can easily be disrupted, which is part of why Elite SEM is known to hire very slowly and fire quickly. At one point, it was in the process of hiring a head of analytics for over 18 months. Plenty of people want to work for Elite SEM; “we just haven’t found out that person,” explains Kirshner. “We are very, very particular.”
“Our interviews are really based on core values,” says Kirshner. One of Elite SEM’s core values is ‘Attitude of gratitude.’ The hiring team will ask candidates a lot of questions to gauge how grateful a candidate is; how much they appreciate others and how much they give back. “If you can’t tell me the last time you bought lunch for someone or have done a good deed for someone, and if you think hard, and it was like six months ago, no offense, but how grateful of a person are you, really?”
In Kirshner’s eyes, if someone is a strong performer but a complete jerk, “it’s not worth it.” He believes that culture fit trumps skills, no matter what. After all, he believes you can train for skill every day of the week, but you can’t change someone at their core. So if the core values aren’t there, Elite SEM shouldn’t hire them (or, it should fire them); it doesn’t matter how good their skills are.
It all comes back to focusing on your employees and making sure they’re happy. At the end of the day, happy employees lead to happy clients – Elite SEM’s net promoter scores in both groups seem to support Kirshner’s belief in that regard. “If I ran a manufacturing facility, my mantra would be, ‘make sure my machines never going down,’” says Kirshner. In his business, the machines just happen to be people. If they’re unhappy, not well-fed, not caffeinated and they’re not happy, then they’re looking for jobs, or are apathetic, and our business would run itself into the ground.
Kirshner thinks that Glassdoor and company reputation can either help you find the best employees – or, likewise, convince people not to apply in the first place. Think having a positive culture doesn’t pay off? Think again. Elite SEM uses its culture to attract talent as opposed to paying recruiters. If Kirshner is paying recruiters to go and find talent, it costs him $30,000 a head, so he’s calculated that over the last 100 people that he’s hired, he’s saved three million dollars by attracting people vs. paying for the people.
How much of Elite SEM’s model could apply to your business? How are you doing in terms of fostering intrapreneurship, transparency, and a winning culture? And, if you’re looking to become an intrepreneur, well, Elite SEM is hiring.