ReCourses Blog | David C. Baker

Filtered by Topic: Management

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The Four Types of Employees at Your Firm

Take just six minutes with me and think about the four different kinds of employees you have. You'll learn a lot more from this exercise if you participate and apply it to your firm as you read.

Start by answering two questions about each employee:

  1. Is this employee a cultural fit? Think about your values, as well as the importance you place on honesty, transparency, collaboration, commitment, etc.
  2. Is the employee a contributor? To answer this question, think about whether you could send them to talk with a client (on their own) or ask them to teach their fellow employees through an informal seminar for an hour or ask them to write an insightful blog post.

Draw your own guadrant, like the...

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You Have One Primary Job as a Leader

As a leader, your job is to make decisions. There are other things, too, but that is your main job.

Warring against that, possibly, is your fear of making the wrong decision. Rest assured in knowing that there is greater long-term potential harm in not making decisions than there is in making wrong decisions.

So to be an effective leader, try to master the timing of your decisions rather than the criteria for your decisions.

Key Times to Make Decisions

So, when should you make a decision? Here are the four most important times to make a decision:

  • When you see an opportunity you're small enough to pounce on. This is usually an opportunity that the big firm has to study, meet about, appoint a committee, assess the risks, get funding approval, and then build consensus around three times per week for five months. There are significant advantages around scale, but being nimble is not one of them.
  • When your people are...
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Eight Gauges on Your Agency Dashboard

In your mind, list all of the important metrics you'd like to track about your agency. Now tie each metric to one specific gauge and your dashboard might look like a hopelessly complex airplane.

At first glance it can be overwhelming, with so many things to measure that you almost don't know where to start. The key, though, is to make the more important gauges larger and then place them in the center. If we did the same thing with your agency's dashboard, here are the eight gauges we'd see right in the middle so that you never lost sight of how your agency was doing.

Performance No. 1: Billings/FTE

Take all employees (billable or not) and divide that number into your yearly fee base. The average, ordinary firm achieves $116,000 per full-time equivalent employee. The good firm is $160,000; the excellent firm is $220,000; the stellar firm is $275,000. This metric is useful because it concentrates on realized utilization, folds your hourly rate into the mix, and won't let you have a bloated administrative staff. From there...

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Life is What Happens WHILE You Fix It

My Declaration for Your 2014: The Year of Your Own Oxygen Mask

This year I will jot down some clever ways to peg the amount of "care" my clients bring to the table, and I will willingly match that level, just because it's the right thing to do. But for my own sake, I will not exceed that level, just because it's also the right thing to do.

I will quit pretending to solve the potable water crisis in Africa and I will take a glass of cold, refreshing water to a randomnly chosen employee on occasion. I am tired of the hypocrisy of wanting to change that world while being a #@%!) shitty manager in this one.

Not inconsistent with this, I will finally boot that one employee out of the nest. Yes, they have done every job in the place and been with me as the organization has matured, but they no longer have the presence, objectivity, ability, or hunger that we need. If I hear them tell one more new employee that they've been here the longest, have done every job, and know how and when to present things to me, I may just make a decision on the spot.

I will be so, so grateful for whatever health and intelligence I've managed to retain through these years. [Pause and be grateful, please.] I won't view life as something that happens after I fix it, but something that happens while I fix it. The journey itself must be savored, along with the control and freedom and opportunities I have to NOT feed the machine.

If what I've just said still doesn't...

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Navigating Employee Compensation

These are the things I've learned about paying humans, most of which I didn't absorb until some time after I was managing them.

The two groups of employees who are typically overpaid are those who have been with you a long time and those who know what other people make.

There are five issues more important to good employees than money, and when they talk about money is when some of those five things have eroded over time.

No employees in the world are mature enough to know what other people make and not read "intrinsic value" into that equation.

Real power comes from shaping how and what someone is paid. Unless a "manager" is that same person, all they are really doing is making suggestions about projects.

Small, frequent adjustments are better than...

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What Success Looks Like at Your Firm

A great client recently asked me to outline my definition of success for their firm. I really enjoyed doing that, and below is a version that you can adapt to your own situation, putting your own stamp on it:

  • Partner compensation equals or exceeds industry benchmarks.
  • After that is achieved, you still 20% net profit.
  • The more entrepreneurial employees are satisfied that their contribution to your gain is recognized and accounted for.
  • Partners and employees in key roles will have already tasted competence in the area of your focus, or they will experience it within nine months of joining the firm.
  • There will be few or no young employees who value variety over expertise.
  • When employees talk about your firm, while still employed, their private comments will be complimentary.
  • When partners and employees head out the door to work for the day, they look forward to the challenges, the companionship, and their participation in the overall culture.
  • As a firm you will not require extraordinary people....
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Good Questions to Ask Yourself

I was recently working with a firm under our new "Come to Nashville" program for a day and we were doing long-term planning, mainly, but with an eye on how that might impact the short term. I came up with some questions that turned out to be very helpful as they took a break from the continuous crazy days we all have, and then answered them honestly and seriously.

  • How do you feel about the current positioning of your firm? If you could waive a magic wand and change it (without regard to current employees or clients), what would your positioning be?
  • What are your biggest fears in just pursuing that positioning, even if it means doing so alongside your current firm and maybe even doing it all alone without employees?
  • If I watched you on a typical day, would it look like you are taking care of clients or would it look like you were taking care of employees (who would then take care of clients if you did your job well)?
  • Who are the two weakest employee links who probably should be dismissed in the near future?
  • Who is the most talented person at your firm who is disruptive to the culture? Are they on the list, above, of people to dismiss?
  • You likely started this firm to create an environment for yourself that allowed for more freedom, control, and money. Now that you have built it, to what degree are these three things true?...
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Should You Start Your Own Firm?

I seldom give up my 17,000-person blog platform to guests. Keeping your attention is important and my primary marketing tool. But, I read a blog last week that Mark Busse wrote, and I thought it was brilliant. I'm sharing it here with his permission:

Rushing into starting your own design business can turn a dream into a nightmare.

Recently I heard from two former students of mine. As they entered the industry a few years ago we had some honest talks about their options, and against my advice they decided to skip internships or junior positions--which they felt were both beneath them--and went into partnership together with another classmate to form their own design studio. After some early success working for friends and family, their studio quickly fell into chaos, the partnership dissolved, and the company folded, leaving their clients in rough shape.

I'll spare you my story of how running my design business has still not brought the freedom, flexibility or financial reward I'd hoped for after 15 years--and I have a business degree--and how I often miss the days of just working for someone else. Instead, let's talk about how lazy, short-sighted and dangerous starting your own business can be.

You heard me: lazy, short-sighted and....

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How Important Is It To Enjoy Your Work?

This is a question that has long intrigued me. It comes up more frequently, too, as individual workers find it harder to find work at all, much less work that they enjoy. But even in a difficult economy, employees regularly switch jobs to work in a more satisfying environment.

They are told repeatedly to "follow your heart…and the money will come." Even aspiring entrepreneurs are encouraged to take that path to fulfill a dream, chase their hopes, and attempt to "build it," hoping they will come.

But that's different than having a right to enjoy it. Not only do I strongly disagree with the sentiment, I think believing it has twisted our expectations and those of our employees. It's not all that different, in fact, from commenting on someone's gruesome death that "at least she died doing what she loved."

First, a lot of people who are "following their heart" are starving. It's just true. Even pseudo-entrepreneurs who follow a system via a franchise are failing in droves--in some, there's a 60% failure rate.

Second, just...

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Why Your Firm Might Fail...and Preventing It

Forgive me for the ominous subject line of this email, but there are times when it's best to be objective and forthright. I've been talking with the executives of large associations and educational institutions in this field, hoping they'll drop the status quo and beginning offering real help to their members and graduates. So far I've made very little progress, so I'm just going to use my own platform (16,000+ of you).

Look around, think back through the last decade, and make a mental list of the firms you knew that are no longer around. Did any of them fail for lack of creativity? Even if you don't think they were that creative, the answer is a resounding "NO". Here is why those firms--and possibly yours, if you don't listen--will cease to exist, in descending order. I'm going to list seven reasons firms fail, and then seven things to keep a very close eye on.

What to Keep An Eye On

  • Make Poor Business Decisions. I'm thinking of things like leasing too much space, incurring debt instead of examining the issues behind why you need it, spending more than 45% of your AGI on compensation, establishing unnecessary satellite offices, ignoring standard embezzling safeties, and not really understanding what the financials are saying.
  • Let Growth Happen to You. This is the land of opportunity, as we're told from a young age, and so one of the most difficult decisions an entrepreneur must make is to turn down opportunity. By avoiding that, they let the marketplace determine how large they will be, in spite of all the additional management load that brings, and worse yet they match their capacity to their opportunity and forgo the ability to say no to clients who don't fit. Eventually they end up consistently accepting work to keep the butts in the seats busy, focusing on cash-flow rather than profit.
  • ...
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More Transparent Client Relationships

I've had a hand in shaping four of the software products out there, including the two with the largest installed base. And for ten years I've been clamoring for more transparency, enabled primarily by allowing a client to log into your project management software (that's not BaseCamp, by the way) and seeing the status of things. For one thing, why make the AE do that? Every client is different, and this would let them interact with the data on their own terms, with selectable update options to boot.

Why hasn't this caught on? Two reasons:

  • Firms say something will take three weeks of work but they don't even start it until four days before the deadline, and this way the client would know that.
  • Firms are afraid of interferance in the creative process, where I think it should be more collaborative and with no "big reveals" as we call them.

Anyway, I was chatting about this with a client of mine, Greg Daake, who has a firm in Omaha. He has been thinking the same thing, and so I asked him to write some thoughts on this. Here's Greg...

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Managing People is Counter-Intuitive

I was sitting down last week, thinking about how much difference it makes when you have a good boss. I realized, though, that much of good management is counter-intuitive. So I thought I'd take a few minutes to record a few observations while they were top of mind.

Before I do, though, remember the survey on the last email? It asked whether you were better or worse than average as a manager. A full 68% of you said better! You can interpret that one.

Here are the things I've learned interviewing nearly 14,000 people for the book I reference at the end:

  • Any non-evil person can be a manager.
  • Management does not make you special.
  • Managers shouldn't always make more money than those they manage.
  • There should be two career paths so that we don't saddle technicians (craft people) w/ management.
  • Nearly all important information should come from an employee's direct manager.
  • Why you were promoted, or why you promoted a certain person, tells a huge story.
  • The biggest danger to your company is a very skilled employee who doesn't fit the culture.
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You Might Need to Change the Name of Your Firm

Most creative firms are poorly named, especially if they are named after the principal and perhaps multiple partners. Unless you turn out to be a very large agency with a 40+ year track record, your name matters. Naming it in the traditional way after yourself does this:

  • it makes it a tad more difficult to sell
  • it encourages new clients to work with you when you should be doing other things that the firm really requires of you
  • it makes it difficult to add significant partners, because every time you do so the name will likely change
  • it makes your agency look small

Chances are that you didn't put much thought into naming the company when it began with just you as an employee. The attorney was pressuring you to come up with some name that s/he could put on the forms, and so you defaulted to the easy choice. If I had done that, my company would be Baker Inc., or Baker & Associates, etc.

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What I Want to Be When I Grow Up

I'm 51, so I figure I'd better get this right pretty soon. :) I think about this a lot, though. The common thread through the last 25 years, though, is that I've worked for myself. That's a lot of years without a safety net, and it's also a lot of years to learn habits that would make it almost impossible for me to work for someone else.

About 20 years ago, though, I put together this list. At the time, I felt like most of my life was ahead of me and that I wanted as many options as possible. So there's very different from each other, and it was just me dreaming one day:

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Gwen Bell

Some people get it. By extension, then, some (most?) people don't get it. Gwen Bell is one of those people who clearly gets it. The first time I read her website, a whole lot of things clicked for me. I'm not prepared (at the moment) to adopt her lifestyle and business model, but I like her presence, how articulate she is, and how key points are explained thoroughly enough to eliminate the frequent response: "Yeah, I've heard of her and read some of her stuff."

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