Stop Pampering Your Millennials: How Butler/Till Asks More, Not Less, Of Its Many Young Employees
Is your company struggling to engage millennial workers? Then come with me to Rochester, N.Y., where a 116-person media-buying ad agency, Butler/Till, after a difficult passage, has 20-somethings taking it upon themselves to boost productivity and quality.
The agency, though nearly 20 years old, has the vibe of a startup, not just because dogs are welcome on Fridays (they are), but because each employee has come to understand how his or her work directly contributes to the overall success of Butler/Till. As a result, billings more than doubled over the last five years to $161 million, on a mere 29% increase in headcount.
This most recent burst of growth comes as the agency’s founders, Sue Butler and Tracy Till, sold the agency in a two-step transaction in 2011 and 2014 to employees. But the results are very much due to a remarkable culture the founders built of teamwork, fun and high achievement. Now, an Employee Stock Ownership Plan, or ESOP, is spreading the financial rewards to Butler/Till workers, with a four-year compounded annual growth rate in the company’s stock value of 20.1%. In short order, employee ESOP account balances have eclipsed the values of longer-in-place 401(k) accounts, which Butler/Till still matches 4% on. The latest ESOP distribution, for 2015, was equal to 17% of pay.
But I’m getting ahead of myself in discussing the financial rewards because that’s not how Butler/Till motivates people. Some background: to prosper in a smaller market like Rochester, Butler/Till hires graduates from area universities and nurtures them into ad agency pros. So, the company is more than 60% millennial.
Upon adopting the ESOP, Butler/Till’s leaders rolled out a fairly typical program of employee education, with a big emphasis on the substantial retirement savings achieved through employee ownership, and no shortage of details on the unfamiliar mechanics of an ESOP. It made perfect sense to middle-aged leaders already thinking ahead to retirement. But to 20-somethings, the message fell flat.
It felt like homework, Brandon Smith, 25 and a senior media buyer at Butler/Till, recounted on behalf of his fellow millennials in a recent presentation at an ESOP conference. “Is this going to be part of my annual review? The last thing I need is to be memorizing a bunch of gobbledygook.” Of the firm’s leaders, Smith said, “They never talked about money this much before we became an ESOP. It’s like they’re obsessed with it now.”
Peter Infante, chief strategy officer and one of three senior leaders at Butler/Till, says it quickly became clear that the carrot of retirement savings alone wasn’t going to motivate his younger colleagues or link them to the ESOP. “Some people, their eyes crossed. We said, ‘Oh my gosh, we really made a mistake here.’ ”
Fortunately for Butler/Till, it is a company stocked with creative people adept at crafting effective messages for clients. To fix its ESOP-communications problem, the agency became its own client: it conducted focus groups of employees; a monthly anonymous, no-holds-barred Q&A session provided more candid feedback; and leaders met in small groups and one-on-one with employees to hear their concerns and, crucially, also their ambitions.
The strategy they came up with will seem counter-intuitive to many of you trying to manage millennial workforces. To co-opt a phrase, it can be summed up thusly: ask not what the company can do for you, ask what you can do for the company. That’s right: Butler/Till is asking more of its employees, not less, stressing each person’s meaningful work and how it impacts the overall results. Tons of financial and ESOP information is shared and available, but the internal conversation was redirected toward making a contribution – to the company and to each other.
Hearing Brandon Smith and Peter Infante’s presentation, “How to Humanize Your ESOP,” at a recent conference, I knew their message would be helpful to other employee-owned companies struggling to capture all the upside of an ESOP. The Butler/Till story is particularly helpful to other professional services firms, a category well represented among the largest ESOPs.
But what made me want to write about Butler/Till was how valuable its approach could be for all middle market companies, regardless of ownership format.
If you’re running an established company, I’m guessing you’ve found yourself at times envying the palpable teamwork and urgency of a startup – everyone in the same boat, pulling on an oar. Butler/Till has tapped into some of that startup mojo.
Workers at every company need to understand their role in the context of overall success, but that is too often lost in an era of hyper-specialization. A company constantly challenging employees to generate ideas to improve on quality and quantity turns on its best analytical minds. Conversely, exclusively top-down, highly controlled management cultures prevent this bubbling up of ideas and, frankly, can alienate our smartest workers.
At Butler/Till this summer, every employee is required to develop a discrete piece of practical innovation – the simplifying of a task, the identifying of an untapped opportunity – and plan and execute its achievement. It’s too early to measure results from the effort, on which employees are required to spend time, but earlier efforts suggest big dividends await. Butler/Till won a Greater Rochester Quality Council award in 2014 for a project that automated incoming invoices and outgoing payments for client media placements, improving accuracy, timeliness and cutting annual work by more than 4,000 hours, or two FTEs. (The captured time was redirected to more meaningful work.) And much of the dramatic increase in billings in recent years has come by winning additional business from existing clients, which often entails rank-and-file, client-facing employees listening and then identifying a need Butler/Till can fill.
Of course, to get to know a client well enough to hear about an unfilled need, it helps to have continuity of people on the account. The ad industry generally suffers annual employee turnover of about 30%. Butler/Till’s turnover has been in the single-digit range in recent years. Turnover is reduced by the more engaging nature of the work and the workplace. What’s more, in addition to skills, Butler/Till interviews job candidates for cultural fit. A hiring manager interviews for skill. And then some members of a 30-person culture crew interview for fit, asking questions designed to reveal whether the person would fit in the teamwork environment:
–If a co-worker was having a bad day, how would you cheer him or her up?
–Describe your ideal work culture. What would make you most happy and productive?
–If you had unlimited funds, what would you do to develop yourself (personally or professionally)?
With the ESOP, notes Mike Della Porta, vice president of technology and operations, “We’re not just hiring another employee. We’re hiring another owner of the company.”
Nicole Henry, 25, is on the culture crew team, and recalls a candidate made uncomfortable by such questions, in each instance bringing the conversation back to concrete work tasks. Not hired. Another candidate asked how she’d spend a free day, had a detailed volunteering project in mind, and mentioned time with family members. “It was such a real response,” Henry recalls. Hired.
In three short years, Henry has experience on small and large accounts, on B2B and B2C, the sort of resume that might make a larger agency in New York want to hire her away. But the larger contribution she’s asked to make at Butler/Till could keep her around. And the ESOP rewards help. She’s piling up retirement savings even before she’s left her parents’ health care insurance. “I have no desire to leave Rochester or Butler/Till,” she says.
David Grome, 31 and at Butler/Till three years, found a former employer’s emphasis on annual profit sharing – and the not-so-subtle competition each fall over how the money is allocated between employees – an unwelcome distraction, he says. The ESOP stresses accumulation of wealth. “As a millennial, the long-term view appeals to me,” Grome says.
Indeed, from the agency’s ESOP owner’s manual: “Our goal is to make our employees millionaires. People who work at (Butler/Till) 10 to 20 years could be well on their way!”
In Sue Butler and Tracy Till’s initial partnership, begun in 1998, they each handled duties in the firm according to their strengths and interests. Butler handled finances and administration, customer service and sales. Till, a creative, focused more on the product itself and on training people. “Just like in marriage, partners have to let the little stuff go,” Till says. “We trusted each other.”