Building a positive team culture at your agency (featuring Keith Scandone)

How to maintain open dialogue, encourage growth, and enable graceful exits
Keith Scandone

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Agencies evolve over time — and so do their team cultures. But they are always a reflection of the founder and key leaders.

Keith Scandone of O3 World joins Chip to talk about his experience and evolution over 15 years of running his own agency based in Philadelphia. He explains why he has prioritized culture — and hired help to focus on it. He talks about some of the challenges he has faced, including growing out of their existing space and managing team members in two locations.

The conversation also touches upon a difficult subject for many agency owners: what to do when an employee wants to leave. He explains the concept of a “graceful exit” and why it benefits both the individual and the organization.

As agencies grow, it becomes more difficult for the founder to stay in touch with every employee, but Keith has come up with a system that encourages open dialogue between himself and any team member.

In a business that is fueled by talent, this is an episode that you don’t want to miss to build an environment to get the most out of your team.

Resources

About Keith Scandone

Keith Scandone is partner and CEO of O3 World. He guides the agency’s strategic direction and focuses on strengthening and expanding the company’s overall impact. From spearheading the Forge Conference and 1682 to co-founding the Philadelphia chapter of the Awesome Foundation, Keith looks for unique ways to differentiate the company and bring the industry and community together. His efforts to consistently craft and curate O3 World’s culture have lead to the agency being recognized as Entrepreneur’s “Top Company Cultures” and “Best Entrepreneurial Companies.” Keith is also working with the leadership team on building out O3 World’s Ventures program, which is a separate entity that takes an equity stake in digital product ideas.

Transcript

CHIP: Hello and welcome to another episode of the Chats with Chip Podcast. I’m Chip Griffin and my guest today is Keith Scandone, the co-founder and CEO of O3 World. Welcome to the show, Keith.

KEITH: Thanks, Chip. Nice to be on the show.

CHIP: It is great to have you here. Before we jump into the conversation, why don’t you tell our listeners a little bit about yourself and O3 World.

KEITH: Sure, absolutely. O3 World is, I guess the underpinning, we’re a digital product agency. We focus everything on actually coming up with digital product solutions and ideas for clients, and then become the digital product team from a strategy, UX, and a technology standpoint. We obviously do digital transformation, looking at their entire digital ecosystem, and providing recommendations. Have sort of become a longterm engagement partner with clients in that regard.

KEITH: I think the final piece is really working directly with innovation teams to kind of explore new ideas inside the organization. There are organizations that obviously leverage new technology, certainly a Venn diagram there that kind of overlaps all of those kind of offerings. We are about a 50 person company. We are based in Fishtown, Philadelphia, and we’re just actually a couple months away from 15 years in business.

CHIP: Congratulations. That is quite a milestone.

KEITH: Thank you.

CHIP: Obviously in the agency space we all talk about how important the people are. It’s a common differentiator that everybody seems to have. I’m not sure what a differentiator it really is, but everybody says it’s our people, and of course it is. In an agency you are basically a broker for your talent and so you need to have a strong company culture. And so I think that’s an interesting topic to explore. And I’m curious what your experience has been over those 15 years with culture and perhaps some insights you might be able to offer to us.

KEITH: Sure, absolutely. I mean, yeah, everybody says the people, it’s the people. And it is true, obviously, particularly in a service business. I mean it really, really is the people, but it is an ongoing process really. And particularly, as you say 15 years, I mean, as you know, the environment in our world has changed dramatically. Certainly environment in the workplace has changed really dramatically, in some places for the better. In some cases, pendulum has swung and sort of for the worst, just a lot more cynicism and skepticism kind of out there in the world.

KEITH: So a lot of it, more than ever, it’s really not just about what’s happening inside our walls, but also really kind of being able to be aware of what’s happening outside and how it’s impacting people’s… Just their days and their lives essentially and trying to be a little more empathetic to what’s going on in their lives and things that are kind of concerned about. And in doing so, I think you really get to know people, hopefully at a way different level. And you’re starting to look… And this is a positive side of how culture has changed. You’re starting to look at people really more as people and as part of a team where everyone’s sort of treated equally versus this employer versus employee type of thing.

KEITH: So I think that’s something we’ve really, really dug into and spent a lot of time with. When we’re interviewing, the skills are an important piece, but really the character of the human being I think is an even more important piece. How they fit in with the culture of the organization. A lot of people, which I’m most proud about, that come to the company a lot of times will say… They’ll be there three, four weeks and they’ll just say, “I’m so unbelievably surprised how nice everybody is. I’m waiting for the other shoe to drop.” Because a lot of them come from sort of these toxic places and the toxic environments where there’s screaming or just not good workplaces. So it’s a really, really big thing that we try to focus on.

KEITH: And how to do that, Chip, I mean I don’t think there’s any silver bullet solution. We still have our challenges constantly. I think there’s a couple things. I think number one, that you’re really kind of rewarding people for who they are character wise, just as much as who they are and the work that they provide. And a lot of the things that we focus on are things outside of their day to day responsibilities. It’s you’re helping other people in other departments or doing other things outside of your day to day. That’s really the stuff that kind of shows the character and what we really kind of try to encourage and really try to support.

KEITH: But it is really sort of an ongoing challenge and just like we do user experience for our clients and kind of customer journey experience, it’s the same exact thing inside of an organization really. You really have to look at what’s the employee experience? How many hours are they working? What are they working on? Are you getting feedback from them? Hopefully transparent or honest or open feedback from them. Are you really listening to them and adapting? I would say-

CHIP: And is that something that you were focused on from day one? I mean obviously businesses tend to evolve over time. And I’m curious, was culture a focal point for you when you started the agency or is it something that has evolved over time?

KEITH: I would say it’s evolved over time. I mean, I think that culture really is… It starts at the top and ultimately as you grow and you’re around longer, then it comes down to everybody. I mean, when we started it was just three owners and we had a couple of employees. So, quite honestly, we were just trying to get the business going.

CHIP: Right.

KEITH: So hopefully the culture is an extension of who we are and our personalities and our core values and things of that nature. But I’d say it’s something that we really doubled down on I’d say probably about eight or nine years ago. We moved into a new office and it was sort of like, O3 is growing up now. We’re a more significant size, we’re going to be a little more mature, a little more professional, and really kind of focused on that.

KEITH: And so a couple of things just kind of like tactically, which I always try to give advice for, is we were sort of and continue to be pretty aggressive about hiring people that are in non-billable roles. So we had essentially a people growth manager when we were 30 people. I mean, that’s way earlier than most bring someone on. We now have a full time recruiter now at 50 people. We had a COO and an office manager and a CFO. All of these significant kind of administrative roles that we’re spending quite a bit of money on but it allows them to focus on their specializations and allows us as leaders to look a little more visionary and focus on things are really, really important about not only growth of the organization and vision but on the people as well.

KEITH: And then having someone like a people growth manager, I mean she’s literally in place to improve upon kind of the experience of the employees. That’s what she’s tasked with and that’s what she’s passionate about. So that’s one piece of advice. I see a lot of agencies, just companies in general, really wait to hold on even hiring a project manager or people that may be non-billable. And so I would encourage get ahead of that a little bit more so because it really… It provides more stability I think overall from kind of an organizational standpoint.

CHIP: Yeah, I think you’ve made a good point here too of having someone who is responsible for a lot of these internal culture initiatives. So whether you call it a people growth manager or a talent manager or HR, whatever, you need to have someone who has that responsibility and in a people driven organization, like an agency, you typically need that sooner than you would in other organizations. Otherwise you’ll typically fall into that trap that a lot of companies do when they say, “Oh, we need to focus on culture, let’s get a ping pong table.” Right?

KEITH: Right.

CHIP: Or, “Let’s put a free jar of candy in the break room.” Those are, that’s not culture, that’s just throwing a bandaid on a much larger problem.

KEITH: Yeah. And I’d say that there’s a couple of, I think, differences as well for O3. One is, so now it’s just two partners. So it’s just myself and Mike Gadsby and he’s the chief innovation officer. So neither of us had a background in the agency space. So we really looked at it, I think, with a very fresh set of eyes. I think agencies get caught up in there’s this like, I don’t know, this rite of passage that your culture should be like a New York agency that you work 80, 90 hours a week and that’s kind of cool and that’s normal. That just never seemed normal to me. Sorry. It never seemed okay to me. So there’s certain points that we’re a little more stressed out, working a little bit harder, but quite honestly, if you went across the board and asked everybody at O3, I mean they’re all out, just about every single one of them, at 5:00 at night.

KEITH: They don’t come in on weekends. I mean it is very unusual that there’s more than a 40 hour work week for them sort of ever. I mean, again, there’s some periods of time when we’re really overwhelmed. There might be like 50 hour weeks here and there, but we really look at it as like we need to have a healthy balance. People should not be burnt out. Whereas again, I think agencies just assume that’s just kind of how it’s supposed to be. And again, just not something we really agree with.

KEITH: But the other thing, and this is just a company thing or a services thing, I don’t think just agencies, although I see agencies do it more often than not. One of our core values is mutual respect. And that’s not just from peer-to-peer inside of our company, that’s actually clients to us as well. So there’s been many times that we have either sort of had to put clients in their place or have a conversation with them about them not being sort of respectful to our team. And there’s sometimes, Chip, we’ve just fired them outright or chosen not to work with them. So I think that’s a really big thing and a really, really hard thing for agency leadership to do. Like, “All right, this looks really tempting. It’s a big brand and it’s a lot of money and it can solve a lot of problems. But at what cost, literally?”

KEITH: And I think that’s a really hard thing that companies have to deal with. Either saying no to what looks like a juicy opportunity or to be able to kind of be very critical, essentially, of a client that might be paying you because that’s a risk that you’re taking. They might say, “Okay, well then we won’t work with you anymore.”

CHIP: Right. And that’s an important point, Keith, and I think agencies need to be willing to stand up to clients and when the… So culture is not just about what goes on internally, it’s about the relationships with your external, whether those are partners or clients or whomever. And to see the leadership of the agency stand up and say, “Look, no, this is not acceptable behavior from this client. It changes or you go.” That’s I think a really powerful way to drive culture.

KEITH: It really is. And again, I think that, I’ve seen some people stick around for a long period of time and I think that loyalty comes because they see that we got their back. They understand that we’re not just running a business or just trying to make money or just trying to make money off of them or something along those lines. I mean, I take it really, really, really personally when somebody kind of goes after any of our staff or mistreats them in some way or talks down to them, very much so. I really don’t tolerate that. So it’s a big thing. And I do think a lot of companies need a little bit more of that, a little bit more of a backbone and a little more willingness to be like, “We’re going to pass on this client. We’re going to pass on this money because we want a healthy, respectful environment internally.”

CHIP: Yeah. Because that money can help you in the short term, but longterm, it’s not a good play if you’re eroding your talent by building a toxic culture.

KEITH: Yeah, or they leave.

CHIP: Exactly.

KEITH: That’s not good either.

CHIP: Exactly. Exactly. So are your 50 employees, are you all in the same office? Do you have remote teams? How does that work?

KEITH: Yeah, no, it’s a great question. I think sort of, it’s something that we pride ourselves on as sort of a differentiator, is we have they’re all full time, in house teams, employees, I’m sorry. We do have, I believe, a couple of contractors right now, but even them, they actually work on site full time with us. We’re actually now in two offices only because we’ve expanded and we sort of ran out of space in our current sort of headquarters. The other office is right up the street, actually and it just houses about 10 more people. It’s just, there’s an organization called Honey Grow, which is a chain of sort of restaurants, really, really cool brand and they have an awesome office and had all this extra space. So we’ve taken some space there. But that’s really the only reason that we’re kind of disjointed physically. But yeah, we all-

CHIP: How often do you bring the whole team together into one location?

KEITH: Very frequently. I mean we have team meetings every other Tuesday that everybody comes together. We obviously have a lot of cultural activities. Just last night a happy hour for somebody that had celebrated their five year anniversary. Plus we have a lot of meetings during the day. They kind of go back and forth and people go back and forth. So there’s a ton of collaboration back and forth.

KEITH: That’s just something that my business partner and I really believe strongly in. There are obviously very pros and cons to this model versus distributed network and such, but I’ve just always felt the importance of face to face communication. And what we do is really very agile and very collaborative, very custom and it’s just, it’s hard. There’s not a lot of work that we can just give to somebody and be like, “You go away for three days and then check in every once in a while.” It’s just a lot of conversation, a lot of back and forth and just kind of builds this… As owners, we have sort of a sports background. So I think the team environment is something that really kind of has always been very important to us. So we try to really kind of nourish that, nurture that, inside O3.

CHIP: Yeah. And that’s… I mean, I think this is something that a lot of agencies are wrestling with because the technology and tools have made it so much easier to build remote teams and virtual agencies and that sort of thing. So I know from the agency owners that I talk to in my consulting practice, there are a lot who are torn between, let’s have everybody in one place because that helps with collaboration, culture and those sorts of things or tapping into a wider network of talent and those sorts of things that you can do through a remote team. So it’s interesting to hear how you’ve addressed that.

KEITH: It really is. And again, I don’t know the silver bullet, I mean it worked for… There’s a lot of distributed teams and companies that it works for. Right now the way we’re structured, I don’t see it working as well. We’re actually… I just even see, Chip, even the office down the street, I’m concerned there’s just a little bit of a disconnect. There’s not as many people there. Are we committed as much to them over there? Do they feel alienated? I mean, I’m really, really sensitive to that to make sure that everyone feels treated the same way and there is a sense of collaboration. They have equal opportunity and they’re all kind of interacting with one another. So I mean that’s just kind of more of my ethos, something that’s really, really important to me.

KEITH: But it is interesting as the culture changes more and more frequently over time and more companies are adapting to that and allowing people to work from home. So, I’d imagine… I mean we have work from home policies that provide some flexibility for people and such, but just haven’t gone the full distributed aspect. So it should be interesting how the business environment potentially impacts that for us as a company over time.

CHIP: Yeah. And I’m curious, how did you decide who would be in one location versus the other? Is it functional? Is it based on seniority? Is it random? I know even the agencies that have multiple floors within a building sometimes wrestle with how do you organize things like that? So I’m curious how you decided to do that.

KEITH: Yeah. Well first we asked for volunteers. And so that kind of helped a little bit. And again, very open, and continue to do this, with just asking people if they want to be at a standing desk versus they want to be seated, which office they want to be at, et cetera. And then, I mean we looked at… Like, so for example, we recently hired a director of finance and she needed an office, well we don’t have anymore, we ran out of closed door offices in our headquarters. So it was kind of only natural that she was going to have an office over in the other space and she can lock the door and have a filing cabinet, et cetera. So some of it was just out of practicality or need and some of it was out of volunteering.

KEITH: But it’s something, I mean I just was talking to our people growth manager yesterday, something we have to really continue to look at. We have to make sure that… We talked about potentially maybe having that group over there for six months and then kind of swapping them and sending new people over there. Because as an organization, we don’t… I don’t say we don’t have teams. We do, but we don’t have a dedicated team that only works on one client. Even if they primarily work on one client, they still work on other things. It’s, I think, one of the value and exciting things of agencies. You can kind of pop into different projects and such.

KEITH: So, we don’t just put teams over there together. We don’t put just a dev team or dev group or just the design group. So we really try to mix it up as much as possible. But I will say, we have not mastered it. We’re still experimenting and just trying to get as much feedback and input from the team itself as to kind of what works for them also. That’s really important.

CHIP: Absolutely. Now Keith, how have you seen your role in driving the culture shift over time? Obviously, as you’ve noted, a lot of the culture comes from the owners, so you and your partners. And that’s true of any agency. When you’re small, you have day to day contact with everybody. Obviously now you’re up to 50 people. I’m fairly certain you don’t talk to all 50 of them every day anymore. So how has your role shifted and how do you make sure that you’re still actively engaged in driving the culture and tone of the organization?

KEITH: Yeah, absolutely. I mean, so again, I mean this is a challenge. I don’t want to say any of this stuff is easy. I don’t think we’ve mastered it. I think we’re doing well, but I always think we can kind of do better. So I think part of it is, again, I think bringing people in that are kind of focused on that and specialized, that’s a big deal. But I really think the leadership team needs to really adopt it because, to your point, I can’t speak to everyone every single day. So it’s really important that all of the management team that they feel sort of as passionate as we do about culture. And they feel as passionate about as the people that they’re managing and their direct reports sort of as we do and kind of treating them with that sort of level of respect.

KEITH: So I really try to, if nothing else, at least impact and influence the senior management team as much as I possibly can. So they know exactly how I’m feeling, they know exactly what’s going on with the culture. They know exactly what I’m doing outside of the organization to essentially grow it. So that’s a really, really important thing.

KEITH: Other things that I’ve done, I mean, listen, I do the I’m available, open door policy. Some people use it, a lot of people don’t. I’ve recently done this breakfast thing. So once a month, I have kind of an open breakfast. I want it to be four people, myself and three others. And anyone can sign up and it’s really an ask me anything session. So that’s, we’re probably, I’m coming up on my fourth one next week. I think that’s been pretty cool because it’s… I think since it’s not one on one, some people… I think just naturally, we have a lot of engineers and such, I think they’re a little intimidated just by a meeting with the CEO and that sort of thing and they’re a little shy. So I think if it’s three other of their peers, they feel a little more comfortable doing so. And the fact that it’s open to absolutely anyone I think has been really, really helpful.

KEITH: So I continue to try to find ways to connect with them. I also, I mean… There’s a group that does basketball, so I go try to play basketball with them. Obviously the happy hours, I try to be at those things. So I really try to organically and sometimes structurally try to find different ways to ingratiate myself with them and really recognize that it’s probably going to be a 70/30, like I’m going to have to make 70% of the effort just because I’m sort of more, I guess, outgoing and I’m the CEO and I have this title that seems sort of intimidating and such. But I constantly sort of wrestle with that and try to find ways to connect with people on an individual level as much as possible.

CHIP: Yeah. And I really like that idea of the breakfasts. I’m a big fan of, as agencies grow, that the CEO or leaders need to have those opportunities for small group engagement. It’s no longer practical to do a lot of one-on-ones, there’s just not enough time in the day. But finding ways to engage in a small group way where folks have a chance to feel like they can express concerns or ask questions and that they’ll be heard because that’s… So many employees just are looking for the opportunity to make sure that they’re being heard and that that helps solve a lot of problems and build a much stronger culture.

KEITH: Well the other problem is too, and I see this more and more than ever and it’s like the slack culture and everything else is that, people are creating their own narratives. And as I said to start off the conversation, I think there’s a lot of cynicism just out there in the world these days and so they see a couple of things happening. And, this is a funny example. So there was a… So last year we grew pretty considerably, we went from 30 people to 50 people. And people were really concerned that we were growing too fast and we were growing just to try to sell. And it came from nowhere, Chip. Just from assumption based on not really much experience. So I had to stand up in front of the staff and say, “Listen, this is a very positive thing. I mean we’re obviously in high demand with our existing clients and some new ones and such and this is exciting. We have no intention to sell in the short or really even longterm. That’s not really our plan. We’re just growing because, organically, we’re growing.”

KEITH: So then, fast forward a few months, and a couple of clients didn’t go away, but they just put things on pause and were going to kind of move forward in the new year. And so then they went from being really almost over resourced to now under-resourced. So now, as you can imagine, now the conversation is, “What’s going wrong with the company? Are we going to start laying people off? Is something bad happening?” So then I had to get up and once again say something, “Like, listen, there are ebbs and flows in businesses, particularly the agency space. Fortunately, we’re in a great position that even if there is an ebb, that we’re completely financially comfortable to ride that out for a little bit until there’s a flow, which we’re now hitting again.”

KEITH: So, there’s a lot of that that you really have got to be sort of just cognizant of and aware of that it’s happening, Chip, no matter what we do, no matter how many channels we create, how much we reach out, no matter how much conversation you have, it’s just happening. And I think it’s better to accept and be aware that it’s happening and try to get in front of it instead of just assume that it’s not or ignore it and such. But that is a challenge because, like I said, that just never really… That never really happened until the last probably I’d say five or six years or so.

CHIP: Yeah. And that’s absolutely a challenge that any organization, but particularly people driven ones like agencies, face as they grow. In the absence of hard information, people will make their own assumptions. They’ll guess. Guesses suddenly become fact. It gets shared with someone else and all of a sudden, you’ve got this group thing that goes in a direction that may not be what you want. So you really have to over communicate. I’m curious, how much transparency do you have with the team? As you were growing, did you share things like percentages of revenue growth with them, actual revenue numbers? I mean, where do you fall on that transparency scale because I know a lot of agencies view this differently?

KEITH: Yeah, no, absolutely. We try to be really as transparent as humanly possible. I mean with quite a bit. I mean we do sort of state of the union… Well, we call it state of the Ozone, because O3 stands for ozone. But we used to do them a couple of times a year and now we’re doing it three times a year. There’s always a financial update in terms of here’s our goals, and it’s always percentage wise. And the reason for that is…

KEITH: So, we have three percentage points that we share. Basically here’s our goal for revenue growth top line, here’s our goal for EBITDA or obviously profit margin, here’s our goal for utilization. They’re the three things. We try to explain it. And I’ve actually explained this to the staff where we don’t show a showcase actual numbers and there’s a couple of reasons.

KEITH: One, as I’m sure you’ll recognize, not everybody understands the context of numbers. They just don’t have a financial background. So they will look at a number… And I’ve seen this firsthand, I’ve even shared in the past with some senior leadership. Look at a number and sometimes be like, “Oh my God, the company’s making that much money? How come I don’t make more?” Or, “Oh my God, the company’s only making that much money? I’m concerned.” They just don’t really have the context. It would take a tremendous amount of learning. That’s one.

KEITH: Number two, as I’ve told them, there’s actual real advantages. I don’t even sign up for a lot of these award shows and such where you have to share your revenue because I don’t want… Like Inc. 5,000 and all these, because I don’t want it out there because there’s people that have come to us, whether it’s clients or eve investors or whatever, they think that we’re a lot bigger than we are. I like that. I mean that’s part of our brand. I like that they think that we’re this really enormous company doing really, really unbelievably well. I think it just props us up and puts us in other conversations because as you know, people are clients as well. They’re people. They’re sort of shallow. They say you never get fired for hiring IBM. So that the more that you’re a sure bet, the better chance you have access to those larger organizations.

KEITH: So that’s what we do in our revenue standpoint. But we also share our goals, we share some vulnerabilities about us individually or where the company is or some missteps that we took or how we went way over budget on an internal project or why it was a problem. We really try to be as unbelievably open and transparent as we possibly can.

KEITH: And that’s why I say with those breakfasts, “Ask me anything.” I mean, unless it’s about maybe like something that we can’t share about that… An employee leaving and by what terms they left on or something which is not legal or right. Beyond that, I mean literally I will honestly share just about anything they ask of me. So.

CHIP: And you made an important point there too which is the value of sharing context. So if you’re going to share numbers, even if it’s percentages, helping them understand, as much as possible, context when you’re doing things like implementing time tracking or other internal initiatives, helping them to understand the context and why. I think that too often as leaders we say, “Okay, these are the facts or this is what we’re doing. Accept it.” But you really need to help educate the team about why certain things are taking place because it then puts that context in place for them that helps them to better adapt to change.

KEITH: Yeah. And I see it in everything. I mean I see it from… We give sort of benchmarks as here’s what to expect a year over year from a raise standpoint. Here’s what to expect, here’s what bonuses mean, here’s what to expect from a bonus standpoint. It doesn’t even matter, Chip. What I mean is that we explain that and then still people will be disappointed, even if they’re aggressive raises. If I told you the average raise or what some of the people are getting and they just have this just not a good perception or context as to what they should be getting.

KEITH: So it’s really, really difficult to set that expectation with them. And these are micro examples for them individually. So if you then try to bring a business and all the pieces and all the financial aspects to it, I mean it’s just really hard to wrap your arms around, even for myself. I don’t have a financial background, it took me awhile to really understand all the pieces and all the nuances and how much… “We spend how much on legal fees?” Or, “How much insurance?” Or, “How much on office supplies?” So you really got to start getting in the weeds.

CHIP: Absolutely. Well, Keith, this has been a great conversation. I think you’ve given folks a lot of good ideas that they can apply to their own businesses. And if someone’s interested in learning more about you or O3, where can they find you?

KEITH: Sure. I think the best spots are O3world.com. Obviously our website gives a good background and kind of who we are. LinkedIn’s a good place to kind of connect with me directly and then also, happy to give out my personal email address. Love to talk to people to get their insights, their advice, which I love to learn from. And also obviously if I’m able to give any more advice to them directly. And that is [email protected]

CHIP: Easy to remember, and of course we’ll have all of that in the show notes as well. So thanks again to my guest today. It’s been Keith Scandone, the co-founder and CEO of O3 World.