Want to grow your agency to 12-50 people and beyond? You can’t scale without building the right leadership team.

Fortunately, you don’t need to start from scratch. In this article, I’ll explore best practices and concrete tips to help you grow more smoothly and more profitably.

We’ll look at key leadership roles, structure by headcount, and how to avoid common problems on the path to effective leadership.

First, why is having a management team even important? Read on!

Why You Need a Strong Team

When you started your digital marketing agency, it was just you. But now things are more complex, and you need more people… and more layers in between.

After you grow beyond about 10 people, flat hierarchies don’t work. Your team members need a clear structure, and then flexibility structure to do their best.

Leadership vs. Management: What’s the Difference?

What’s the difference between leadership versus management? Leadership tends to involve executive-level roles—but leaders should strive to be good managers... and managers should strive to be good leaders.

For our purposes here, a leader is someone who manages other managers. You'll ultimately build an executive team because your agency has (or soon will have) too many people for a single layer of managers to manage.

Key Leadership Roles at High-Growth Agencies

In the early days of your digital agency, people handled multiple areas of leadership. That’s OK, as long as you’re aware of the risks—and plan to make things more specialized as you grow.

Agency roles fit into six categories: account management, project management, subject matter expertise, client strategy, business development, and support. When it comes to leadership roles, your categories might include:

  • Long-Term Strategy (mission, vision, core values, strategic planning)

  • Business Development (marketing, sales, partnerships)

  • Delivery (account management, project management, subject matter experts, client strategy)

  • Internal Operations (Finance, HR, business administration)

Your executive team can also advise you as an informal "board of directors." Similar to consulting a business partner, this can help you avoid expensive mistakes.

Leadership roles tend to become more specialized over time. For instance, you might promote a Director of Delivery to VP of Delivery. They would now (or soon) manage a Director of Accounts and a Director of PM. Speaking of that…

Shifting Your Team as You Grow

Roles need to become more specialized as you grow, so that people can focus on what they do best (and so they don’t have a million direct reports).

Early Days: Back When Your Agency Was 5-12 People

Think back to when your agency had 5-12 people. You had many generalists, and perhaps one manager aside from the owner. There was a lot of camaraderie—but also a lot of stress, because people “had” to do things outside their area of expertise.

If you have big growth goals, recognize that not everyone can stay in their current role. When this happened at an agency in Canada, I recommended the agency help the employee find a new job. Then, they could re-hire them in a few years, once the agency needed their desired future role.

Today: Leading 12-50 People

As you grow to 12-50 people, you're adding more managers… but it’s time to add directors. A director typically oversees managers who oversee the front-line team members. Agencies tend to add directors around the 25-person mark, although some do this sooner.

You'll need to make a decision about team structure. Which delivery model do you prefer?

  • Function-based teams (e.g., AM, PM, design, development, and marketing strategy)

  • Pods (self-contained “agency within an agency” teams that serve a subset of your clients)

There are pros and cons to each approach, which go beyond the scope of this article.

Each time you add more managers, you’ll see a drop in billables… but without those temporary drops, you can’t scale. If someone wants to stay in their current position, you'll need to decide if that's right for your agency in the future.

As you keep growing, it's time to build a leadership pipeline; more on that below.

Tomorrow: Growing Your Agency Beyond 50+ People

If you want to grow your agency to 50+ people, here's a preview of what to expect.

You'll add more layers of management, including C-level leadership positions (if you don't have them already). Your payroll will be larger, so it's all the more important to ensure future managers and leaders get the training and coaching they need to succeed. If you haven't already, you may opt to create "pods" to help you take on more clients.

Before you pursue this further growth, consider whether it meets your long-term personal goals. Bigger is not always better, and it's often more stressful.

Tips to Avoid Common Problems as You Grow Your Management Team

Leading people is hard; humans are complicated, and leadership involves a lot of humans. But as a business leader, you can reduce (or even prevent) common problems with attention to certain fundamentals.

Coach Your Leaders on Coaching Their Team

As you grow from around 12 people toward 50 people and beyond, you and your managers will need a mindset shift. Your job is now about getting results through other people, not about doing it yourself.

This requires coaching your direct reports on coaching their directs, instead of solve every problem for them. One shortcut? Use what I call the “3A’s of delegation.” Clarify if they're making the manager Aware, seeking the manager's Advice, or asking the manager to become Actively Involved.

To double-check how your direct reports are doing, schedule “skip-levels.” You’ll ideally meet with your direct reports every week; you might meet with their direct reports once every 1-2 months. This goes beyond one-to-many employee communications, to help you ensure things work.

Know if You Want a Lifestyle-oriented Agency vs. an Equity-oriented Agency

Every agency is unique—and the “right” team depends on your long-term goals. In particular, consider what I call your agency growth style. Do you want to run a Lifestyle-oriented agency (keep the business) or an Equity-oriented agency (sell the business)?

  • If you lean toward Lifestyle, you don’t need to delegate as many leadership roles. For instance, if you like doing sales and client strategy, keep doing that.

  • If you lean toward Equity, you’ll need to get as much off your plate as possible. Otherwise, acquirers will wonder if you might never leave. In my work as an agency coach, this usually means promoting (or hiring) a team member to serve as COO, President, or even CEO.

For more on building the “right” agency for your goals, see my book  Work Less, Earn More: How to Escape the Daily Grind of Agency Ownership.

Plan on a “Goldilocks” Level of Accountability

Do weekly one-on-one meetings (with your direct reports) and monthly skip-levels (with their direct reports). And prepare to upgrade your internal accountability systems. You’re trying for “Goldilocks” here: not too much, not too little… just right.

At a minimum, this requires an ongoing meeting cadence and clear Swim Lanes regarding who’s in charge of what. If you don’t use one already, an ARCI (or RACI) matrix can help—around who’s Accountable, Responsible, Consulted, or Informed.

Sometimes it makes sense to commit to an entire business "operating system," like EOS. This can be a good way to get and keep people on track, although it usually requires a significant ramp-up process. Speaking of ramping up...

Up-Level Your Own Leadership Skills

When you’re managing leaders, you’ll need to up-level your own leadership skills. Leadership development includes training, coaching, and on-the-job experience. This includes finding your ideal leadership style, along with where you might need to adapt to your agency.

To build a strong foundation, I'm a fan of intro management training from  Manager Tools and from LifeLabs Leader Lab. I've completed both programs myself—and I send my team, too. If someone is a high-potential employee, consider executive coaching or a leadership bootcamp.

As a starting point, consider taking my  free “30-Day Manager” course. You'll get a month of tips via email to help you improve your leadership skills. Your team will likely notice a difference, too.

Balance Hiring Internally vs. Externally

Should you hire internally or externally? It depends:

  • Internal candidates are a good “default.” They're a culture fit and you know their potential, but they may still struggle if this is their first managerial or leadership role.

  • External candidates bring outside expertise. They've seen what works at multiple agencies, but you can't be 100% sure they're a match for your agency.

Typically, external clients expect more compensation—since they're making a "jump" to a company they don't know. That raises an important point about budgeting in general...

Budget to Add Future Layers to Your Executive Team

As you grow, you’ll add more managerial roles and layers. Your managers are less billable (and higher-paid) than your individual contributors. Long-term, that's OK, because the managers enable you to build a larger team of highly-billable people that report to the managers.

This means your profit margins will temporarily decrease before the manager's team reaches full billability. Be ready for it. If you see 30% net profit margins now, you can weather changes at 20%—instead of dropping to 10% or less when hiring a new layer.

Monitor Progress Using a New-Hire Ramp-Up Plan

It helps to have a solid new-hire ramp-up plan for each role: what do you expect in Month 1, Month 2, etc.? For executive roles, the plan should focus on long-term initiatives and "Quick Wins" on key current headaches.

A few years ago, I saw a new hire wasn't progressing on their ramp-up plan. We could part ways after one month, rather than waste months (or even years) trying to make things work. In contrast, I learned a new client had waited 18 months to fire an underperforming salesperson.

Having the ramp-up plan also helps you serve as an effective leader to your managers. Instead of making arbitrary decisions or working in a vacuum, you can ask managers how their employees are doing on their ramp-up plans. This makes everyone's performance evaluations easier, too.

Take Action: Build the Team Your Agency Needs

Based on everything you’ve seen here, consider your next steps. You might act on a Quick Win (e.g., add monthly skip-level meetings), or work toward a longer-term goal (e.g., build an internal leadership pipeline).

My challenge to you: What’s something you can do this week to optimize (or start building) your agency's leadership team? Good luck!