Consciously Firing

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By Alexander McCobin 

In 2016, the influential media publication Ad Age named Dan Golden’s company the number one agency to work at—and the following two weeks were the worst of the CEO’s professional career. His digital marketing agency Be Found Online (BFO) had just received the most prestigious recognition one can hope for in advertising, but BFO was also in turmoil from an increasingly toxic situation. The reason was no secret to BFO’s entire executive team: while their largest customer brought a lot of revenue and had helped put BFO on the map, it was clear that several years into the relationship, many of BFO’s major problems stemmed from the relationship with this client.

For years, BFO had cultivated a team and culture that they were proud of, one where people enjoyed going to work each day and felt like they were able to make a difference. No matter how much they did internally to cultivate that, they couldn’t control the culture of their client, and it was starting to have detrimental effects.

Dan knew the horror stories. The client didn’t treat his team with respect or recognize even the most basic boundaries for polite, professional behavior. At one point, the client called his team on Halloween and demanded that a father stop trick-or-treating with his children to work on a project. BFO team members were losing time with their families, feeling stressed, and threatening to quit (or actually quitting and being talked back from the ledge by Dan or others).

It became clear to Dan and his team that the client wouldn’t respond to constraints BFO requested, and Dan resigned himself to acknowledging that the Conscious Capitalist win-win relationship BFO strove for in all situations would not be possible. They either needed to accept that their culture wouldn’t be what they wanted, or they needed to let their client go. The latter would involve a dramatic hit to their revenue, potential backlash from the client, and strained relationships with the other partners in the engagement. But the former would mean they wouldn’t be part of a company that they could be proud of.

Instead of making the decision on his own, Dan and his cofounder, Steve Krull, talked with the entire BFO team about it. “Here are the risks if we do it,” Dan told the team. “If we fire this client and want to keep all our employees, we’re going to have to tighten belts, pivot, and diversify, at the very least.” BFO would be facing hard times, and everyone needed to understand that. They did.

As a team, they made the decision to fire their biggest client.

They let the client go as consciously as they could, being open with them about why they made this decision, and giving the client two months lead time to find a new partner to work with. It was a tough transition period, and one of BFO’s competitors began undercutting them based on their relationship with this client, but BFO’s team remained steadfast in their decision to move in a more conscious direction.

As it turned out, that was the easy part. The hard part was figuring out how to move forward internally at BFO while retaining their culture and keeping their promise to their employees. Agencies lose clients all the time, and typically they survive by downsizing their own staff. But BFO wanted to challenge the industry’s standard high-turnover culture. As Dan puts it, “I’m sure some people were scared for their jobs. But they said they want to work with businesses that respect us and that we respect. They wanted to work with Conscious Businesses.”

Because the entire company was involved in the decision, people felt empowered. If management had acted unilaterally in making this decision, then people certainly would have despaired. BFO’s executives now brought the rest of the team into an “Appreciative Inquiry”—a 9 a.m.-to-9 p.m. meeting on a Friday that went through the whole situation, explaining the losses and projected impact on the business. Bottom line: if BFO kept doing everything the same, they would be out of money in five months. Then Dan said, “Let’s brainstorm how we’re going to get around this.”

Every idea for cost-cutting was on the table. BFO could survive if everyone took a 20 percent pay cut or if some people were let go, but they also knew imposing such draconian measures killed morale. The employees explored everything from freezing 401(k) contributions to cutting vendor and conference expenses. They decided together that the annual BFO Olympics, when they flew all their remote staff in for a day of fun and bonding, could be skipped that year.

On the sales side, they told employees they had the power to control their destiny, and suddenly the creative juices started flowing. They created a referral system that got existing customers BFO enjoyed to recommend other businesses to them. The system quickly began to bring in new business, and a year later, BFO had their best first quarter, with $1.5 million in new revenue. It was two times as big as any quarter before.

If he could have done anything differently, Dan would have started all of this sooner. It was a year of pain. But it also spawned a deeper appreciation across the team for the power of being a Conscious Organization.

Today, BFO operates with a new system called the “Perfect Client Index.” This is in place to ensure they don’t have a toxic client again. They evaluated and quantified which clients align with the values of the organization. In addition to budgets and industry, they look at metrics like “personal fit,” which lets them know more about who their clients are as people. “As a growing company, you don’t always have the luxury of picking and choosing your clients,” says Dan. “But it’s a two-way street. As a service provider, we’re trying to get clients, but at the same time, we want clients who are aligned with us. The more we can align our strengths with the things we care about, the better. We want to take more ownership of that.”

By putting on paper just how much risk the nuclear option of firing a client would cost them, BFO was able to be a better service provider to the clients it chose to continue working with. This was in large part because they also now understood that, as a service provider, they had more leverage with many of their clients than they realized.

But the most important lesson was the value of getting everyone in the company to think like an owner. By including the team in every step of the process—from making the decision to let the client go to figuring out how to cut costs without affecting salaries to generating new revenue—BFO not only addressed an issue with a single client but transformed itself, and it has become a far stronger and more successful organization.

“As the business owners, it’s our job to share not only the prosperity but also the pain,” says Dan. “We do a lot with things like bonus programs and being Conscious Capitalist employers. But there are times when we’re in a C-Suite sweating this out, and no one knows what’s going on. I’ve learned the value firsthand of bringing a team in to get new ideas. We’re not just writing our own destiny but our employees’, too, so they should be a part of the path. We’re a stronger company than ever before. I’ve learned not to be greedy about any of it and let others make tough decisions, too.” That is the full embodiment of a win-win Conscious Capitalist approach.