Agency Advantage 38: Bob Ruffolo on Why Team Culture Matters for the Bottom Line

Bob Ruffolo on why team culture matters for the bottom line

In this episode of Hubstaff’s Agency Advantage Podcast, we’re talking with Bob Ruffolo of IMPACT Branding and Design who shares how establishing a strong set of values saved his agency.

To be honest, whenever I heard someone talk about their mission statement or core values, I thought of cheesy motivational posters with words like “Perseverance” and a picture of a kayaker going over a waterfall. They seem like cliches pushed by big corporation management.

But after talking with Bob, I realized that core values can have a transformative effect when they are truly embodied by an organization.

Cultivating company culture isn't a cliché - it can have an impact on your bottom line! (PODCAST) Click To Tweet

IMPACT Branding and Design is one of only 11 of Hubspot’s Diamond Certified Partners and one of the leading inbound marketing agencies in the country that consistently beats their profit goals. However, just a few years ago their growth had slowed and they started losing money.

In this episode, Bob lays everything on the table and makes the case for why cultivating a strong company culture was crucial to their turnaround and how you can do the same.

Download a full transcript of the interview with Bob Ruffolo: Get it right here.

Key Takeaways

Why core values matter more than skill [7:00 – 11:00]

There are so many people out there with natural gifts; the gift of gab, design, development, or whatever else, but they have no idea how to apply it. Even if you want to work with these talented people, they may not be trainable. They might have a different work ethic, or don’t prioritize clients the same way you do.

Provided people are willing to learn, you can always teach them the skills they need to do the job. Values are harder to teach. Practically speaking, if people don’t fit the values of your agency, then they’re not going to be successful in your company, and if you have too many of those people, the company is not going to be successful.

When you have a clear set of values that guide your company, then you can not only see upfront if people fit what you’re looking for, but you give people a litmus test they can use to make decisions. Is this the right thing to do or is this the wrong thing to do? Do I have to ask the boss for this, or do I not have to ask the boss for this? When everybody understands what is expected, people don’t have to be micromanaged because everybody is working towards the same goals.

How to define core values [11:00 – 15:00]

If you want to have a set of values that define your company, you need to first define what those values are. At IMPACT, Bob and his team started by describing the best people in the company and why they were so successful and so well liked. Then they did the same exact thing for the people that were no longer with the company by asking why they are no longer with the company.

They ended up coming up with 7 to 10 different phrases that really describe what they’re looking for in all of their people, but it wasn’t precise enough to really use as a litmus test. To simplify it, Bob distilled those discussions down to 3 core values: passion, helpfulness, and dependability.

Now they can actually look at all of their people, and if they don’t show passion, helpfulness and dependability the majority of the time, they can’t work at IMPACT. They interview, review, and fire based on those values. Everybody at the company knows this and knows that is what is expected of them.

How to live by core values [15:00 – 21:00]

Defining your core values is one thing, but actually living them is another challenge altogether. This is where most companies fail and why “values” and “mission statements” are seen as little more than a feel-good cliche; if you don’t live the values then they can’t shape your business.

In the beginning, Bob didn’t come down with a strict mandate that these values should be implemented effective immediately for everybody. Instead, they let everyone know how those values played into the purpose for the company and the direction they were going. Over the next year, many people who weren’t on the same page left on their own, while others had to be asked to leave.

After a two-year process, Bob’s team realized the values weren’t another business cliche and were aligned on the vision for where the company was going. If you don’t take these values seriously and show everybody that you are fully committed to them, then your team won’t either.

Letting go of “B” players [46:30 – 55:00]

If you bucket all of the people on your team, you have A players, B players, and C players. Your C players are going to leave or be asked to leave for one reason or another: they can’t do the job, they don’t have the skills, or they’re not a culture fit. Whatever it is, most organizations don’t have a problem getting rid of them.

The B players are the ones that show up and do their job, but nothing more. They never give you a real reason to fire them, but they also never give you a real reason to promote them. They’re just clogging up your system. While they may not make big mistakes, they simply aren’t going to be successful, so you need to have honest conversations with them.

Early on, when you see the performance is not where you want it to be, or they’re not fitting with your core values, you have to let them know. Establish a plan to determine what to do over a certain period of time to get them to A player status. If they aren’t a good fit, tell them you understand, but explain what is expected from anybody in the role and if that they can’t perform at that level, they can’t work there.

These aren’t easy conversations to have, and that is why so many companies avoid them, but having a glut of employees doing the bare minimum is not how you build a lasting agency.

Here’s the full transcript:

Andy Baldacci: Bob, thanks for joining me today.
Bob Ruffolo: Excited to be here, Andy. Thanks so much for having me.
Andy Baldacci: Of course. Your agency, Impact Branding and Design, is one of HubSpot’s 11 diamond partners and is really a clear leader in the inbound world today. I just have to ask, was building a big agency like this kind of something that you had in the back of your head from day 1, or did it just evolve into that?
Bob Ruffolo: You know what, I think it was in my head. I actually remember probably being a freshman or sophomore in college and really being into marketing and advertising I guess at the time. I actually had dreams of starting my own agency. In fact, I even created a logo once called Ad3 and that’s what I was going to call my first agency. Never really did anything with that. Yeah, I was very into agencies, even though I never worked for one before, starting Impact. It was definitely something I wanted to pursue and I’m very happy I did.
[00:01:00]

Andy Baldacci:

Right, so what was the founding of Impact like? Was it just sort of one day, like alright, I’m going to do this. I’m guessing there’s a little bit more kind of thought and preparation into it than that.
Bob Ruffolo: Yeah. For me, after school, I graduated, I really wanted to work for an agency and I visited a few. I kind of lied and said it was for a school project, but I really wanted to see what agencies were like and I was just drawn to that. But when I put my application in, I couldn’t even get an interview for whatever reason. I didn’t know anybody in the field and I probably didn’t have any internships or enough experience, so I didn’t get any interviews. I ended up going to work for a manufacturing company in my town and I worked there for about 3 years. It was good opportunity, I learned a lot. That’s actually where I learned inbound marketing. It was around 2007, 8 and 9.
[00:02:00]

Andy Baldacci:

Were you in a marketing role there?
Bob Ruffolo:

[00:03:00]

I was, I was, yeah. When I got to that job, my boss at the time said, we have this website, see what you can do with it. He was the CEO of the company. I looked at the site, I noticed they weren’t getting any traffic, so I said, how can I get more people onto this website. That’s how I learned about content and keywords and stumbled upon HubSpot’s site and I ended up getting them from really 15 to 20 visitors per day up to about 200 visitors per day. My boss said, oh, this is great. Now I have all of this traffic, but what I really need is leads. I had to go learn about calls to action and try to optimize the site and drive people to convert, and he was getting a ton of leads. He had no CRM at the time, so we were using these yellow pieces of paper, we had them all over the office, and that was my way of knowing I was doing a good job is that we had these quote reform requests all over the place.
I ended up doing some freelancing on the side, learning from that. I had a small little freelance business. I was ready to take it full time, so that’s how Impact got started. I just kind of separated myself, took a chance, and it was just me in my condo with a laptop and an iPhone and that was it. I took on more business, I saved, and built up a little of a bank account.

[00:04:00]

About 6 months in, I was able to hire somebody, and Tom DiScipio was my first hire. Contrary to popular belief, Tom and I actually did not know each other before I started Impact. He came to our website, for whatever reason applied, thought it was a good place to work. Came into my condo and didn’t know who I was and interviewed at my kitchen table and was really excited when I offered him a position part-time. He had a full-time job at the time. Tom came and worked with me out of my condo.
We were there for about 3 weeks before got some real office space. If you see the pictures of our first office, all we had was folding tables, and we put them against the back wall. We had this like big empty room, and it was just folding tables, chairs and our computers. That’s all we had. Eventually, about 2 years late, we had outgrown that space, we had too many people, too many desks and too much stuff. That’s really the story of how Impact got started.
Andy Baldacci:

[00:05:00]

Yeah, because I know, you recently published really candid kind of 2-part series on the growth, the early days, but also kind of the growing pains. I’ll link both of those parts up in the show notes so listeners can kind of get a deeper dive into that. Can you talk  about what some of those early growing pains were? Because for a lot of smaller agencies, they aren’t growing quickly enough to have those growing pains. You guys, you grew very fast, but there were still a few stumbling blocks along the way. Do you mind speaking to that a bit?
Bob Ruffolo:

[00:06:00]

Well, first thing I’ll say is Andy, I was stupid. I was very stupid when I started. I didn’t know anything about what I was doing. I just was a risk taker and I was really really excited, so I was just go go go all of the time. I never took investment money, because probably I didn’t know how to take investment money at the time. I just said, okay, well, when we can afford to do things, we’ll do that. Our growth strategy as Tom and I, we had this office, and we had a book of clients and everyone trusts us, we’re doing good work. We were just bringing on interns. I was bringing on interns that I thought could take things off my plate, right, and if they were okay or good enough to do the job, I would give them the chance. A lot of them were unpaid interns. I probably wouldn’t do that again, but it was the strategy that got us from just Tom and I up to 10 people or so. If our interns were good, we would keep them. If not, the internship ran out and they would leave.

[00:07:00]

I didn’t know how to hire. I was picking the people that seemed that wanted to be there, that seemed cool, and they had some kind of skills or experience in the area or degree in the area. My philosophy back then was give everyone a chance and what’s the risk, right. We would bring on a lot of people and churn and burn through people. Again, we had some gems that really came out of that. Natalie Davis was one of our early interns, and so is Vin Gaeta, Joe Rinaldi, those 3 people are all still here, the cornerstones of our agency right now. There was a lot of people that came and went and the numbers were pretty high. That’s how we got started. As people took on more responsibility, they grew in the organization, and you really had to have that kind of personality to grow. We never defined what that was, but we knew it when we saw it and we retained them. That brought us up until about 2011, late 2011, when we probably had about, probably around 7 people at the end of 2011. That was the next big change for us.
Andy Baldacci:

[00:08:00]

Right, because in the article you talk a lot about how you focused on basically looking for people with certain talents, certain skills. Like if you read kind of, or even if you apply for a job, especially in sort of the startup world, it seems like that’s what the process is very optimized for. There’s tons of tests on skills, and it just seems skills above all else. But you quickly found out that that wasn’t all that you really should be focusing on. What was wrong with kind of that approach?
Bob Ruffolo:

[00:09:00]

Well, I tell you one story that really sticks out to me with our early interns was, yes, I hired people for skills. There was this one girl who was a pretty good designer. A lot of the portfolios that we saw at the time were pretty good, and that’s the reason why we allowed them to come into the company. I just remember one time going up to her desk, and I just, I said something to her, and I was like, we should adjust the spacing here. It was clearly off, right. She turns around, looks at me, and goes, you didn’t go to design school, what do you know? I’m like, everyone else in the company just kind of stopped, like (gasps) right? It’s like, okay, there’s something not right here. I’ve always carried that story. I just laughed, I mean I laughed at it that night. It didn’t really bother me. She never came back after that through her own accord. She was appalled, apparently. There’s something wrong there.

[00:10:00]

I think, as we’ve grown, we didn’t know it until probably about 2014, but it’s so much more important to have the people that share the same values that you do, have the same work effort, the same drive, the same vision, the same beliefs as you do. So much more important to have that than it is for people to have skills. Vin Gaeta, who’s one of my top people and I love the kid to death, when he first came in, he wasn’t very good. He went to a good school and had gotten a master’s degree, but he didn’t have the same skills that like Joe had or like Tom had. But what Vin had was this drive, this motor, this acceptance, this willingness to learn. Like I’ve never seen it from anybody else, and he’s never ever lost that in the 5 years that’s he’s been with Impact and the 5 years he’s been with me.
It’s like what is that? Why do I just love this kid so much, and why is he improving at such a rapid rate, and why does everyone listen to him? Why is he such a boss, right? It ends up being that he just has the core values that Impact needs, and he shares the same beliefs that I share, and that Tom shares, and that Natalie shares, and he’s just a leader of this organization. I think that’s so much more important, because there’s been so many people come in that have these natural gifts, the gifts of gab, and the gift of design, the gift of development, right? They just have no idea how to apply it. Even when you want to work with them, they’re just not coachable, whatever it is, or they just don’t have the same work ethic and they don’t prioritize clients the same way we prioritize clients.
[00:11:00] If you don’t have that, you’re not going to be successful in our company and if we have too many of those people, the company is not going to be successful. I think that really led us to, there’s got to be something here, and it ended up being around values.
Andy Baldacci: Was there a sort of tipping point that kind of forced that realization, that hey, there’s something common amongst these high performers, it’s these values, like this, we need to search these out, or was it kind of coincidental?
Bob Ruffolo:

[00:12:00]

We had some problems with a few people in the organization, and we end up having to make a giant people change at the end of 2013. Coming out of that, we knew we were a better agency, we didn’t fully know why, but we knew we had to make a change. We knew there was a group of people, especially a new wave of people, like Katie Pritchard and Erica Dube, that were just, they had something about them that was really special, and then I read “Good to Great”. “Good to Great” just like opened my eyes. If you haven’t read it yet, it’s one of the best books I’ve ever read in my life. It led me to read probably another 100 books after that.
Andy Baldacci: That’s when you know it’s a good book, is when you’re like, alright, now these are all of these different areas I have to go in, yeah.
Bob Ruffolo: Exactly, exactly. That was like the first core book I read, and it taught me all about core values. I think there’s a few other books, like “Rockefeller Habits” and “Traction” by Gino Wickman that I read after that. I started to understand about core value. What I ended up doing, I pulled it from one of the books, I have to remember [inaudible 00:12:40], I keep telling this story and I can never remember what book it was, might be “Traction”. It’s either “Rockefeller Habits” or “Traction”. They talk about the mission to Mars. The whole part of the exercise is like you pretend like you’re an alien, you come down, you don’t know anything but you’re observing our company and like, what do you see, right?
[00:13:00] What we did was it kind of took that, and we said, let’s describe the best people in this company. What are the reasons why they’re successful? Why do we love these people so much? What makes them who they are? Right? That was eye-opening, because we started writing down all these different terms on what they’re doing. We had counted them, and we had phrases like, we didn’t know how to put words to it. It’s like, we can give them the credit card and we know they’re going to do the right thing, right? We just had these things written down.
Then we did the same exact thing for the people that were no longer with the company, and we said, why are they no longer with the company? What words describe that? We came up with a whole bunch of other things that opened our eyes and said okay. We had all of these words, we had all of these things put together, and we ended up being able to work that down, work that down. We ended up coming up with like 7 to 10 different phrases that really describe, this is what we’re looking for for all of our people.
[00:14:00] It wasn’t good enough. It was still to complicated. I ended up, one night, it just came to me. It’s like it’s passion, helpfulness and dependability. Those are our 3 core values, PHD, as simple as it gets, right? Passion, helpfulness, dependability. Those are our 3 core values. Now we can actually look at all of our people, and if they don’t show passion, helpfulness and dependability the majority of the time, they can’t work here. Everyone in this company, they know those back and forth, they know that’s what’s expected. We interview off that, we review people off that, we fire people off of that. Everyone here now shares those core values, or else they wouldn’t be here.
Andy Baldacci:

[00:15:00]

Right and core values is something where it’s like you hear sort of so many successful companies talk about them, but at the same time, you kind of wonder if there’s a bit of like an echo chamber with it. Because it seems like so many companies talk about these core values, but if you actually go in and look at it, they’re not really embodying them. Was it sort of like, you developed these core values, waved a magic wand, and everything is magically better? What was it like after getting these down on paper?
Bob Ruffolo:

[00:16:00]

No, it still took some time. I mean, even as leadership team, again, my leadership team is younger. At the time, I wasn’t even 30 yet when we probably rolled out the core values for the first time. We explained to everybody how we came up with them. It wasn’t something we’re just made up and we’re pushing down on everybody. No, we really did an analysis of our best people and these are the words that describe them. Actually, when we rolled them out what we did was we actually did an activity where we said, these are the words that describe this person, these are the words that describe this person, these are words that describe this person. Everyone kind of voted for who they were, and then we let people know, these are the core values. They were able to humanize who they were. Then as they voted, whoever won that ended up winning the first core award in the first year. It’s kind of a cool way of rolling it out.
That’s how we did it. We didn’t try to impose it. Along the same time, we also let everyone know like what our purpose was for the company and the direction we were going. I think over the next year, there were people that got off the bus. They said, hey listen, this is great that you guys want to be this, but I don’t believe in that. I don’t believe in all the work we should do should be to make our clients successful. I believe in creating really beautiful art and things that function really cool. That’s great. I have no problem with that, but that’s not what we do here at Impact. They left on their own or they had to go, right. It took probably about a year and a half, 2 years, to fully transition to really get the entire company fully aligned on values and the direction we were going in.
[00:17:00] There’s a lot of attrition. A lot of the system probably getting some people out, people leaving on their own. We had to also let a few people go, and not because they were bad people, but under the rules of the system that we put in place, this is not the best place for them to succeed, so they had to go. I think probably last summer, the last person really left and the team has really aligned in a direction we’re going in. We had the vision for where we’re going, we had the values in place. People knew that the values were not … Am I allowed to swear in here?
Andy Baldacci: Yes, go for it.
Bob Ruffolo:

[00:18:00]

People knew the values weren’t bullshit. They knew they were legit, because we’ve had several rounds of awards. We put so much recognition in place, that we recognize people for their core values at any time. Like every Friday meeting, we recognize people. We put a system in place with badges, so people are getting badges for representing the core values. People are getting reviewed on the core values, people are seeing their friends leave because they knew they were legit. It took some time for everyone to really believe that and it’s not just a fad of the week. But once we had that, man, the company just took off after that. It was great, because we had the right people, and we knew what right people actually meant.
Andy Baldacci: Why do you think, because it’s something where it’s like you intuitively get it, like having everyone aligned, like these things are important. But like why do you think that is so important? Like why can’t you just have a bunch of talented people working on projects together? Why does it need to be so much more aligned than that to really succeed and really to get Impact to where you want it to be?
Bob Ruffolo:

[00:19:00]

Oh, great question Andy. Because we’re a team, we’re a team. I think if, it’s all about alignment. If people have their own agendas, or their own beliefs, and the beliefs are … I mean, hey listen, not everybody is exactly like me, right? Not everybody is exactly like Tom. Tom and I aren’t exactly alike, right? Natalie and I aren’t exactly like. It does take a mix of different types of people. That’s why it’s not … You don’t have every single core value that everyone shares and nothing else, right? There has to be some kind of mix, but there needs to be that foundation of just being aligned. By having these well-defined, a well-defined purpose, a well-defined vision and a well-defined set of values that everybody is aligned on, then we’re all playing on the same team.

[00:20:00]

People can do their own litmus test of, should I be doing this or should I not? Is this the right thing to do or is this the wrong thing to do? Do I have to ask the boss for this, or do I not have to ask the boss for this? I think that also makes people much more comfortable here, when they know, okay, all I know is I share these values, I’m the same way, I’m just going to do my best work everyday. I don’t have to be micromanaged. It just makes the whole team just work better together. People are producing their best work under a system where they know what the values are, knows, expects them every single day. I think that’s the other part is people know exactly what’s expected of them from work and there’s no room for misinterpretation. The values are very well-defined and so is the purpose.
If you’re working towards all of that and you’re representing the same values, then you’re doing a great job here and we’re going to say keep going. If you make mistakes, everybody makes mistakes, but you’re not going to have to worry about that because you were doing it with the right intentions, you were doing it with the right values, you were going for the same goal. I think that just makes a much better team.
Andy Baldacci:
[00:21:00]
Yeah, and I think that kind of the last point is really important, because it almost is like the values can act almost as a manager, like you said a litmus test is that instead of constantly having to guess what someone, your boss or whoever, would want you to do, when you do have these clear values, you can kind of derive the answer yourself.
Bob Ruffolo: Exactly, exactly. That’s what we want for our people. We want them to feel autonomy, right? We want them to feel like they’re in a position to do their best work and make the best decisions and that we trust them. I think just having core values in place just gives them everything they need to be successful.
Andy Baldacci: Once you kind of, last summer, once things really kind of clicked and you had everyone basically on the same team working towards the same goals, what changed? Was it just things, other than kind of like the generic things took off? Like what was it like from when you started out to what things were like at that point?
Bob Ruffolo:

[00:22:00]

We were in really bad shape last summer. We were losing money every month, and a good amount of money every month, which is not, we had never been losing money. We just had a big combination of the wrong management structure, the wrong … I wouldn’t say the wrong people, but people didn’t share the core values. Just a lot of issues, right. Then it eventually hit the P&L, right? You’re looking at it, and you’re like, oh my god, we’re losing money every single month, what’s happening here? And a lot of money.

[00:23:00]

It was like around the time that we knew we had this team, we wanted to stop the bleeding from good people leaving, but we knew we had a lot of good people at that point. We had downsized from like 36 people down to 23, and even lower, because we ended up adding some really good people during that process. I think the biggest turning point is I remember this day very very well, we had a meeting. We did it town hall style, almost like we turned our training room into like a big war room. Everyone had a seat at the table …
Andy Baldacci: Are you there Bob?
Bob Ruffolo: Hello?
Andy Baldacci: Hey Bob, I think it just cut out when you said “everyone had a seat at the table.”
Bob Ruffolo: Okay, can you hear me now?
Andy Baldacci: Yup.
Bob Ruffolo: Okay. We did this like town hall style, everyone had a seat at the table, and I was just honest with them. I was as honest as I possibly could be. I showed them all of the numbers, all of the financials. I told them exactly where we made all of think mistakes. I tried to make this emotional for them, so they could feel it, but then also presented the same confidence that I have, that we have the best team here right now, and I have the full faith that we can turn this ship around.
[00:24:00] We started to talk about what we needed to do to turn it around. I showed them, this is what the best things, or the most important things we need to do. Then they start talking about it. They were getting excited. We do this, we can do that. We just make a tweak here, we focus more here. This is why we’re messing up. Oh my god, we didn’t even think about that. Everyone left there, because we ended up keep going until everybody had like their own objectives for the quarter and what they were going to work on, but everyone left there so gung ho. It was just one of the coolest quarters I’ve ever seen, because within one month, we were profitable again.
Andy Baldacci: Wow.
Bob Ruffolo:

[00:25:00]

We had fixed so many things. People took ownership of it. They were excited to do it. It was so cool to show everybody the next month like, look! We made $1,000 this month! It wasn’t a lot, but we made $1,000 this month, and everyone cheered, right? We were like, this is so cool. I didn’t incentivize them with money or profits or anything. They all have their fixed base salaries. No one here has like a bonus program. They weren’t doing it for money. They were doing it for the team, they were doing it because it was the right thing to do. It’s why we exist, because we’re a team, right? It didn’t stop, because we kept everybody like, we got to keep going guys, because we’re better than this. We’re better than break even. We should be doing so much better.
Come the end of the quarter, we had the best quarter we ever had from a revenue standpoint, from an efficiency standpoint. We came out with all of the same people. No one left the company, right? Everyone was super excited. Man, did we party at our holiday party that year. We had a really good end of the year. It would make you want to cry if you saw how incredible it was that everybody came together. Then we followed up … Oh god, sorry.
Andy Baldacci:
[00:26:00]
No, that sounds like quite the turnaround. Like going from losing money and just literally months later having a record-setting quarter. To kind of drill down a little bit into the actual stuff, because I think there’s a couple of lessons here. The first one is sort of the bigger picture, like be transparent, get everyone on board, get everyone on the same team working towards the same goals and knowing that you trust them so that they can actually take ownership. Because without that, it’s really hard to make things work, especially as you scale up. Sort of on the more tactical level, what were some of the things that were happening that were kind of hurting your margins, that were making it so you guys were losing money?
Bob Ruffolo:

[00:27:00]

I think from a client retention standpoint, I think there was a lot around … We had probably the wrong structure in place, so we ended up having people on accounts that probably shouldn’t have been on accounts. I think they were trying their best, but the way they talk to their clients, and some of the things they were saying weren’t the right messages. There was some turnover that came from that, so we had to fix that. We talked through as an organization how are we going to get all of these clients to trust us? We did some basics and get some framework across the board.
I think fundamentally one of the things we did too is we worked our way backwards. We ended up setting a few members of the leadership team. I let everyone know, this is what it’s going to look like in 3 years if we do everything we need to do, and everyone believed that we could do it. We didn’t set these astronomical numbers or anything, we set something that was reasonable growth, but we should absolutely do, and then we ended up breaking that down to one year. What do we have to do in the following year and what do we have to do in the quarter to be on pace, to be there for the next year and all of the way through.

[00:28:00]

I think everyone just knowing, these are like 3 to 7 things we have to do this quarter that gets us in route to set us up for next year, which sets us up for our 3-year plan. For everyone to be able to say, know how they fit into that, and the quality work they have to do and the standards to make that happen and the team also holding themselves accountable. I think that made a big big chance. Obviously we had lost accounts, so a lot of the change, we had to go from losing money every month to making money every month, was just getting some new accounts back on.

[00:29:00]

We also had some staff changes. We had some people leave and we had some key people come on. Brie Rangel was one of the people that came on, and she just immediately made a big difference and people navigated towards here, and we see the way that they were working was differently. By getting the right people on the accounts and bringing in some new accounts that were really good for us and letting everyone know we have to be able to take on new work right now. Don’t tell me you’re overworked, don’t tell me that you’re maxed out, because we have to be able to take this on. People would then complain. They said, how can I be more efficient, how can I stop doing certain things? How can I take on this new work and make that happen?
Knowing that … Because it was easy for people to cop out, I think, before too. They’d say, it’s not my job, or I already have enough work to do. We need to hire, we need to hire, we need to hire. Where it’s like, no guys, we’re not hiring. Everybody can do more. When you do more, you’re going to get paid more, and we’re going to stay a small team for the next year, and that’s what we’re going to be, so don’t even ask me to hire, because it’s not even in the questions. We need to figure out how to do this. Because look at the numbers, we should be able to handle this much work and we’re not even there yet. Let’s focus internally. Let’s focus on our efficiencies and our processes and things we should stop doing so we can do the work that gets us to this level. That was really a good full year working on that. Again, it’s all a mindset, I guess.
Andy Baldacci:

[00:30:00]

I think that’s a good way of putting it, is the mindset, but it’s also, it goes with having the values and having that transparency where everyone knows what the goals are, not just 3 years down the road, but next quarter and next year. You’re right, when people do take ownership and there’s a clear kind of framework that they’re working within, if they add more to it, they know something else has to go, so they’ll prioritize on the right things if they have the right kind of principles guiding it.
Bob Ruffolo: Exactly, exactly. Totally agree.
Andy Baldacci: Yeah, because … No, and that’s the thing [inaudible 00:30:23] it’s like, a lot of times it’s easy for people, not even just in agencies, but in any business, to just kind of coast. To say, oh, I have too much work, so I can’t take on this. Then for the companies to grow, just because everyone acts busy. When you kind of have those constraints forcing you to evaluate everything you’re doing, you’re realizing that a lot of the tasks that you’re doing don’t need actually to be done, and a lot of them that you’re doing aren’t being done in a very efficient way. That’s kind of almost like a forcing function to make you reevaluate all that.
[00:31:00]

Bob Ruffolo:

I think just a quote to that, I kept saying to everybody about, if you can get more work done, then you have higher value. If you have higher value to the organization, I have to pay you more. Not that everyone here is driven by money, but then it starts to click in their head, like the more I do, the more I get paid. I don’t think a lot of young employees always think that way. To get these people to want to do more, and to say, the more I do, it’s better for my career.

[00:32:00]

Then to be able to say, that Gary Vaynerchuk right, he does a lot of stuff. Yeah, he’s an entrepreneur, but he found a way to get a ton of stuff done, that’s why he makes a lot of money, and that’s why he’s so successful and that’s why you guys all idolize them. Get the young employees thinking that way, not like, oh it’s not my job, or you’re putting too much on me. No, like be excited that you have the opportunity to do a lot of stuff. If I’m asking you to do things, it means that I see a lot of potential in you. If you can find ways to get that done, man is this organization going to value you. If we don’t, someone else will, right?
Andy Baldacci: Yeah, that is a fair point. It’s funny, because you mentioned that especially for younger employees, I know a lot of my friends who are a few years younger are kind of … They’ve been in the career a few years, they’re looking about getting a raise and they kind of, their reasons are, well, I’ve been here for this many years, I’ve done this, I’ve done that. It’s never focused on the actual value that they’ve created. That’s what any business owner is going to care about. It’s not that different, it’s a real mindset change on what actually matters. It’s not just showing up that matters, it’s the result, it’s what you can produce.
Bob Ruffolo:
[00:33:00]
Exactly, exactly. I think that mindset was a big change. Then, of course as we cut the team down from 36 down to 23, we did have some money to play with, so we were able to give significant raises to the key players. Since then, they have seen a couple of really big rounds of good size merit increases. They know that I’m not just saying that to them, because they’re actually seeing in their paycheck and their compensation. I wouldn’t say most of my people care about this. Some of them say, gee thanks Bob. They care about other things much more than they care about their own compensation.
Andy Baldacci: In getting people with that attitude though goes back to having those core values as part of your hiring process, is that getting the right people on in the beginning so that they’re not complaining about having too much work, they’re instead finding ways to get it done while focusing on the actual, creating the most value.
Bob Ruffolo:

[00:34:00]

It’s interesting, some of my hardest working people in this company, my top performers, have never ever asked me for a raise. I don’t know what that means. They’ve always received them. They’re my highest paid people in the company, but never said, hey listen I want more money. Never held me hostage. Never complained once. They just, they go out there, they give it their all, and they know that the organization will take care of them. I love that, because then the responsibility is on me, and I have to say, listen if I don’t give this person a $10,000 raise, I could risk losing them, but that’s what they deserve, that’s their value right now. They’ve significantly increased over the last 6 months to a year, that they’re playing at this level now, and I love that.
Again, I don’t know if that’s the right system. I’m sure other agencies probably have some more science behind it. We put a system in place that says we’re going to do regular 3 percent raises twice a year, but I always blow past that, because my people are just improving at such a rapid rate.
Andy Baldacci: You have it in place where twice a year you’ll evaluate for the 3 percent raises, but if you see the value kind of above and beyond that, you’ll go literally above and beyond that?
Bob Ruffolo:

[00:35:00]

Yeah, yeah. I probably could do a better job of having a formula or system for that, and I think that’s something I might have to work on in the next 6 months to get something better in place. Right now just every 6 months, I try to evaluate what value that person is bringing to my organization, what they’re going to bring, and what is that worth? What is fair market value for that? That’s how I’ve been determining compensation.
Andy Baldacci: Do you guys have a meeting, like a review where you go over that so that you can kind of point to the things that you said like, “hey, these are areas where you’ve done really really well, if you keep going that way, you’ll get keep getting raises like this.” Or if they’re not getting a raise, you can say “hey, we haven’t seen enough value created in this area, like this is where you could do,” or what is the kind of process like for handing out those raises?
Bob Ruffolo:

[00:36:00]

Yeah, it’s something we have to do better at. I think we’re small enough where I can get with their direct manager, who has … Now direct managers always have one-on-one meetings. If it’s not weekly, it’s bi-weekly, depending on the employee and how good they are and how much support they need from their manager. There’s always these meetings, and if not talking about raises, they’re talking about improvement, and whatever they need to do to continue to improve and get to that next level.
Most people can look at somebody else in the company and say that’s kind of where I want to be. We start talking about how do you get to that position. Once they start getting to that position and they’re able to take on that type of work, then we have to make sure that they’re being compensated for that level. Again, we’re small enough where I do decide most of the salaries. I do get input from the other managers, but as we get bigger, there’s going to have to be a better system for that, so that we can scale with that.
Andy Baldacci:

[00:37:00]

Right, and this actually, this transitions pretty well into kind of what I wanted to touch on last, and it’s the second part of your series was “10 Steps to Transform Your Agency” and it was sort of highlighting the lessons you learned along the way. For the listeners, I’ll make sure to link up all of the posts so that they kind of get the full picture. We won’t have time to dive into all of the lessons, so there are a few I want to dive into really right now. Are you cool with that?
Bob Ruffolo: Let’s go.
Andy Baldacci: alright. The first one that I want to talk about was, you said, “Listening to your people and taking action.” In one point you mentioned, was you did, it was the 360-degree feedback.
Bob Ruffolo: Reading that feedback was like the worst day of my life.
Andy Baldacci: To back up a little bit, can you say what that process is like.
Bob Ruffolo:

[00:38:00]

Yeah, absolutely. My uncle, who was very successful, and he’s been a mentor of mine. He kept telling me for years, he goes, you got to get 360 feedback, you got to get 360 feedback. That’s basically, everyone around me in the organization reviewing me and letting me know in an honest way what my strengths were, what my weaknesses were. I end up saying, okay, I’m going to do it, I hired a consultant named David Tate, who is phenomenal, and he walked me through. We started off the entire process, we did all different types of assessments, including the Hogan assessment, the Myers-Briggs and different things to understand where my strengths are.

[00:39:00]

Then we got to the 360, he did it 2 ways. He did a qualitative and a quantitative. Actually, he started with the quantitative, which was a process where he took about 10 people and they all went online, it ended up taking a couple of hours, and they rated me on all different types of skills and how well I was in certain things. They had an opportunity to comment on each of these skills. The second part was he followed up after his findings with the 10 people, most of them were the same, there were some different people, and he dove in a little bit deeper to get more color around where my strengths and weaknesses really were. He was able to give me back this phenomenal report. Off the qualitative one, I’m sorry, it’s the quantitative one that was actually a printed book that was incredibly impressive. Then he summarized all of his other findings in another document.
Andy Baldacci: It was all really complimentary stuff?
Bob Ruffolo: Of course, yeah, they told me how perfect I was, right?
Andy Baldacci: Right.
Bob Ruffolo:

[00:40:00]

I’m reading it, and of course I asked everybody before to be critically honest. It is anonymous. I’m reading through the data, like just the numbers and the pure data, right? I’m like alright, here are my strengths, here are my weaknesses, I get it, it’s a scale and I’m obviously going to be weak at some things and strong at some things. I think I was strong in like the visionary and strategy and things like that. I was weak in some process oriented stuff and work-life balance, right? So pretty typical pretty much. I was like, okay, I get that, I knew that about myself, and I know I had those things to work on. Then reading the feedback, and the feedback was almost all over the place. It was so interesting. My biggest takeaway from doing that 360 was the people that reported directly to me viewed me one way, and the people that reported indirectly to me, or actually didn’t report into me at all, viewed me a completely different way.
Andy Baldacci: Interesting.
Bob Ruffolo: In totally a way that I didn’t think that they would view me. There were things in there, like, “Bob cares more about his own financial success and his ego than he does about anyone in the company.”
Andy Baldacci: Wow.
Bob Ruffolo: There was a lot of things like that, right? It’s like, it was almost like a dagger in my heart, and just turn, right?
Andy Baldacci: Right.
Bob Ruffolo:

[00:41:00]

After about 4 days of crying. Not that long. After like the initial shock wore off, it’s like really taking this data, there was so much of it, and really trying to understand and dive in deep, like what is the problem? I think, there were some things I got. Like there was also like, I thought I was a really good teacher, because I was always loving to read things and share as a team. But the way people were receiving it was they didn’t think I was a good teacher because they weren’t receiving it the same way I was teaching it. Little things like that. I think the biggest takeaway is just that big difference, and what am I going to do with it? I understood, okay, we are just not aligned. This is around the same time we were, this is last summer. It really opened my eyes.

[00:42:00]

Especially where I thought i found the biggest issues was around my creatives and my developers, because they really didn’t report into me. There was a manager in place of all of my creatives and all of my developers, but anything … That person felt pretty good about, but from them, nothing got down to the rest of the team. That team was just completely misaligned with the rest of the organization. They viewed the company in a completely different way. They were the ones that felt not appreciated, they were the ones that were more gossipy and complaining. They were also in the 3, some of those people were in the 360 survey. That was like, that was the aha moment, that I had a manager problem. I had a really big manager problem. That’s what really, that was one of the biggest takeaways.

[00:43:00]

That was also followed by listening to Brian Halligan over at HubSpot, talk about how they do a net promoter score on all of their employees. When he sees that the net promoter score drops for a department, that’s when he knows he has to make a manager change. I was like, that just makes so much sense. That led to another lesson there too. Okay, so get feedback, don’t be afraid of the feedback. You can always learn from the feedback. It’s critically important. I know another list thing that you wanted to talk to me about today was about managers, right, and how important it is that you have strong managers that can take what happens at a leadership team meeting or talk things that you’re working with them, and then bring that down to their department and everyone in that department is as gung ho and rah rah rah as your direct leadership team. That’s how you’re really going to win. If you don’t have a manager that can do that, then you really need to make a manager change. Again, I learned that the hard way.
Andy Baldacci: Right, because you almost … When you think about it that way, like you almost have a game of telephone where you are passing your message on to their managers and then they not only just have to pass on the message, but also kind of pass on the enthusiasm and all of that. If any of those pieces are missing, you’re probably going to be the one that gets the blame for it at the top.
Bob Ruffolo:

[00:44:00]

Yeah. Just because you have somebody that is a star, a star individual contributor, doesn’t mean that they’re not valuable to your company, but they might not be the best manager. Because manager is a whole different set of skills, and that’s where I got it wrong. I had this person who was one of my best designers, so I was like, alright, let’s put this person in charge of all of the creatives. I’m pretty sure that person left the meetings, leadership team meetings, and went back to their desk and just said hmm, and got back to work. Probably didn’t let anyone know what was going on. It sounds so easy, it sounds so simple. I don’t know, I just learn things the hard way I guess.
Andy Baldacci:

[00:45:00]

No, but I also like what you said in your articles, you said, “Let them know what we’re doing to address the concerns, but also what we can’t do and why.” I think that last part is really important, because it’s sort, it’s obviously different with employees, but in any business, there’s sort of the mantra that the customer is always right, and it’s not really the case. This is the same thing where, you’re not necessarily saying that you’re going to lead by mob rule and immediately enact every single piece of feedback that you hear, but what you are going to do is listen. Let them know that you’ve heard their concerns, and if you’re not going to act on it, let them know why, so you really can be as transparent as possible. I think that mindset of not doing everything they say, but if you don’t still keep in the loop is really crucial to building trust in the team.
Bob Ruffolo: Exactly, exactly. I think it’s just active listening, right? Not going back … If someone says, oh, I have an idea and we should be doing this, or how come we’re not doing that, and not just going back to them and saying, oh well this is all the reasons why, right? Getting them to tune out and get frustrated. Just say, oh, that’s interesting, tell me more about that. Why is that important to you? What could we be missing? Then really try to understand the core of what they really really care about, and then ask them if we did this instead, would that be better? Get them bought in. Get them to feel like their pain really really matters, because it does.

[00:46:00]

I think that’s another skill that a strong manager has to have. Because then once people feel like, just by asking them more questions and diving deep to what they really care about, that’s almost sometimes better than even doing what they’re talking about, especially if it’s something you can’t do right away. But then letting them know, okay, that sounds like a great idea, I am completely on board with that too. As soon as we can do that, I want to. We’re going to put it on our backlog and it’s something that we’re going to address at this leadership team meeting. We’re going to see if we can come up with a plan to do that. I can’t tell you exactly when it’s going to happen, but I think it’s a great idea. The person hopefully will leave that conversation feeling pretty good, like I’m a part of this organization, I contributed today. Sometimes it’s [crosstalk 00:46:26]
Andy Baldacci: Right instead of swearing under their breath, oh they didn’t listen again.
Bob Ruffolo: Exactly, exactly.
Andy Baldacci: The last lesson I wanted to touch on was about letting the sort of what you call the B players go. Because like you’re saying, not everyone is going to be a good fit. You had it seems like a couple, like sort of 2 different periods where you had to let some people go. You learned some lessons about the right way to do that. Can you speak to that a bit?
Bob Ruffolo:
[00:47:00]
Yeah. Well, when I’m talking about B players, there’s a podcast I listened to, I think it was a Tony Robbins podcast. They were talking about culture and how important it is to really, if you bucket all your people, you have A players, you have B players, the C players. Your C players are going to get flushed out anyways, they can’t do the job, they don’t have the skills, they’re not a culture fit. You’re going to get rid of them anyways. Most organizations don’t have a problem doing that.
The B players are the ones that, again, we talk about culture a little bit. They maybe, they’re there, they do their job, but nothing more. If they can get away with less, they will. They never really give you a real reason to fire them, but they also never give you a real reason to promote them. They’re just kind of like clogging up your system, right? That’s really what, it’s terrible to say that, but that’s really what they are. They’re sitting in a seat that somebody else could be sitting in, and passing through that seat and helping you grow the organization. If you have somebody just kind of sitting there, and they’re not advancing, you can’t keep them in the company. That’s really how you can kind of define a B player.
[00:48:00] The A players, again, those are the ones that are, every 6 to 12 months, you want to promote them, they’re driving a lot of value for the organization, they’re growing. We had some people that we unfortunately had to classify in that organization. It doesn’t mean they’re B players in every organization. They’re a B player in this company, in what we’re trying to do. Many of them who left here and have been super successful in other jobs. I love that about them. They just weren’t going to do it here. We had to have honest conversations.

[00:49:00]

The first time I let people go, and I had this big mess, I had to make a change. Some of them were in that category where they were struggling and they weren’t growing and they were holding other people back. Not on purpose, but they were just in the seat. It was also a mix of people that had to go for other reasons, right? I surprised everybody, and I hate that I did that. I didn’t have conversations with them, letting them know that we might have to look at a transition or anything. I called them in one day, and let them know we’re making a change, and they were like, what? Is this a joke? Are you kidding me right now? I’m like, no, we’re making a change and we’re letting you go. Tom is going to escort you out, right?

[00:50:00]

It was a shitty day for me. I felt crappy about it. I can’t imagine for some of the people that meant good and tried but were struggling, I can’t imagine how they felt. I feel really bad about that. Again, don’t get me wrong, the change had to happen and the company we were … The people that were there after I … We had to make that change, right? It was the way I did it. A few years later, my dad kept like advising, people need to know where they stand at all times. He kept drilling that into me. Everyone needs to know where they’re standing. They need to know where they stand.
When I knew I had people that were frustrated, and they’re basically at their desks, they’re working through lunch, they’re staying late, they weren’t making good progress, the clients weren’t happy with them, they were giving it their all, I realize I need to let them know exactly where they stand. I’d have conversations with them, really human conversations. Let’s go walk around the building, let’s talk about it. If you were successful in this role, what would it look like and what can we do to make that transition? When it wasn’t working, to let them know like we need to make a change. They knew that that was coming, and they say, again, some people would say this is not the right thing to do, it’s just what we’ve doing, and it’s working for us. Take it full disclaimer. But let them know, we’re going to make change. How can we make this easy for you, and how can you help make it easy for us? Let’s talk through it and come up with a 30 to 60 day transition plan.
[00:51:00] Hey listen, they have clients, they’re attached to clients, right? Just letting them go and then telling a client, oh we let that person go and you’re getting a whole new account manager, right? Let’s make a transition plan that works for both parties. I’ll give you rave reviews, I will be a great reference for you, I’ll help you work on a resume, I’ll look at jobs with you and see if I can find places that are a good place for you. If I know of anyone that I think you’d be a good fit for, I’ll let you know. Let me see if I can help you make that transition. What do you want to be doing? If you were to start over right now, what would your dreams be, and how can you go after that? And have those kinds of conversations with them and be there for them throughout the entire process.

[00:52:00]

It was amazing. Some of them, I watched like all of the weight come off of them. They’re almost like, they were the best employees, they were the best they’ve ever been at Impact in that period, where they weren’t worried about doing a bad job anymore, because they knew it was coming to an end. They still gave it their all to the company, because they knew I was giving my all to them. Their teammates appreciate it. By the time they left, we had somebody maybe hired already for it, or at least we had a plan in place. It was just such a good transition. We were able to do that a few times. I like doing that. It just seems better.
Andy Baldacci: Yeah, no, I think that’s a good way of putting it, is you would treat it like a transition, because whether or not you treat that way, for the employee, they’re going to be having a transition. You might as well accept that and work with them to try to make it as easy as possible for them, and also giving them the opportunity to turn things around. I think that’s kind of, at least more of a human approach to doing it.
Bob Ruffolo:

[00:53:00]

I think that’s one key thing that we have to say, is you give them that chance to let them know like this is what needs to happen, this is what success looks like, but once you make that decision, you can’t go back on it. You can’t be wishy-washy either. If you say we have to make a change to them, and they’re going to be here for the next 30 days, if you decide you’re going to do that plan, if they start performing well, you can’t go back and offer them their job back. You have to stand by that. That’s super important, so I just add that in.
Andy Baldacci: Right, so, okay, so for the change part then. If they, is there an outcome in the transition where they stay in the company?
Bob Ruffolo: If you made the decision, then no.
Andy Baldacci: Okay, I see. But earlier on.
Bob Ruffolo:

[00:54:00]

Earlier on, yes, certainly. Early on, when you see the performance is not where you want it to be, or they’re not resembling the core values, you have to let them know and you have to put a plan in place to say, this is what we’re going to do over the next period of time. Quite frankly, this is exactly what we’re looking at, and if it’s not you, we understand, and if this is not what you want to do, we get it. But this is what’s 100 percent expected out of everybody in this company and anybody that’s in this role. If you can’t perform at this level, you can’t work here. We say that to them when we hire them, we say that to them throughout their entire transition. It’s not a surprise. Then when we make a decision, this person can’t do this job, then there’s no going back.
Andy Baldacci: Right. Okay, that makes a lot more sense now, yeah. No so honestly, you’ve given so much kind of all over the place and just good lessons to building a lasting agency that not only gets by, but one that really thrives and grows and is able to get to the point where it’s a big agency that’s having a real, I was going to say a different word without being cliché, but has a real impact. I wanted to wrap things up, just hearing what your plans are for the future, what is sort of next quarter look like, and then what is the long-term look like for Impact?
Bob Ruffolo:

[00:55:00]

World domination. No, I’ll tell you, we’re not perfect. We have a lot of things that we’re working on here. I’d say the biggest things that we’re trying to do right now is working on our efficiencies and continuously improving our quality for our clients. I think we have, I think a lot of agencies, especially in HubSpot space, probably feel the same and that that needs to be significant work done there. I know we really need to focus on that.
We’re working with a consultant to implement Scrum and whatever deepens that journey right now and make sure our playbooks are perfect, making sure we have the right systems and tools, software to be as efficient as it possibly can. We’re always doing, we do a ton of professional development with our teams, so every week or every other week, we have some kind of workshop internally here for our team to build their skills. We want this to be the best place to work for our people. We’re continuously listening to them and how can we improve the work environment for them. We recently put a 401(k) in place, so always focus on, make sure we’re giving, have hopefully above average compensation.
[00:56:00] Obviously, we’re trying to grow, there’s obviously some revenue goals here we’re working towards. Social responsibility is a big thing. I wish, at the core, and maybe when we started we were doing more things for our community. We have some initiatives around social responsibility that we’re working on. We have about 7 goals that we’re working on for this year, and most of them are actually themes, so they’ll continue until next year as well. We’ve got a lot going on here at Impact. It is a fun place to be though.
Andy Baldacci: No, it sounds like. If listeners  want to hear more about seeing sort of not just what you guys have gone through, but where you’re going in the future, where is the best place for them to head?
Bob Ruffolo:

[00:57:00]

Where we’re going in the future. I’m going to be publishing a lot more on LinkedIn. If you follow me on LinkedIn, I’m going to have more of a document of my journey being posted there. I enjoyed talking about the 360 feedback, so I’ll be posting more content on there that’s more around the agency, the journey of an agency owner. Because our blog is going to be, obviously, what our blog is. That’s probably the best place to follow the updates and things we’re working on.
Andy Baldacci: Awesome. Well Bob, I just want to say thanks again for coming on the show. It was great chatting with you.
Bob Ruffolo: Andy, thank you so much man. I really really appreciate it.

Want to learn more?

If you want to hear more from Bob, be sure to follow him on LinkedIn where he documents his agency journey. And if you want to see how a leading inbound marketing agency runs their own blog, check out the IMPACT blog.

Resources mentioned:

Bob’s 2-part series on lessons learned building his agency:

360-degree Feedback
Good to Great by Jim Collins
Mastering the Rockefeller Habits by Verne Harnish
Traction by Gino Wickman
Gary Vaynerchuk

Thanks for listening!