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Group effort Featured

8:54am EDT December 27, 2005
When Joe Phelps founded The Phelps Group, he broke from the norm, creating an innovative environment that stresses collaboration and feedback instead of individual results.

At the Santa Monica-based agency, which provides advertising, public relations, promotions and marketing consulting services, the general rule is that two heads are better than one. Associates work together in clientcentric self-management teams toward a common goal of doing a great job for the client and bettering the agency as a whole.

“The idea is if you get good people and you give them the right environment, and then you bathe them in enough feedback and collaboration, the answer will come,” says Phelps.

And not just any answers but good answers. The company billed more than $60 million last year and has seen double-digit annual revenue growth for more than 20 years.

Smart Business spoke with Phelps about how he attracts and retains customers by fostering agency-wide teamwork.

How do you get results for your clients?
I think it starts with the people at the agency. Once we have the mission and the vision and the values and the core competency determined — which we have years ago — then the No. 1 job is finding the right people and finding people who can do the job, want to do the job and are passionate about it. Once those people are in place ... it’s downhill from there.

We have a very heavy profit-sharing plan so that everyone in the agency wants every other team to be successful, and everybody’s headed in the same direction. When you get all the horses headed in the same direction, you have a lot more power.

How is this model different from what many of your competitors are doing?
The general way to organize is by functional department. You have a production department, a media department, a creative department, and those departments are headed by a director. And that director is often compensated by how much money goes to their department.

So the advertising guy will be with the PR guy at a client, and they’ll be hoping that the client doesn’t take their PR money and put it into advertising or vice versa. So what happens is the client’s best welfare is not at heart. What they are looking for is what’s best for the agency’s individual departments.

We don’t have functional departments. That is a real key differentiator for us. You always know who you are working for when you are at the agency. You’re working for the client. You are not working for a department head.

There’s a lot of conflict of interest that comes in those situations. I learned a lot working for other people and other corporations. One thing I wanted to do was design the conflict of interest out of our company.

How do you find people to carry out your mission and vision?
Because of our mission — which is to do great work for deserving clients, and we define deserving clients as those clients whose products ... make the world a better place — that’s tending to attract a certain type of person, a person that’s looking for a balance in life, worthwhile work and so forth.

I did an analysis awhile back, and over 60 percent of our people came as a result of a recommendation of one of our associates. And our associates care about who they work with 10 hours a day, five days a week. They pretty much know who is going to work out and who’s not.

When we look for people, we look for obviously talent, experience, desire, and I used to say a good heart. But then I met a few people that had a good heart but they couldn’t play on teams. So we changed it to a good team player.

What are your strategies for customer retention?
Once thing that’s happening — and it’s happening at an accelerated pace — is whatever you deliver for your client, they’re naturally going to want it the next year faster, better and cheaper.

What you do is you give input to your brain, you let it percolate for a while and then the answer comes. But if the demand is for faster, better and cheaper, you are losing time in the subconscious. So if you don’t have more time, then what we’re doing is we’re putting more brains on the business.

If a regular team of five people can’t come up with the answer in three days, what if they brought that question before a body of 50 or 60 people? The answer could pop faster. Having a lot of people look at the work really is not only a safety net but it’s a great research tool, and it actually improves the work.

What has been your biggest challenge associated with growth, and how have you managed it?
My biggest challenge personally is that if we’ve grown 20 percent a year for the past 18 years — and that has been about our growth rate — then I obviously can’t work 20 percent harder every year and cover 20 percent more territory. My job changes rather rapidly, and I have had to learn to let go and trust more.

HOW TO REACH: The Phelps Group, www.thephelpsgroup.com.