Miles Everson, CEO of MBO Partners, joins Chip to talk about the challenges that agencies are facing in this new era of work — and how they can find success while mitigating risks.
This conversation explores important topics like hybrid work, contractors versus employees, the new outlook that many employees and employers have after a year of remote work, and more.
Opportunities abound for agencies that are prepared to adapt and innovate, but risks remain and it is important to understand how to balance the two.
The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Hello, and welcome. I am Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance. And I am very happy to have with me someone today who can help talk about the future of work, particularly the future of work in agencies from both the employee perspective as well as from the employer perspective. So welcome to the show, Miles Everson, the CEO of MBO Partners.
Very good, thanks, Chip. I’m glad to be here today as well. So this is an important topic for businesses throughout the United States. So
it’s an absolutely vital topic. And and almost every, frankly, business owner, let alone agency owner is having conversations about this right now, trying to figure out, you know, how are they going to reshape their team reshape how they do work going forward? Are they if they were in office full time, before the pandemic? Are they coming back entirely full time now? Is it going to be some hybrid thing? Or are they just gonna say, you know, forget about it, I don’t want to lease anymore, we’re gonna go all remote. You know, there’s so many factors that go into this. And it’s not just about, you know, what you want to do? It’s what’s feasible within the environment? And how do you navigate all of the, you know, the pitfalls that are out there. And that’s something that I think that you can speak to quite well. So, before we jump into some of those topics, though, can you tell me a little bit more about yourself and MBO partners?
Yeah, I’m happy to. So I’ll start with myself, which is, I joined MBO two years ago as the CEO, delighted to be here. Prior to that, I spent 30 years at PricewaterhouseCoopers. And last finished running the global advisory and consulting businesses, where obviously, we had a lot of human capital, and a lot of services and clients that we sold work to and help, you know, create value. Here at MBO partners, what we’re doing is we’re making it easy for independence. And I say independence, it’s it can be small businesses, as well as individuals, solo entrepreneurs, do work with very large companies. So I think of us as we are an enterprise gateway solution, we help enterprises make it possible for lots of people in their organization to do work with these independence. So that’s, that’s what it’s the company’s been around for 25 years. I’m delighted to be here. And you know, we’re doing our best to try to help make that work easier for the independence and the enterprises.
Great, well, I think that’s a, that’s a great setting of the table for the conversation that we’re going to have because a lot of agencies are interested in hiring more independence for their teams, historically, agencies, particularly small ones, have relied upon independence in order to to supplement their teams, and to develop the expertise they need. But we’re in an environment now where it’s becoming more challenging to do that, you’ve got some states like California that have really clamped down on the rules on how you can qualify as an independent contractor, you’ve got a lot of states who are, you know, trying to do more in terms of tax grabs, for any kind of presence that a business may have in their state. And so at the same time that owners are looking for flexibility, particularly coming out of the pandemic, they’ve got to figure out how do I do this and not come across some trip wire that’s going to increase my taxes, or get me into trouble with some government agency? So is it is it First of all, is my characterization accurate? Is it is it more challenging from a regulatory and legal standpoint than it was, say, 10 years ago?
The piece of it that’s more challenging regulatorily in my view, is it’s the worker classification regulations, right? So you know, and so, what, what you can have is still people are classified, that they need to be an employee, but that’s where they can be an employee of, for example, we have a payroll company, so will w two, um, so the agency doesn’t have to. So from an agency perspective, you can have both 1099 and W two for worker classification, and still be able to access a large pool of independent talent. And that’s, that’s the value of what we’re doing, or at least one of the big pieces of value.
Right, so that so basically, what you’re doing is you’re taking away the headache of trying to figure out how to navigate all these different systems and sort of allows the agency owner to focus on the substance of the work, and you focus on the bureaucracy of the work for lack of a better way of describing it. That’s right. That’s exactly right. That’s what we’re doing. So because of this, you’re obviously working with a lot of employers, a lot of employees, you know, let’s let’s take a moment and pull out that crystal ball. And as you’re looking into the future, what is the future of work looking like for agencies, what do you see coming down The pipeline, that’s that’s important for agency owners to be considering as they’re determining their own structures in the years ahead.
Yeah, well, let me start with just some some kind of context, I’ll say factual data points that are important. So these are from the Bureau of Labor Statistics. If you work in the United States today, and you’re under 45 years old, you’ll change companies every 4.1 years. If you’re under 35, you’ll change every 2.8 years. So I would actually think could make a pretty good case that the velocity of a rotating workforce is happening in the full time workforce as well. And so what that means, from my perspective is every company or agency has to have, you know, the muscle, if you will, to be able to deal with a higher velocity of change in their workforce and what they historically would have thought of, and then you kind of add to that what’s happened, you know, let’s, I think it’s, you know, the COVID pandemic effect is 46% of white collar workers say they’re going to change jobs in the next 12 months. That’s an astronomical turnover rate for any company. So I look at it and say, by definition, if you’re going to be really accessing the best talent on the planet, you have to have multiple channels, in terms of where you get that talent from, and an important channel is the independent worker, because more people today choose to be independent, that are forced to be independent. And that’s it. It’s just such an important context to have. Right?
Yeah. And I think that’s I think one of the challenges is that the government’s don’t seem to recognize that a lot of workers want to be independence, right. They, they see being independent as as a threat. And part of that is because some of the structure that’s been built into the system, as far as, you know, tying, you know, a lot of social benefits to your actual employment. And, you know, we can have those debates, I suppose another day, but because of that, that it creates that tension where you’ve got workers who want that freedom, that independence, and yet, you know, government that sees that as as a bad thing in the guise of trying to protect those workers.
Yeah, so I, this is actually a really important point, Chip, I think, in the political circles, Far too often. All independents are kind of painted with a single brush, if you will, saying there’s gig workers, they’re freelancers or independent. And I think there is a very demonstrable difference between somebody that is working as a temporary worker, and as an unskilled labor, and is getting taken advantage of, if you will, by the big guy, versus people with college degrees, that can earn six figure incomes, you know, high five figure incomes, and can make those judgments for themselves. And so the regulation needs to get pointed towards what is the real objective that’s trying to be done, because I think most people would say, we should make sure that there’s some type of, you know, rails of safety, if you will, for that little person that could get taken advantage of the college educated people can make their own choices as to what they want to do.
Well, and I think, you know, one of the other things we’re seeing from a freedom perspective, I know is something that you’re particularly passionate about looking at it. And that’s the whole concept of the digital nomad. And so so can you, can you take a little bit of time just to explain what a digital nomad is, and how that’s going to change the nature of work?
Yeah, so digital, first of all, digital nomad is somebody that is not only working remotely, but they’re not they’re working remotely from multiple geographic locations. And so I’ll start with, you know, again, the COVID pandemic accelerated company’s willingness and ability to work with a remote workforce, right? 15 months ago, there was, you know, hesitation to embrace a remote workforce for many, many companies, and then all of a sudden, if there were 100% remote, so that accelerated what I believe was an inevitable change anyway, but you know, it pushed a decade into a year in terms of duration. And so once you get to the point where you say, okay, it’s okay for people to work remote, then the worker can start to choose where they want to spend their time and, and work and so, you know, if you look at what what’s happened between 2019 and 2020, so we don’t have the 21 data yet, but there was a 49% increase in digital nomads. Again, it’s significant increase. So there’s, there’s 10 point 9 million of them in the United States today. That are, that’s their primary residence. Interestingly enough, 6.3 million are those are full time workers, that is up 96% from 2019. So basically doubled because of COVID. Right. And, and so, but when you look at it, and I think this points to the what they’re much deeper macro trend that existed before COVID was present, which is digital nomads, 90% of them have higher job satisfaction. And when it comes to income satisfaction, 76% say that they’re satisfied with their income. So you think of the, you know, a happy, secure workforce is part of what you want. And, and I think we’re seeing that, that’s, that’s coming to bear out, as we see people that are choosing to work as these digital nomads.
Yeah, and the last year really did accelerate this right. Some people, you know, for a variety of reasons, chose to pick up and temporarily work from somewhere else. Maybe it’s because, you know, if the if you’re going to be trapped at home, you’d rather be, you know, trapped at home on a lake or an ocean or in a mountain area. You know, maybe you went to spend time with family because they needed some help in the evenings. And so you could work during the day and help out. There’s all sorts of reasons that the people chose to do it over the last year. But But what you’re saying is that that’s that’s not a blip. That’s a trend that’s going to continue.
Yes, it’s absolutely a trend. You know, one of the predictions that I have about the future, and I think it started already, Chip, which is the balance of power, is going to accelerate towards the worker in the in the in the power between a company and the worker, because Good work. One thing is there scarcity of qualified workers in the hottest skill areas to begin with. But secondarily, when you have a liquid market, if you will, for a demand and supply can find itself more easily. The best providers are going to they choose who they work for, because they have a wide variety of choice. And that’s that that’s definitely accelerating. And you see that amongst, you know, entrepreneurial people that choose to go be independence.
Yeah, and, you know, right now, I think we would both agree that it’s a it’s a very talent friendly market, right. So, you know, there is there, there are a lot of agencies I know, out there looking to hire, and they’re having a very difficult time finding folks because, you know, people can be choosy right now. And so they’re choosing to be choosy, if that makes sense. And our, our mutual friend Karen Swim has has chimed in here with I think, what’s a good point, which is that flexibility creates satisfaction. And she says, she says it’s ridiculous that more companies don’t understand this. And I do think that, you know, flexibility is something that, frankly, both sides can value in this equation, both the employer and the employee, I guess the the question that I have, when it comes to flexibility is if you’re an employer, and you say, you know, look, I, I’m fine to have digital nomads, I don’t care if they work remotely, I don’t care where they’re working from, I’m just looking for the quality of work. Is it enough to say that, or do you need to be, you know, considering other things when you’re coming up with your own policies, as an agency business?
Yeah. So this was the the heart of a thought leadership piece that we put out last week in the Harvard Business Review, which addresses how companies need to think about digital nomadism. And a big piece of this is you need to know where your full time employees are working. Because I think it’s a less of an issue for small agencies, just to be clear. But for some large companies use in particular, you could end up with multiple people working in a jurisdiction, and they trigger tax residency obligations. And they’re going to go to the company to collect those taxes, not the individual. Right, because it’s easier. It’s the deep pockets approach. So that’s, that’s what’s that’s what’s going to happen. So having a policy, and then making sure you know, where people are physically working, as opposed to assuming they’re working at the location that is their residence on file.
Right. Right. When and it’s something that you need to work with your team to help educate them about to write because, I mean, I can imagine a lot of employees might say, Sure, you know, I live in New Hampshire or Florida where there’s no income tax, and, you know, so I’ve got some some address there. And, and so it’s not really in my interest to tell my employer that I’m actually you know, working from Manhattan or Los Angeles or somewhere with a higher tax burden, that’s not going to just affect my employer, it’s going to affect me too. So So how do you navigate that and, and make sure that you’re helping your employees be in compliance as Well,
yeah, well, I mean, awareness is an important point on this one, because I don’t think, you know, there’s probably there’s not a sufficient awareness is what I’m saying on the Natalie’s. And by some employers as well of what the potential downside issues are. Now, I will say that, you know, our belief is that the workstyle, that fits into the lifestyle back to this flexibility point that Karen was making a few minutes ago that will outlast if you will, the regulatory pressures and issues, people will learn how to deal with the regulations, they’ll comply. And so I don’t see the regulations as having sufficient power to change, you know, what a mass of very large mass of people want for their lifestyle and work style. So that’s, that’s going to happen regardless. And, you know, so what, when I think of this, if I go right back to the staffing agency, I think, you know, a lot of the listeners may be today, I think you got to get beyond thinking about this as a compliance matter. And think about it is how do I really optimize my total workforce. And that starts with really thinking of your workforce as being broader than your full time employee base. Because I would argue that by definition, if you’re not looking beyond your full time workforce, there’s no way you can have confidence that you’re getting a look or access at all of the, you know, great talent that’s out there and is available.
And I think that’s a great point. I mean, you know, at the end of the day, and I always tell my clients is you can find a way to navigate whatever regulatory tax and legal structures exist around you, right, you need to figure out what is best for the business, and then work with your professional partners of various kinds to make sure that you’re, you know, at least mitigating the risk. But it’s, it shouldn’t be an obstacle in itself, to doing what you want and what your team wants. But so now, so now, let’s pivot a little bit at how you actually manage this as an employer, how do you get the most out of your team, when you’re, you know, when you’ve got people who are, you know, you’ve got some digital nomads on your team, you know, you’ve got, you know, maybe some in office, people in your team, you’ve got people working different time zones, you’ve got, you know, you’ve got a mix of full time, part time and independent contractors, how do you do that, as a manager and figure out how you get the most out of them? Does it change the nature of communications with your team,
it changes the nature of communications, you know, touch on that, but it also changes, I believe, how companies think about the way they run their business, I’m saying from an operating model perspective, and I, I see us moving at a greater pace, that at going after a project outcome based operating model versus an org chart, based operating model. So it’s a bit of adopting, you know, I’ll say loosely, agile type concepts that have been used for systems development, into how you think about value creation in your companies all together, which is, I’m going to get the right deep niche skills that I need for a particular outcome I’m driving towards, I may not need those skills full time all the time. And that’s why you tap into the independent workforce to get the skills you need. But your internal, again, your organizational muscle that you need, is not just how do I manage a bunch of people that report to me every day, regardless of what I have? I’m doing, but how do I bring together teams? How can I form teams quickly? How do I get those squads or pods of people to produce very well, by the way, some leading companies have been doing this for three years. And it makes you more agile and more nimble. And doing that. And so, I see that as is a really important component of how you think about this going forward. And then I know I forgot your first point, Chip, what was your first question?
So does it change the nature of communications with your dog?
Yeah, thank you. Yeah. So one thing that COVID pandemic did, is it made for a number of industries, you know, health provider industry, and for the education system, going from synchronous to asynchronous interactions. And so I think what we’ll see for the next five to 10 years is even more asynchronous communications occurring. So think of it as anywhere where today you think it’s got to be synchronous. You have to challenge yourself and say, Well, why couldn’t this be an asynchronous communication? And just to be clear, maybe synchronous is the interaction is happening at the same time and asynchronous is it happens at different times. A great example would be interviewing people. You don’t need to interview people. synchronously, you can do asynchronous interviews. And because there’s a fair bit of support out there now that asynchronous communications drive up productivity drives up happiness, because it gives people more of the control of when they’re interacting and with whom they’re interacting. And so that’s better than, you know, having to do everything at the same time. So, flexibility? Yeah, I
think it’s, it’s finding the right mode for the task at hand, right? Because there are some times where, you know, asynchronous can can slow things down, right? where, you know, if you, if you and I were to spend 30 seconds, just going back and forth, you know, we could probably solve something just like that. But there are a lot of times as you point out, where asynchronous can be much more convenient, because if I’ve got a kid crying a dog barking, I’ve got to run an errand, you know, I’ve got the flexibility as a worker, to to address that in in a way that fits within everything else that’s going on in my life, which makes me happier, more productive, and all that. So trying to try to find those mixes, I think is something that a lot of organizations are going to have to continue to feel their way through in the years ahead, and probably some tools will have to continue to be developed in order to, to make some of these processes as smooth as possible.
Yep, completely agree. I mean, look, look at the profound effect that email and online collaboration tools have had, which most often that’s a synchronous communication, I think what happens is some people try to use it as synchronous, and they get, you know, sucked into their keyboard for eight hours a day. Which is, which is a little different. So I think the workforce and companies will have to get better at what means of communication are we using when? and for what purpose? And when done properly, it can drive up productivity of the workforce.
Yeah. And I think it is going to require a mindset shift on on everyone’s part to understand, you know, what kind of tool you’re using? And is it right for the task? Right? So, you know, to me, you know, texting is much more of a synchronous communication mode, right? Because there’s, there’s not typically, it’s one of the reasons why I discourage my clients from using it with me, because, you know, it’s hard to flag things for follow up, you know, you lose track of things. Whereas email is great for asynchronous, because, you know, you can, you know, flag things, file, things, organize things and make sure they don’t fall through the cracks. But trying to try to make sure that you’re not using an asynchronous tool for synchronous, or vice versa, is a learned skill and something that I think folks are gonna have to spend some time with as well. Yeah, I completely agree. So, so if I’m, you know, if I’m sitting here as a as an employer with, you know, let’s say, you know, maybe, you know, a 20 person team, and I’m trying to figure out, Okay, what what does all this mean, for me, though, right? You guys have talked about some some great high level concepts and things I should be thinking about, but, but realistically, is there anything that I should be going out and doing in the next, you know, 612 18 months to make significant changes to my business? Should I only do it if I, if I feel the need? I mean, talk to me a little bit about what, you know, what’s your practical advice for that small employer is?
Yeah, so I think they need to be factoring in what? witnesses from a strategic perspective, what percent, or number of people do I want to be independence is a part of my total workforce. And I say this, because if you wait until you need it, you’re going to be behind the eight ball, so to speak. And, you know, so there’s a number of specific use cases. So when when you have a strategy for embracing an independent workforce, you may have great talent, that’s a full time employee, and they come to you and they say, I don’t want to work full time anymore. Well, it gives you an option to keep that person engaged as a potential independent to work periodically with you. Okay? Another use case is if there’s really 46% turnover, you’re going to spend all your time interviewing, instead of having a pool of, you know, virtual specialists, if you will, that you’ve built up that you have access to. So that’s where we’re spending a lot of our time now is building virtual benches of talent for our enterprise clients, that in their heart skills areas, okay. And then the other is, if you want the flexibility to lean into growth, without incurring the upfront fixed cost of hiring people and putting them on the, you know, on the bench, so to speak until you find work. Having a pool of independents that are available to help you drive your growth agenda is a lot less expensive way to drive growth than relying on only a full time workforce. I’m not saying that there’s not a place for full time workers. there absolutely is. But should you be targeting 25 30% of your workforce or more maybe even to be independent? Absolutely.
Yeah, I mean, I personally think a good rule of thumb for agencies given the nature of work is to you should have a percentage of your workforce as independence at least as large As your largest client is the percentage of your revenue, so if you’re, if your largest client is a quarter of your revenue, then at least a quarter of your labor costs should be independence, because that gives you the flexibility should, you know something really bad happen to make more intelligent decisions, it doesn’t mean you wouldn’t have to do any layoffs in those cases, but at least you’ve got some portion of the workforce that that’s automatically more susceptible to being flexed. And it gives you that that breathing space, if you will, to make more strategic decisions in those moments, as opposed to the panic ones, that so often I’m sure you and I have seen businesses make.
Look, that’s part of the reason independence choose to be independence, you know, the best independence will have five, six clients that they work for regularly. And they view it as risk diversification. Because if they one company, you know, has a problem, they have five or that they can go, you know, do work with. And, you know, I’m saying that that’s, that’s a risk mitigation strategy. But it’s also obviously they they get to choose who they work for, and the type of work and projects that they work on. So it’s bad to if you want access to great talent, you’re going to have an independent strategy, by the way, most of these independents, because they’re independent by choice. They are inherently more entrepreneurial. And so what’s wrong with having some entrepreneurial spirit embedded in your workforce?
What do you see, it’s not just entrepreneurial spirit, but one of the things I preach communicators need to have more business acumen and, and you know, independence, simply because they have to do things like you know, file business tax returns, and, you know, set themselves up properly. And those kinds of things they start to develop, even if they don’t want to, even if they’re not inclined to they have to start learning some of those basic business concepts that will serve them well as they’re serving clients down the road. Absolutely. So miles, I mean, we’ve we’ve really just scratched the surface here. I suspect we could go on for two or three hours. But do you have any, anything that we didn’t touch on that you think would you know, people would benefit from from hearing this moment before we wrap up?
Yeah. So the first thing is, I’m going to go back to the digital nomads, right? So we just did recent research on this. And there’s 64 million adults in the United States today that believe over the next three years, they may become a digital nomad. Okay, that’s a very significant number. And so I think you want to keep your eye on how you will deal with digital nomads in your workforce. And that’s both full time and independent. Okay, so the second is, we see the the number of independents over the next five years, growing at two and a half times the rate of the full time workforce. So by 2025, well, over 50% of the people in the United States will either be an independent or will have worked as an independent. And that’s pretty profound. And then the the third item I would highlight here is in the independent workforce today, 16% of that workforce is made up of the the gen Z’s and the Gen. Z’s are predicted to be the most entrepreneurial group of workers that are coming into the workforce. And so what I’m pointing to here is, historically, the independent workforce intended to be a bit bolder than the average age of the workforce in full time. We’re seeing a shift on that. And so if you’re even thinking about how do you how do you pipeline for the next four or five years, access to the right talent? Again, if you want the, you know, that generation of talent working with you, you’re going to you’re going to have to embrace the independent workforce, they also change jobs every 2.8 years. Right?
So, a lot to think about here. If people you know, would like more of your insights or they’d like to learn more about MBO partners, where can they get more information?
Yeah, well, they can go to MBO partners website, which is on the screen here, which is MBO partners COMM And they can reach me directly at Myles at MBO partners. COMM is my email. So I’d love to hear from folks. So thank you. Well, miles, I
really appreciate you taking the time to speak with us today. You shared a lot of valuable insights, things that people are thinking about today and given a lot of food for thought. So I I do appreciate that and I appreciate everybody who tuned in either live or is listening now on the podcast feed, and I look forward to having you all back with me on a future episode. Excellent.