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Start a Business on Company Time? Sure.

Advertising agency WDCW takes a liberal approach toward letting employees work on personal projects at the office.

So liberal that one employee has produced a feature-length documentary film; another owns an online coffee company; a group of workers has a career guidance site; and several maintain blogs – all while on the company clock.

The agency has 72 employees at its Culver City headquarters and an additional 80 in Seattle, and allows its creative workers to develop these projects between assignments.

Chief Executive Ben Wiener said the purpose of the program is to attract and retain creative talent. Permitting employees to pursue their passions keeps them motivated and yields knowledge – and potential profits – for the agency.

Since the program started two years ago, the agency has retained all its digital experts, a sharp contrast to the industry norm of high turnover, Wiener said.

Most companies don’t allow employees to do personal work on the clock, especially if it’s related to a sideline business. Although WDCW may be one of the few local businesses to have such an arrangement, some elsewhere are experimenting with the concept.

Scott Knaul, vice president at consulting firm Workforce Insight in Denver, said there are similar programs at Apple Inc. and Google Inc.

“The CEO is differentiating his organization from others and becomes the employer of choice,” Knaul said of the approach.

WDCW strives for a free-spirited culture; the company stores its advertising awards in garbage cans to show its unconventional attitude. But Wiener maintains the management approach gives his agency tangible competitive advantages.

“It’s not kooky; it’s enlightened self-interest,” he said. “Our clients are seeing a return on this investment because we are getting smarter as marketers.”

A challenge for agencies is this, Wiener said: Clients want creative and never-before-seen marketing campaigns, but they demand to see a track record ahead of time to be assured that their campaign will work. By allowing creatives to test ideas for marketing campaigns on their real-world projects, the agency can show customers at least some results.

WDCW, formerly named WongDoody, is still client driven. (Clients include T-Mobile, ESPN, Alaska Airlines, Cedars-Sinai and the Los Angeles Philharmonic.)

“We have never missed a deadline, never let a client down,” Wiener said. “Everyone puts these projects in their proper priority. They aren’t as important as what we do for clients, but they aren’t just hobbies. This is how we keep our edge.”

An employee begins a sideline project by going to Wiener’s cubicle to discuss it with him. Typically Wiener allows them to spend limited time and resources from work – such as getting advice from colleagues or some computer programming help – to get started. In return, he expects nonmonetary benefits such as access to contacts or data generated from the project. The employees usually maintain complete ownership and control of their projects.

For example, Justin Johnson started coffee distribution site OregonCoastCoffee.com. Another employee, Brianne Burrowes, owns a website for career women named IWantHerJob.com. The agency offered some design and online marketing expertise.

“The only capital we’re putting in is our labor, and in return we get a real perspective on the e-commerce business,” Wiener said.

If the coffee enterprise becomes profitable, Johnson gets to keep the money.

However, some ideas require such a large commitment of time or other resources that Wiener takes an equity stake in the business – and would claim a share of any profits.

Court Crandall, the “C” in WDCW, has produced a documentary called “Free Throw” in collaboration with the agency. The movie is about students at Compton High School who participated in a basketball-shooting contest to win a college scholarship.

Crandall plans to enter “Free Throw” in film festivals, starting with Sundance in January. If the movie finds a distributor and eventually makes a profit, WDCW and outside investors will share the money.

The movie has already produced some nonfinancial returns. When the winning student in the contest landed a basketball scholarship to Cal State Northridge, he decided to split the $40,000 prize money with the other finalists. That story was covered by the Los Angeles Times, Yahoo News, CBS, ESPN and CNN, and included mentions of WDCW.

In addition to “Free Throw,” the agency has a majority stake in career guidance site CareerSparx.com and minority stakes in several other ventures. Agreements with employees are verbal.

Wiener keeps tabs on how much agency time is spent on outside projects, and he establishes deadlines and parameters just like paid work for clients. He said it’s too early to know whether or not these projects will become profitable.

‘Alarm bells’

Not all are as sanguine as Wiener.

Heather Sager, an employment law attorney and partner at Drinker Biddle & Reath in downtown Los Angeles, said allowing employees to work on their own projects with company equipment and on company time raises numerous liability issues.

“Alarm bells go off in my head when I hear this,” she said.

Sager noted that for outsiders, it might be unclear when the employee is representing the agency versus his or her own blog, for example. If the outside project were to engage in discrimination or unfair business practices, the agency could be held responsible. Also, mixing personal and company projects at the office could lead to charges of time sheet falsification or violation of break rules.

“It hasn’t happened yet, but this could be an example of no good deed going unpunished,” she said. “If one person gets upset, that could ruin it for everybody.”

Wiener said legal contracts at early stages of brainstorming aren’t practical.

“We’re not going to bootstrap an idea and then spend $40,000 on legal documents,” he said.

Knaul, the consultant, said such a program isn’t right for all companies.

“You need the right culture and right people,” he said. “Management has to be more hard line than a regular company in terms of deadlines and expectations or it can turn into chaos.”

Wiener recalled that when he first started in the advertising industry, the attitude was that the agency owned the employee and all his or her ideas. But that model has changed, and he believes the shift will be felt in other industries.

“Anybody who needs to recruit and retain talented people will face the need to change the employer-employee relationship,” he said. “The larger the company, the greater the need for structure. But the problem of how to encourage creativity is relevant to everybody.”

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