You owe it to yourself and to your agency to stay on top of staff costs – but how do you square that with finding and retaining the best creative talent?
The creative industries have taken a hammering this year and agencies in particular have had to work twice as hard for every pound they’ve earned, with marketing budgets slashed and economic activity sluggish.
They’ve also faced the challenge of motivating creative, naturally collaborative people who are forced to work in their spare bedrooms or kitchens.
In a recent video for We Are Like Minds, marketing guru Robert Craven laid out some interesting stats about how agencies feel they’re doing at this point in 2020:
- thriving | 15%
- surviving | 35%
- struggling | 40%
- dying | 10%
In other words, about half of all agency owners are worried about the health of their business and only 15% really feel upbeat and in control.
When I heard him start digging into what sets that top tier apart, I found myself nodding along:
“The successful agencies are the ones with the deep pockets. And why do they have deep pockets? Because they’ve saved money. And why did they save money? Because they were profitable and financially prudent…”
People are expensive
Of course one of the biggest costs for any business, and one of the hardest to stay on top, is staffing.
First, everyone always feels under-resourced, and your managers will always want just one more team member.
As the agency owner, you have to challenge that:
- Is there work people are doing that could be stopped?
- Is there anything that could be outsourced?
- What could we automate using new software and tools?
- Are there processes that could be streamlined?
- Do we have staff with skills we no longer need?
- Are team-members working as hard and efficiently as they can?
Those last two are especially tough because they’re about people.
Not only is it difficult to think about human beings as ‘resources’ but it’s also likely you’ll get pushback on almost anything you do to manage people’s time or measure their productivity.
Understandably, too. The creative industries rely on happy people with the headspace to do their best work, hence the old cliches about agencies with table football, beanbags and beer trolleys.
For all that, there are ways and means of tracking how creatives are using their time.
Tracking time in the creative sector
As with KPIs for creative businesses, the principle is that something is better than nothing – even if you have to resort to estimates and the rule of thumb.
As an accountant who started out working in large firms, I’m used to traditional timesheet techniques, reporting every six minutes on which client my time should be billed to.
That’s obviously not going to work for someone who’s trying to focus on a creative task, though. Instead, I’d suggest asking staff to report on what they’ve been doing with their time at the end of each day, or when they complete a particular task on the project plan.
It doesn’t have to be precise down the last minute, as long as it’s a sensible estimate you can work with.
It’s also a good idea to explain to them why you need this. It’s not just about making sure they’re busy – it’s to make sure you’re not doing more for a client than they’ve paid for and that your proposals are properly costed across the board.
In my experience, and from what I hear from agency owners, creative staff members have a tendency to underestimate how long a task will take, and also to under-report the time they’ve spent on jobs.
Unfortunately, that often translates into them working late nights and at weekends to catch up, masking when teams really are under-resourced and leading to burn out.
You can also make time tracking easier, and so more likely to stick as a habit, if you get the right software.
Project planning and team management applications, such as monday.com, have options for this built in and it’s worth trying a few to find one that works for your team and the work you do.
The best creative agencies have people dedicated to managing projects, freeing up time and creative headspace for the people who work the magic.
At the same time, strict project management principles can be challenging for creative people.
Again, from what I hear, they don’t always happen to feel suitably inspired on day three of the second sprint when the work is scheduled; and if they do it on day four of the third sprint, when an amazing idea pops into their head, it throws everything out of whack for a fortnight.
The fact is, though, deadlines are real, budgets are real and if your agency is going to be viable, sometimes creativity is going to have to come second to delivery.
I mentioned ‘sprints’ above. As you probably know, they’re part of the scrum model of the ‘agile’ approach to project management. It was designed for software development but works well for creative teams, too. It balances flexibility – a sprint might be two weeks long – with structure.
You need to find the right project management model for your agency, the right software and tools to administer it, and the right project managers to keep everyone in line.
In a funny way, all that structure, process and management can actually help creative people feel free to focus on what matters. As Phil Hansen says, “We need to first be limited in order to become limitless”.
Tactical use of freelancers
Finally, there’s a simple rule I think all agency owners should apply when it comes to deciding whether to increase the size of the team and their staffing bill: first, use freelancers and temps.
You’ll often hear people say things like, “But for what we’re paying her, we could have paid two month’s wages for a junior designer!”
But sometimes, all that’s needed is a bit of additional targeted resource to get a project over the line, not a permanent team member.
And remember, though skilled freelancers are expensive, so are permanent staff. People often forget to take into account the cost of recruitment agency fees, valuable management time spent sifting and interviewing and, of course, the long-term cost of pensions and staff benefits.
If you find your freelance or temp bill stays high for months on end, though, that might be the sign you need that your business is ready to grow.
We can make managing your staffing budget and payroll easy. Get in touch.