Usually WHITEPAPER. Calling out the challenges and opportunities that agency principals face in managing talent and keeping their own ego in check.

Transcription

1 Smaller Is Usually 104 Better WHITEPAPER Calling out the challenges and opportunities that agency principals face in managing talent and keeping their own ego in check.

2 Size matters more than you think It used to be that bigger was better. That having lots of staff meant agency owners could provide lots of services. But times have changed. Oftentimes now, big equals bloated, and lots of staff means lots of challenges. Agency attrition rates are at all-time highs, while employee engagement across most industries particularly within creative service firms - is at all-time lows. Attracting and retaining talent is costing firms huge sums of money, and those costs results in increased fees and reduced agency profits. Perhaps we re not far from a time when being big is a big disadvantage, a sign of inefficiency and old school thinking. Those negative connotations don t attract the growing number of clients clamouring for nimbleness niche expertise, and competitive rates. Clients want solutions, and care little about how their agency provides them. Accenture s 2016 global study of human resource management best practices revealed one-third of all companies now embrace an outsourcing model to enhance or extend their workforce. The advantages include instant access to incremental bandwidth and complementary expertise. In order to compete in the future, organizations will need to push talent management beyond the confines of the enterprise wall to include the new extended workforce: a global network of outside contractors, strategic partners and nontraditional workers. By maximizing the potential of both an extended workforce and permanent employees, companies can gain critical advantages. ACCENTURE S 2016 GLOBAL STUDY OF HUMAN RESOURCES MANAGEMENT

3 Clients aren t fussed about who s on staff versus who s contracted. The only person who really cares is the agency owner. In our experience, too many agency owners inappropriately correlate size with success, and adhere to antiquated operating models that have become as inefficient as sending faxes instead of s. What matters most is profitability, and the ability to enjoy productive working relationships with clients and coworkers, and the personal satisfaction that comes from being paid handsomely to do the best work of your life. Chasing a vanity metric like headcount is ridiculous. By definition, vanity metrics are easily manipulated, and do not necessarily correlate things that really matter. Few things distract owners from properly positioning themselves and winning profitable and fulfilling work more than the false assumption that they need to have X number of full-time personnel in order to properly service clients. Are firms with 100 employees better at delivering excellence than firms with 75? Or, are agencies with 30 employees more capable of solving problems than a boutique shop with 16? The answer is no. Clients crave expertise, and firms are obligated to provide it. But expertise isn t correlated with quantity of staff, it s correlated with experience and access to specific competencies. Sometimes in-house experts are best, other times real-time access to niche experts is preferable. Vanity plays a detrimental role in today s cluttered landscape of over-staffed agencies, and so does naivety. It is naïve to assume top talent want to work for your company. It is naive to assume top talent to want to devote their whole selves to the clients and projects residing within your agency. And it s either naive, or arrogant, to assume your in-house team is equally qualified to solve any challenge, for any industry, within any geography. There is so much nuance to marketing today that claims of full service are unfounded and demonstrate a complete lack of respect for true craftsmanship that can only come from deep specialization.

4 Hiring decisions, talent management and retention challenges are exasperated amongst marketing services firms because the entire marketing industry is in a radical state of flux. Three trends catalyzing agency evolution: Many of the world s biggest advertisers have abandoned once-valued agency of record (AOR) relationships. Ad Age has dubbed the situation Madison Avenue Manslaughter because without AOR assurances, traditional ad agencies requiring sizeable recurring capital are being crushed under the weight of their overhead. The median tenure for a CMO has declined, reducing the ability to rely on trusted relationships to combat regular agency reviews, as well as a record year for mergers and acquisition has resulted in the elimination of duplicative agency partners. Agencies can no longer expect the quality of their work to secure their accounts. Agencies can no longer rely on multi-year retainers as that payment model, they are being replaced with project engagements. Clients enjoy shorter-term projects because they provide better line of sight to agency activity and personnel, along with heightened accountability. These trends are troublesome to old school agency principals because they demand running leaner teams in order to mitigate risk. Highly volatile industries demand highly variable labor models.

5 CEOs and other leaders frequently cite their inability to hire the best people, time to fill roles taking longer than ever before, and difficulty identifying and optimizing the skills of their own workforce as critical short-term obstacles to their growth. Each of these challenges can be tackled differently with a move towards a more agile workforce. The whole marketing industry is ripe for a fundamental transformation that adds capabilities and influence while at the same accommodating increased conservatism regarding cost investments. Marketing services firms need a new operating model that nimbly adjusts to unexpected gains or losses in income. Agency owners must convert fixed expenses to variable expenses in order to thrive. That s why we built Communo. Communo is a human resource platform powered by a business development engine. It was designed by marketing professionals, exclusively for the marketing services industry. It trumps other 3rd party contingent worker sites because it combines access to experts with a mutually beneficial revenue generation model designed to both give, and get, work. Communo is an extended workforce solution that replaces the need to add expensive in-house talent in hopes of differentiating your business or making you more attractive to hire. Many of the most popular just-in-time workers, such as designers, copywriters, web developers, researchers, analysts, videographers, photographers add unnecessary overhead to a services firm already being critiqued by frugale procurement officers who are clueless on how to properly value a marketing vendor relationship. In addition, top talent is increasingly opting for more appealing contractor engagements that offer greater flexibility, diversity, and compensation. As such, fewer and fewer are willing to accept traditional agency jobs.

6 Here is the cold hard truth. The key to agency success is quickly growing or shrinking operations as the work demands. If a firm is too small, it will miss out on meaningful engagements because it fails to create confidence around its ability to deliver on client needs. If a firm is too big it must increase rates to maintain margins, or increase margins cover the overhead. Six considerations to help you find balance: Don t outsource responsibility for maintaining client relationships. Your ability to properly service accounts, and to become your client s trusted advisor, is foundational to your firm s success. Be slow to outsource anything directly tied to your firm s core competency. Only do so in times of peak demand, and only then as a compliment to your in-house team, never to run a stand-alone project. You will land new clients because of the expert you are. You will retain new clients because of the additional experts you know. Bring in support for fringe activities and bolster your client relationship as an indispensable partner Take full advantage of online talent management tools and platforms, to make it easier to procure vetted marketing service professionals but be careful. Avoid generic platforms that charge hefty commissions on the work they facilitate. Select small agencies over freelancers. Agencies often have more sophisticated views of business, more realistic expectations, tighter deliverables, and are more likely to reciprocate opportunities back to you. Always protect your intellectual property by signing non-disclosure, non-compete and non-solicitation agreements to ensure your most valuable assets, your clients, your staff and your intellectual property is safe.

7 Communo Can Help Lower staffing overhead Access Solopreneurs and Boutique Agencies, fast Build a roster of talent to support your growth Three reasons Agencies choose Communo: No Commissions No Transaction Fees Recruiting Power Communo members enjoy unlimited access to staffing with without margin eroding commissions that staffing agencies and marketplaces have in place. When Communo members hire each other, they don t pay any hidden platform fees associated with transactions. All work is scoped and payed offline. Communo members already share thousands of staff, but when talent is not available in our Community, we will acquire the talent needed to get the job done. Many agencies owners try to appear more successful and more satisfied, than they actually are. Communo helps people enlarge their businesses, increase their profitability, and improve their quality of life. Take our self-assessment to measure how you are tracking to your own definition of success. Learn if Communo can help expedite growth. TAKE THE SELF ASSESSMENT

8 In the not-to-distant future, many advertising, creative and marketing services firms will be deselected because they are too big. Clients will stop paying inflated hourly rates resulting from staff overhead and will refuse to fund resources not directly engaged on their business. Marketing firms must get smaller, but still retain the ability to scale with speed in order to accommodate dynamic client demands. The Communo model provides the ideal solution for both client and agency owner.