Agency staffing is stuck in the 20th century

Staffing PR agencies has long been a headache for management. People costs are the single highest overhead. It’s a constant challenge to ensure you have the right teams, with the right skills, at the right time.

Win or lose one client and you can easily find yourself with either too few or too many people. The former risks under-serving existing clients, the latter hits profitability. And both expose staff to burnout or redundancy – neither ingredients for an attractive workplace.

In the agencies I’ve worked in, celebrations on winning a new client were soon overtaken by cold reality. Accommodating the extra work, means reshuffling the client teams or hiring new talent fast. If you want to maximise profits, you operate with very little resourcing slack.

Management tries to predict requirements based on their new business pipeline. It’s clunky and imperfect. And like any attempt to predict the future, it’s devilishly difficult.

There’s always a lag between knowing you need the resource and actually having it in place. Ask anyone who’s ever tried hiring a good account manager. With a few exceptions, there’s been very little innovation in agency staffing.

Management consulting firms have the same problems as PR firms, albeit on a larger scale. The difference is that in other professional services sectors, this is a problem solved.

For example, EY set up GigNow to improve its client project resourcing in 2017. It already covers 42 countries and taps into what most talented people prize above reward: flexibility.

It also gives them the option to choose who they work with and what they do. EY claims its platform has improved client handling capability, the original aim.

The unexpected bonus is that it led to new opportunities that it couldn’t previously handle with a fixed staffing model. It’s a win:win situation for management and their consulting teams. Clients benefit too.

So why are PR agencies showing such a collective failure of imagination?

One reason might be that the people who run agencies tend to have learned on the job and risen up through the ranks. It’s still quite rare to meet an agency director who has worked in another sector. It would explain why good ideas from outside are neither understood nor tried.

In project management, it’s common to have a core team, supported by freelancers, interims and contractors. Each bring specific skills, experience and expertise. The size of this outside resource ebbs and flows, depending on project phase and intensity.

Organisations that operate like this have invested time to identify the right people to deploy flexibly. And they know how to keep them engaged, especially during periods when they’re not needed. This might include invitations to social gatherings or company events. Some even pay a modest retainer in return for them being on standby.

I believe some advertising agencies operate like this too. But I’m not aware of any PR agencies that do. Those that take a more progressive approach to staffing tend to have started that way from scratch – a ‘born flexible’ model. But they’re still uncommon.

The conditions are ripe for innovation. There are more freelance PR consultants than ever. Most of us are freelance by choice rather than necessity. Increasingly, people are waking up to the notion of non-traditional or Squiggly Careers.

There are, however, impending legal barriers that could limit agency staffing innovation. IR35 employment rules in the UK public sector will expand into the private sector and charities on 6 April 2021 (postponed from April 2020). You can read more about this and what it means in my recent PR Moment article.

Over in the US (the world’s largest market for PR services), in January the state of California introduced legislation known as AB5. Chip Griffin, a US-based advisor to SME PR agency leaders, believes this law could ‘crush the independent contractor model agencies can use’.  

“AB5 was designed to protect gig-economy workers at firms like Uber and Lyft. And although it currently applies in just one state, others are watching closely and may follow suit. It could be a big threat to the domestic freelance or independent contractor model,” he explains.

Chip adds that starting out with contractors still makes sense for US firms expanding into other markets though:

“Most developed countries, notably in Europe, have much tougher employment laws. Hiring employees carries too much administrative burden and down-sizing risk for many firms.”

Given these recent legal developments, how long it will take to make ‘ebb-and-flow’ resourcing commonplace in PR agencies is anyone’s guess. But I believe those that get there first will find they have a twin competitive advantage. They will be able to quickly configure bespoke project teams to meet clients’ exact needs. And run core agency operations at lower fixed costs.

This article was first published on the CIPR’s Influence magazine website

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