I got a call from a client who ran an agency that billed mostly fixed monthly fees.
Her management team meeting had just ended, and it was a disaster. Her team was adamant that they needed more people. Everyone was busy, working overtime, and getting burned out. Raises have been paltry, and their best people were threatening to leave.
At the same time, even though revenue is growing, margins are shrinking.
“What can I do?”
Diagnosing the root of the issue
Digging through the facts, it became clear that as the margins declined, she was hiring more and more junior team members. Those junior folks took more time, and more revisions, and more direction, from her already stressed Creative Director and Account Director.
Those stressed management team members got more and more accommodating to the clients; the more overwhelmed they got. They didn’t have time to evaluate where we were vs. budget, or research how many rounds of revisions they already got. It’s easier and faster just to agree!
Further, the busier everyone got, the laxer they got on their timesheets…
So we were way over-servicing these clients. Delivering, in some cases, twice the number of hours we budgeted.
With a growing business and shrinking margins, she needs to hire more senior people, people with a track record of success.
- On the creative side, people who could nail the brief in one take.
- On the account side, people who could push back and give strong counsel to the clients.
She needed more grownups.
Of course, this is terrifying! Her margins are shrinking and I want her to spend more?
Her pipeline is growing and strong, so I could show her that she could support the higher salaries if we could get the over-servicing under control. And if she didn’t, she was going broke anyway and might lose half her staff in the process!
Reluctantly, and with white knuckles all the way, she made the change and righted the ship.
Is there anywhere in your business where you’re scared to spend the money you need to get outstanding talent? How would having those more senior people change the dynamics between you and your clients? How would it impact your role?
Hit reply, I’d love to hear what you’re thinking. I read every email and reply to most!