Marketing Procurement

What should brands do when the talent crisis impacts their agency’s performance?

Performance Reviews

“If a marketer senses that their agency partner is not properly resourced or experiencing high turnover, it is important to query the root causes of poor performance. This can be done through performance reviews conducted by an objective third-party.”

By Greg Paull, Principal & Co-founder, R3

It has been reported that the grab for talent has resulted in agencies being outbid by up to $50,000 for the right candidate and junior salaries increasing by as much as $20,000. When put in the context that an average mid-sized agency might employ 100 people, the cost becomes a concern for financial sustainability. In this situation, talent creates tension between investment and revenue. Clients are looking for a mix of agility and expertise, and agencies can’t win, do, or sustain the work without sufficient talent. 

There are more dimensions to the cost of the talent crisis than recruitment expenses and salaries. Though agencies are already on the defence, committing to hiring drives and employee benefits, the change to the overall talent marketplace has far-reaching effects, with the potential to impact scope of work, the quality of work being produced, and fundamental partnership issues like trust and internal knowledge.

Resignation Math

Following calculations by recruitment intelligence company Zippia, the average cost per hire in a non-executive role in the U.S. is $4,425 (median $1,633). For executives, it is $14,936 (median $5,000). It costs up to 40% of an employee’s base salary to hire a new employee with benefits, and it can take 36 to 42 days for roles to be filled. Once a person is hired, it takes an average of 12 weeks for that new hire to become fully productive. 

In addition, there are calculations to be made on indirect costs like litigatory exposure, intellectual property theft, morale, and relational equity. Positive teams are more resilient and effective in problem-solving and when faced with high-pressure deadlines. Team cohesion mitigates errors, blown budgets and timelines, three things that, in extreme cases, provide clients with a mandate to call an agency review.

Source: Microsoft ’The Work Trend Index’, 2021

Talent & Agency Models

Marketers will want to factor the grab for talent into their chosen agency models and operational strategies. If clients feel that the level of their agency talent has decreased or they are not getting the attention they require, discussions should be had with partners to review if it is a matter of talent resourcing, budgets, or poor management.

• Global Agency of Record: Brands working with a global Agency of Record should have transparency on agency turnover, hiring practices, and policies related to intellectual property, privacy, and security. Data and information are currency and understanding how they are shared and stored within a decentralized workforce is best practice.
• Regional Hubs: For brands that work with hub models, marketers need to secure account expertise in key offices. In addition, regional and local agencies must have sufficient senior leadership to oversee the work. Resignation rates are highest among mid-career employees, and an agency without a stable, committed mid-level bench puts the work at risk.
• Independent Agencies: Holding companies are in competition with independent agencies for talent because compensation is no longer the most important factor when it comes to job acceptance. The pandemic has changed attitudes towards corporate culture, with some people wanting to work for companies that are more aligned to personal values, and which offer better work-life balance, employee engagement and recognition, and community spirit. Marketers might find highly experienced, senior talent working in small boutique agencies, or running their own business.
• In-housing: The cost of talent also directly impacts the cost efficiency of in-housing. With recruitment, training and retention demanding more resources, the design and scope of in-house teams should be revisited. Agency rate cards should be re-evaluated against in-house operating costs, and depending on the scope and volume of work, in-house teams might need to restructure, adopt a more agile approach, or change the volume of work being outsourced to agency partners.

Diversifying the Talent Pool

Companies are looking beyond traditional pipelines to solve the talent crunch. Mergers and acquisitions are one way to fill the talent gap, particularly when it comes to digital and analytics capability. The cost of purchasing another company might be a big step, but for those looking to build new departments, acquisition can be a faster and more effective approach than building teams from scratch.

Employers are also more open to freelance arrangements and using specialist marketplaces to hire talent for specific projects. According to a study by GrowTal, 51% of marketing freelancers agree that finding new opportunities has been easy during the pandemic, compared to 37% overall.

All major holding companies have launched new programs for talent recruitment. To attract non-traditional candidates, online assessments, social media campaigns, e-learning and online training programs are being launched. To meet diversity quotas and attract new talent, WPP has invested in over 60 partnerships worldwide, partnering with schools, ethnic talent networks, and professional organizations.

In the UK, Dentsu has focused on people who have retired or left the advertising industry and are open to returning to work on their own terms. Leadership programs for college students, recent graduates, and non-degree holders who have voiced interest in joining marketing as a profession are also being rolled out. 

A Solution Based on Metrics

Some say that the employment situation is here to stay. The best way for marketers to respond is to first take a systematic approach uncovering what their own talent costs might be, analyze the risks and benefits within the current market context and discuss resourcing needs with agency partners. 

• What is the impact of staffing on key metrics? What are the needs of a marketer’s brand category and governance structure? Freelance and hybrid models are not beneficial for brands that work within tight deadlines or have drawn out stakeholder and creative review processes. Companies that don’t operate on clear scopes will experience inconsistent work and pressured deadlines. For internal marketing teams, will the talent crunch make in-house agencies more (or less) reliant on external partners? Are in-house teams adequately resourced to meet the challenges ahead?
  
  

Source: Microsoft ’The Work Trend Index’, 2021

• Where is the retention problem coming from? If a marketer senses that their agency partner is not properly resourced or experiencing high turnover, it is important to query the root causes of poor performance. This can be done through performance reviews conducted by an objective third-party. Are resignations related to work terms and people policies? Or are they related to the availability of talent within a geographic region? This information is vital to help marketers optimize their partnerships and increase their return on investment. Many marketers are also aware of the need for vendors to align with brand values and ESG (Environmental, Social and Governance) goals, and such analysis will uncover gaps that need to be addressed.