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The Balancing Act

Here’s the conundrum many businesses are currently facing:

Wages across the board are experiencing quite a bit of inflation. Pay rises are being expected everywhere. While replacing members of staff generally costs a company 20% more than retaining previous staff.

For agencies, there’s a real need to balance these expectations, whilst still trying to manage cashflow and profit margins in the wake of the pandemic.

Employee expectations

The pandemic has amongst other things radically changed the employee view-point on employment and work life balance. It’s given them cause to re-evaluate what is important. Priorities have shifted and motivations evolved. 

More so than ever before, we are seeing an increase in staff expectations for professional development, career progression, flexible working and an increase in compensation. Whilst staff also want to belong to an organisation which aligns to their values and beliefs. And if this is not the case, they are willing to move.

Retaining top talent continues to be a priority for senior teams and executive committees across the board. This issue needs to be viewed not in isolation but in conjunction with managing a business and its other priorities, strategic objectives, and margins.

Making unplanned pay rises for instance, without consideration of wider context, could lead to financial implications impacting both your bottom line and your cashflow, and influencing your ability to recruit new staff at the right level. Here are some things to consider first:

  • Are you making an exception for one or two people? If news is shared, how could it affect the morale and culture of the agency? Will it set a precedence and possibly unrealistic expectations which the business cannot meet year on year?
  • Is the pay rise fair? And in line with the policies within the agency? If not, why not?
  • Can the business afford to lose the person and what might be the knock-on impact if they leave?
  • What are the business and client requirements, and the existing capabilities within the agency?
  • Is the employee someone who will grow with the agency? Are they instrumental for the longer-term strategy?

Not just a salary

Instead of only thinking about base salary increases, agencies should think about the compensation packages being offered as a whole. This is not just pertinent in retaining talent but also when recruiting too. There is a lot more which can be considered and included beyond financial incentivisation. The first step is to understand what the motivators and hygiene factors of your employees and the prospective candidates are? Ask yourself – why would someone want to work here?

 No matter the size of your business, you should be looking to create a great place to work.  

Holiday allowance

If the pandemic has taught us anything, it is that employee wellness and wellbeing is of utmost importance. Looking to update holiday allowance is an easy win. It signals to existing employees and prospective candidates that their wellbeing is important to you as an organisation. After all, you want to have well rested and recuperated employees so they can perform to the best of their ability. 

Offering competitive days might not be sufficient and agencies could consider offering more than the competition as well as days for birthdays, duvet days, mental health day etc. There is an upward trend in companies of having unlimited holiday policies. Before you dismiss this option out of hand on the belief it is going to cause utter chaos, consider what it signals to the types of employees you are hiring. Also remember line managers still need to approve holidays.

The implications for your business should however be carefully considered before introducing unlimited holiday (you could access the free DBA HR helpline to discuss this further, for instance). 

Training stipend

Look beyond basic on the job training. Structured training, which upskills your employees, benefits both the agency and individuals.

People are not just motivated by money – most are looking for professional development, and by: 

  • identifying and articulating training needs; 
  • proactively encouraging training programmes; and
  • considering budgets and time off allocated, 

You’ll demonstrate that you are building an agency for growth. 

“Top talent” often:

  •  seek professional development; 
  • want to upskill and/or reskill;
  • will look favourably towards organisations which are prioritising the same. It demonstrates to them that you as an organisation want to invest in them.

This is a great motivator for existing employees, but also prospective candidates.

Flexible working

Hybrid and/or working from home is fast becoming the norm in lots of agencies and flexible working requests can vary from employee to employee. This is very much the current trend and agencies need to be in a position to be able to respond and have solutions which work for both agency and employee.

You should have a clear process and policy in place to manage this in a fair way, whilst still allowing a flexible working pattern to happen.

A blanket policy or one size fits all, is not best suited to managing professional individuals who are seeking autonomy and trust. It is not appropriate to have a set number of days working from home and/or days in the office to simply be able to tick a box.

Look beyond ‘working from home’ to being able to ‘work from anywhere’. It is important to consider if your existing infrastructure allows for this flexibility.

More than the minimum

When you are offering a compensation package, look beyond the minimum legal requirement but within the constraints of what you can afford.

  • Pension – can you look to match employee contribution to a certain %?
  • Parental leave packages and policies to return to work for a parent – getting this right not only fosters loyalty but is a signal that an organisation values its employees’ wellbeing, both mental and physical. 
  • Sick policy – are you able to top up pay?
  • Annual leave

Other add ons to compensation packages include:

  •   Health schemes and death in service insurance
  •   Annual company trips
  •   Increase or bonus days off 
  •   Gym membership
  •   Discount programmes
  •   Community service leave 
  •   Food and beverage – on site food facilities

Performance related bonuses

The base salary at a minimum should be market rate but agencies can look to incentivise the team with bonuses which are related to KPIs and milestones. 

These should be a mixture of agency, team and individual performance. It should drive and exceed the desired organisational strategic goals. If employees are exceeding expectation and delivery, they should be remunerated accordingly. Having a bonus scheme allows agencies flexibility but also helps in managing cash flow, as bonuses could be paid out half yearly or yearly.

Having performance contracts with bonuses linked to KPIs allows agencies to align company values and goals to employees’ performance. 

Invest in your talent team and processes

Agencies need to make sure there are suitable policies, robust processes and the right people to manage talent.

The importance of this cannot be underestimated as this is fundamental to employee engagement, building company culture and recruiting and retaining top talent. Having experts who know how to manage high performing and high functioning teams will ensure the longevity and agility of your business.

Charge out rates and recovery rates

Generally, happy, engaged employees with sufficient work in the studio will have good utilisation and recovery rates. As part of the standard working practise, these KPIs should always be reviewed to identify inefficiencies and rectify any areas of the business where there are shortfalls. This needs to be an ongoing discipline built within your agency’s process. The DBA Annual Survey Report even describes this inefficiency as “working for free on a Friday”. Closing this gap will help increase your margins or at least maintain it if your cost bases are increasing.

If you are considering increasing your charge out rates as a result of increasing base costs, be aware that an increase in rates won’t necessarily translate to an increase in profits and healthy margins. You should also review your pricing strategies and positioning, alongside carrying out benchmarking exercises. By giving you an understanding of what competitor and industry leaders are doing, the DBA Annual Survey Report can help you benchmark the numbers within your agency, to improve your performance whilst balancing the needs of your business and your people.

The DBA Annual Survey Report is an invaluable members-only business tool which enables you to benchmark your financial performance with your peers. Released each October it covers fees, salaries, utilisation, income, recovery rates, benefits and trends within DBA member companies. Data is segmented by geography and size of agency to make comparisons more relevant.

About: Sim Thirunesan

Sim provides dynamic financial insight and strategic business management support to creative professionals, allowing them to focus on excelling at what they do best. By providing clear insight, she can help you make the best decisions for your business and enable you to plan effectively, freeing up your time to focus on unlocking your maximum potential and produce the best work for your clients.

Sim is an accredited DBA Expert. Find out more and contact her here.

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Image credits:

Laura Goodsell | Unsplash

Vicko Mozara | Unsplash

Dan Gold | Unsplash

Jeremy Thomas | Unsplash


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