In this discourse, to be “inefficient” does not mean one is being ineffective with time, or wasting time. Rather, it means allocating time away from activities that would contribute to your agency utilization rate towards activities support a larger outcome of curiosity, ownership, impact, and camaraderie of your team and subsequently reduce the likelihood of having disengaged employees and a toxic company culture.
I talk a lot about achieving retainer alignment and operational efficiency, and I fully stand behind striving towards effectiveness in both of those arenas. However, there is something valuable lost when you expect your agency members to be 100% efficient, 100% of the time. It can lead to a loss of at least these things:
Before I dive more fully into these, allow me to define a few other terms and ideal agency metrics and how they impact the notion of efficiency at your agency.
Agency Utilization Rate
An agency’s utilization rate is the percentage of employee time spent on billable activities. Because most agencies bill based on a form of cost based pricing, a good utilization rate often must be between 85-90%.
This means that of a 40 hour work week 36 hours are directly billable to client work. Since most contracts are not 100% aligned, the average working week for agency employees is 50-60 hours. When you only achieve profitability from an 85-90% utilization rate, something is broken, but that’s a discussion for another day.
Disinterested and Disengaged Employees
To be a disinterested or disengaged employee means that going to work is an emotional battle for the employee. Then, performing work duties is another emotional battle, one after the other, until the end of the day when they are reasonably allowed to “clock out”. While “clocked in” the goal is to get it over with, not necessarily deliver the highest value or strive for results and impact and they may take longer than expected to deliver a project or not long enough because the quality suffers. Disinterested and disengaged employees rarely bring ideas to the table and are less likely to attend optional meetings and team activities. When employees become disengaged, the efficiency they provide towards client success and agency development decreased.
I’m not a fan of modern emphasis on company culture and employees being the right “culture fit”, but it’s so prevalent that I can’t not talk about it and do this article justice. So, what does company culture have to do with efficiency and humanity.
Picture two skyscrapers with a tightrope stretched between the two. One skyscraper represents agency utilization rate, or revenues based efficiency. The other skyscraper represents the humanity of your employees. Agency leaders must keep their balance between both, and understand the forces acting on each to successfully ensure agency utilization rates remain profitable without sacrificing the humanity of their employees. Likewise, sometimes the humanity of the agency must be tested and refined, grown and molded, shaped and reshaped in order to achieve a healthy mix of quantitative revenue generating efforts and qualitative agency cohesion and curiosity.
The Fruits of “Inefficiency”
The mix of employee utilization rate, employee engagement levels, and company culture can yield either a really great agency outcome or a very poor one.
When agency utilization rate is high enough to keep employees productive on revenue generating activities as well as engaged with the company purpose, and when retainer alignment is in check such that regular 50 and 60 hour work weeks are merely historical recollections and you’re able to pay your employees top dollar, your agency can produce high yield fruits that will make your team, your value proposition, and your bottom line much sturdier for the long haul.
So, what value comes from accommodating some inefficiencies at your agency? I see four primary fruits of “inefficiency”, those being
1. “Inefficiency” Produces Curiosity
Curiosity gets a bad rap for killing the cat, but its actually a good thing for your employees to be curious because this interest in discovery is what will leave new stones upturned for your clients and your agency offerings. Our field is one that requires employing lifelong learners because of the pace at which tools, strategies, and value-add results changes.
I asked several agency employees what they would do if they had time to spare each week; the resounding answer of the top employees was that they would spend more time learning, researching, and discovering better ways to do things. Think of how much Google spearheaded from 2004 to 2013 simply by encouraging all of their employees “to spend 20 percent of their time working on what they think will most benefit Google” during those 9 years. Most of their cornerstone products were ideated and developed during that timeframe.
Imagine, what would your agency be able to achieve for clients if your delivery team was able to spend just 10% of their time each week learning how to deliver better results to clients? Or brainstorming solutions to agency challenges to present to leadership? Or increasing their knowledge level of your niche industry’s specific vantage point to better understand prospects and clients true challenges and needs?
With this in mind, consider ways your agency can re-allocate weekly time spent from busy work or non-value-add client activities and begin to reset agency and client expectations accordingly.
2. “Inefficiency” Produces Ownership
Agencies across the globe struggle to position themselves as the conversation drivers with clients and often devolve into passive doers instead of active thinkers. It’s certainly easier to live by a to-do list from clients and claim that you have to do it because otherwise the client won’t be happy. In my opinion, that’s usually merely an excuse to not think critically on behalf of the client and be confident enough to present your recommendations to the client for fear of what they may say.
Calculate how much of your account managers’ time is spent emailing with clients about items that are outside of the scope of work AND would not deliver additional value or results to their core objective. Then calculate what percentage of the client activities is directly related to the client’s directives versus your team’s expert recommendations. If the results are surprising to you, you may not have a team culture of ownership over client’s success. As a result, your team has likely become order takers rather than expert advisors, which makes you easier to replace if the client relationship ever hits a rough patch.
Now consider ways to redirect your account managers’ focus from hovering in their email and Slack inboxes and instead to invest that energy towards uncovering beneficial strategies and opportunities to present to the client on the next meeting with them. Likewise, your delivery team’s focus can be diverted from urgent last minute client requests towards important results generating activities for clients.
Does your team express ownership of client results? In other words, is there a feeling of skin in the game for the client? If not, the objectives for your client-agency relationship may need clarified into results driven terms.
3. “Inefficiency” Produces Impact
When you’re spending all of your time doing, you have little to no time left for reflecting.
How often does your team re-evaluate the activities and scope of work for clients based on the results they are currently getting (or not getting)? Keep in mind, this is different than preparing a monthly report of KPIs. Rather, this is time spent strategically evaluating if the activities in their scope of work are achieving the client’s goals. The frequency with which this is necessary depends on the kind of agency services being delivered and the kinds of client objectives being supported, but a good benchmark for most client service relationships is to re-evaluate the agency’s impact every 3-6 months.
If your team has devolved into a frenzy of order taking, it will be hard for your account managers to take a wholistic look at which activities are and aren’t working well for the client and what could be changed about the scope of work to drive higher impact. Further, without a sense of ownership of the client’s success, the path of least resistance and the activities that are easier to deliver are likely to be favored. But, with a healthy sense of skin in the game and time to expand their knowledge, your team could instead suggest and implement higher value driving activities, even if they were not originally services offered by your agency. And when you are expanding the value-add to the client, you are simultaneously expanding your client revenues.
Once your team embraces a healthy level of ownership (but not obsessiveness) over client results, they can refocus their energy on activities that will drive the most impact, but in order to achieve this, they need time to reflect on what’s going well and what’s not going well on behalf of the client.
4. “Inefficiency” Produces Camaraderie
The workforce is not all robots yet, and that means you employ humans and all the greatness and frustrations that comes with that reality. You have the power to improve the agency culture and working atmosphere of your virtual or physical offices by encouraging activities that produce camaraderie. If you’re afraid you’d need to turn your agency into a hip place with beer taps on the abstract mural adorned wall to accommodate this, don’t worry, that’s not a pre-requisite. How you implement this camaraderie culture can be directly tied to producing higher levels of curiosity and ownership in your team as well. Plus, camaraderie does not mean everyone at the agency is everyone else’s bestie. It merely means everyone is cohesively striving towards the same goal, in unity and with purpose.
Here are some camaraderie building ideas that I personally find value in from agencies I’ve been a part of:
- Beer O’Clock: Pick a day and cut the work day one hour short, leaving one hour of paid time for the team to gather and interact as humans to share about their other passions, life stories, and current personal events as desired. If you don’t like beer, substitute with your beverage or snack of choice.
- Lunch & Learns: Assign 2-3 of your employees to find an interesting article about changes in the industry or tips that the team could benefit from. Then, pick a day to gather for lunch and discuss the major article takeaways and how to apply them to your client base and service offerings. Get the ideas flowing alongside a hearty business sponsored lunch or a BYO meal.
- Book Discussions: Let the team suggest titles and then vote on a book to read and discuss together. Order physical or electronic copies of the book and determine how to section out the content and how frequently to discuss the material. These books can be business related, personal development related, industry niche related, or on any topic your team finds valuable to improving their work and the agency.
- Create Idea Spaces: Having whiteboards on the wall and communal idea spaces is a surefire way to encourage collaboration, camaraderie, and curiosity.
- Create relevant, non-client specific, slack channels: Different agencies are made up of different people, some who like to share more than others, so you can facilitate as much or as little sharing between team mates as desired by creating channels relevant to your employees and company culture. Some ideas include a gratitude sharing channel, a pets and babies photos sharing channel, a personal goal tracking & accountability channel, a music and/or podcast sharing channel, an insights and educational content sharing channel, and on and on….whatever fits your team’s fancy!
Improving a sense of camaraderie in your agency can increase the level of trust your team has for each other, lengthen average employee tenure, and improve a sense of work-life balance.
Strong agencies are built over time, not overnight. Take the top one or two insights that stood out to you most and make a plan to foster positive change. Outline what barriers to achieving your desired outcome exist and define daily, weekly, and/or monthly activities required to pave the path. After that initiative is smoothly rolling and adopted by the team, consider the next one or two actions to take and continue the iterations from there.
Building a successful marketing agency takes grit, a focus on your value, and sometimes a *loving* kick in the pants.
Needing an ally as you achieve your long-term goals?
I’d be happy to help.