Several questions have been bothering me for quite a while now. And it’s not the ongoing saga of measurement for once. No, the questions I’m grappling with are why does the PR industry have such an aversion to tracking time and why do our pricing strategies fall short?
I don’t think it’s too broad a generalisation to say that precious few firms observe a strict time recording protocol. True, I’m basing this on a small sample but the consensus among those I’ve spoken to is that timesheets restrict creativity and/or represent an intrusion.
My role as a growth advisor is to help a select portfolio of agency clients grow not just the top line but the bottom line. And a key part of this is taking them through a methodical process of reviewing pricing strategies and time/capacity planning – in some cases from introducing timesheets for the first time through to building budgeting models.
The shared belief is that to maximise profit, every agency should pay close attention to what it sells and how much it sells its services for. And the unit it sells, quite simply, is time.
It has long surprised me that even as our industry has evolved, our approach to pricing and time management has not developed further. There’s always been price pressure on our services and the ambiguity around impact has not helped the situation. But as measurement and evaluation has advanced and as communications has become more and more integrated, so the value of our advice has increased.
Setting the right hourly or daily rates for consultants is something that every agency must pay close attention to. The opportunity, some might say necessity, is to price for value and for experience. Too often rates are calculated based on salary which, while an important component, is not the only criteria to bake into pricing strategies. Value based priced versus hourly rate pricing is a huge debate and one that deserves close attention when reviewing the rate card. Add into this the potential to price by product and you can see why the topic of pricing is complex.
Once done and having developed a competitive rate card, the imperative must be to ensure the agency works for the hours it sells. I’m a disciple of Neil Backwith, an industry legend who literally wrote the book on agency management based on his experience of taking Countrywide into Porter Novelli and leading that firm in EMEA for several years. Neil uses the term ‘wastage’ when describing the scourge of our industry which is over-servicing. Too many agencies seem to accept that clients receive more than they are paying for. It’s called ‘client service’.
I challenge this. For me, the habit of saying yes and of accepting scope creep as a part of what we do needs to change. We need to charge for the hours the client has bought, and we need to educate clients that what they have bought is advice based on a unit of time – i.e., hours – and that as an agency, we have priced those hours based on value, experience, and impact.
It’s in everyone’s interest to pay closer attention to the time we have sold and the time we are spending with a client. The PRCA 2021 census highlighted the stark fact that 34% of the industry had suffered from or been diagnosed with mental ill health. Time pressure is surely a major contributor to this so why would any agency not closely monitor where its people are spending their hours?
Timesheets are not an inhibitor to creativity. Nor are they an attempt by management to look at performance. Implemented properly, they are window into the business which first and foremost supports time planning, and which in turn helps individuals and teams effectively manage workload. At a business level, the data is invaluable in assessing profitability of teams, projects, and individual clients. Matched with the correct deployment of resources and the right hourly rates, they are an essential tool in the agency management arsenal.
I accept that introducing time sheets and reviewing hourly rates is no small undertaking. But today’s SaaS timesheet platforms has made the process straightforward to set up. Taking an established business on the journey of time management does take time to build the right behaviours and compliance, but I argue it’s a journey every agency should be prepared to go on. Put it this way – if it means you have a happy team; that’s not over-worked; and which can still deliver outstanding work while being paid a premium rate – why would you not take the plunge? After all, it might add several percentage points to your bottom line.
Article written by Andy West
If you enjoyed this article, you can subscribe for free to our twice weekly event and subscriber alerts.
Currently, every new subscriber will receive three of our favourite reports about the public relations sector.