The Industry School: The High Price of Cutting Costs on Resource Management
In the typical agency business model, billable services are optimised to maximise revenues, while the cost of non-billable roles are kept to a minimum.
So far so sensible, but what happens when you cut those costs too aggressively?
Resource management is not a billable role. No agency I’m aware of adds a fee to its invoices for making its projects run smoothly, ensuring the right people are involved at the right time and making the project profitable for the agency. It’s not the done thing and nor should it be.
But savvy agencies know that if they were to take the resource manager out of the equation, they’d lose a lot more than they’d save.
Some find out the hard way, either by making the role redundant or by giving the resource management remit to people in other, equally important roles, thus diluting their effectiveness across not one, but two vital disciplines.
Seeing resource management in purely cost terms is to miss the point and, more importantly, miss out on the contribution it can make to your bottom line. The cost of getting it wrong – or not doing it at all – is far higher than paying the going rate to do it, and do it well.
The danger is two-fold. Firstly, a resource management vacuum is an invitation for chaos to reign as the lack of coordination across the agency’s various functions puts a strain on individuals, departments and ultimately, project health and profitability. Secondly, without a firm commitment to resource management and a vision for its role in the agency, you could find yourself in an endless and highly expensive mishiring process involving freelancers, recruitment agencies and induction programmes.
Avoid the temptation to tack the role onto somebody else’s job description. Too often, I’ve witnessed what others have referred to as ‘horse trading’ where managers use the resource management remit simply to satisfy their immediate client and/or project-based needs. While understandable, this rarely serves the agency’s wider interests.
By contrast, an agency-wide view and commitment to best practice resource management can add up to 10 per cent – and often more – to your bottom line.
How? The answer to this question will vary from agency to agency, but here are three pretty much universal ways resource managers earn their keep across our sector.
They spot problems before they hurt the business
The resource manager’s wide overview covers finance, project health, account management, human resources and more. They’ll soon spot if a team is overservicing a client, needs more creative resource or if a retainer needs to be reviewed. In agencies that operate without a resource manager, issues like these are picked up so far down the line as to be fatal, either to a client relationship or the financial viability of a project.
They ensure the right people perform the right tasks
Because they work across the whole organisation and not just for one team or department, the resource manager knows the skills, experience and current workload of everyone at any given time. So, when a project needs a senior developer or a creative team to step in, the proactive resource manager has already prepared the groundwork. As well as making the project run efficiently, this also means:
They help your agency retain great people
Good people like to stay busy doing what they do best. And while achieving the project-based objective above, resource managers make this individual-based objective possible too. This is good for staff retention and helps to minimise avoidable recruitment costs enormously.
Make the resource manager a crucial role in your agency. Far from costing you money, it’ll make the core roles you bill for even more valuable.
Jo provides resource management consultancy which is so vital to successful business transformation. Jo is a resource management consultant at The Industry School, helping businesses enact change that brings immediate improvements in efficiency, enhances culture and delivers fast return on investment and runs The Industry School Resource Management workshops and clinics.
To learn more about how resource management could boost your agency’s profits, contact us at email@example.com
Jo Petroccia is resource management consultant at The Industry School
Genre: People , Strategy/Insight