7 Signs You’re Ready to Hire New Employees to Support Your PR Business
Over the last two years, millions of American workers have voluntarily left their jobs in an ongoing economic trend coined the Great Resignation. Spurred by the vast disruption caused by the pandemic, today, more than 11 million American jobs remain open, and job seekers are taking advantage. You might say the grass has never been greener as employees continue to hand in their notices for more lucrative opportunities that embrace flexible work cultures.
Table of Contents1. When the Industry is Ripe with Opportunities 2. When Employees Are Over Their Capacity Limits 3. When Your 10:2:1 Ratio is Off 4. When Utilization Rates Trigger Staffing Alerts 5. When Higher Paid Employees Are Doing Low-Value Work 6. When Client Dissatisfaction is Linked to Staff Shortages 7. When PTO Causes Chaos
On the flip side, businesses everywhere are floundering to hire and retain qualified, impactful employees. The landscape is fueled by sky-high offers, preemptive raises, and massive signing and retention bonuses. In particular, it’s been especially difficult for the PR industry, known for its fast-paced, deadline-driven culture. Recruiters in the field claim that competition for top talent is at a level they haven’t seen since the dot-com boom of the mid-1990s.
But when it comes to staffing, many PR firms have historically existed in a state of flux, hiring based on intuition versus using hard metrics to project optimal headcount properly. Therefore, it’s no surprise that firms find themselves struggling to right-size their workforces in today’s era of uncertainty.
It’s a problem that will take judicious planning to solve. It becomes nearly impossible for firms to achieve their performance goals without proper resource planning. Add in an uncertain geopolitical landscape, skyrocketing inflation trends, and an unrelenting global pandemic, and you have the perfect storm of disruption.
So, which business metrics should you rely on to justify that it’s time to hire? Below are seven common signs that your firm may be ready to add headcount:
1 When the Industry is Ripe with Opportunities
In the PR space, a notable theme is emerging in 2022 - firms are turning down new client work at an unprecedented rate. There is simply too much opportunity with not enough talent to service it properly. And with so much work available, mid-sized agencies, in particular, find themselves inundated with prospects as opportunity cascades down from larger-sized firms turning away jobs.
It’s an opportunity that they should be prepared for. To ensure you’re adequately staffed to service more prestigious accounts, carefully take stock of your workforce and decide sooner rather than later if you need to add headcount.
Once those new client accounts have been greenlit, it'll be easier to deliver results if your new staff has already been onboarded and trained. But predicting upcoming project hours in an uncertain economy is easier said than done. It’s a delicate balance that requires strategic capacity planning.
2 When Employees Are Over Their Capacity Limits
Capacity planning is the process firms employ to determine how much work they can complete given their total number of employees and upcoming time constraints. More specifically, “capacity” is the maximum amount of work that can be completed in a given period.
For mid-sized firms who find themselves inheriting accounts that would typically go to more prestigious firms, it’s essential to prepare by having the right number of billable resources with the right availability. When that balance becomes upset, you’ll likely see a sharp productivity decline – signs to look for include missed deadlines, quality deterioration, and an unusually stressed team.
For example, if an account manager creates a blended team of four employees to service an account, but the forecasted project hours indicate five employees are actually needed, the firm not only risks underservicing the account, but also employee churn. To put it bluntly, it won’t take very long for burned-out employees to jump ship if their hours are not being properly allocated to match the project scope.
When demand consistently outpaces employee resources for two consecutive months or longer, it’s a good indication that it’s time to hire. The team may not need new full time employees (FTEs) if projects can be done by freelancers, consultants, or even a seasonal crew member. When you do decide to hire, you should first determine which skills are needed for the required role and whether that person should be an FTE.
3 When Your 10:2:1 Ratio is Off
Each employee who services a client will have a unique hourly rate in the PR space. For example, an account manager, executive, and coordinator may work together to service the same client, but each will charge differently for their time. Generally speaking, the higher the title, the lower the utilization rate.
That being said, there are always roles within the firm that aren’t billable at all, such as HR reps or administrative assistants. Of course, each role is vital in its own respect for business continuity, but it's essential to carefully balance your workforce with those who are billable versus those who are not.
Creating the right blend of highly billable, partially billable, and administrative staff can be tricky. Industry data suggest a typical PR firm has an average 10:2:1 ratio. That’s ten highly billable associate staff to every two partially billable senior managers to every one non-billable administrative staffer.
Of course, different firms may have different compositions, in which case adjust the triggers accordingly. But, in general, this ratio can be used as a solid reference point for future hiring plans.
The main point to remember is that your core staff should always be able to support the low watermark in terms of upcoming work. The low water mark, otherwise known as the ‘minimally profitable utilization rate’ is the level at which a firm can continue business operations even when there’s less-than-desirable profitability.
When that mark slightly scales, work can occasionally be filled by supplemental staff such as freelancers and consultants, but it’s important not to wait too long to hire more FTEs if this pattern continues. When hiring is not correctly planned, it can lead to ‘dangerous hiring’ where selectivity is sacrificed out of desperation.
4 When Utilization Rates Trigger Staffing Alerts
Generally, staffing trigger points are best measured through utilization rates, and it’s a good idea to set both ‘overwork’ and ‘deadweight’ triggers. For example, when utilization rates exceed 87% agency-wide for two months in a row, it could indicate the headcount is too low. At that point, add staff to lessen the billing burden on current employees. And after agency rates have been examined, take a look at individual teams. You should also perform this fine-tuning process at a team level.
In contrast, the “deadweight” trigger activates when utilization is less than 75% agency-wide for two months in a row. This decision could affect freelancers, consultants, or even FTEs when appropriate. At that point, consider reducing headcount.
Overwork and Deadweight Triggers for Agency-Wide Utilization Rates
The following table outlines each case:
|Net Utilization Rate||95%||15-30%||0-5%||75-85%|
|Overwork Trigger (high)||>98%||>50%||n/a||>87%|
|Deadweight Trigger (low)||<80%||<14%||n/a||<75%|
5 When Higher Paid Employees Are Doing Low-Value Work
When top talent spends time doing work that associates should complete, it’s a good indication that something is amiss. Because every salaried employee has their own variable cost rate, you’ll want to make sure higher paid individuals are spending work hours applying their proprietary skills as much as possible.
In other words, it behooves every PR firm to ensure those with higher-level job titles aren’t completing tasks that an associate could do. But the reality is anyone can fall into this trap. Delegating to the proper staffer can often feel like more work – ‘it’s just easier if I do it myself,’ especially if you know that your administrative assistant is already running behind.
To break this down, say a salaried financial manager makes $4,000 per pay period and works 80 hours during that time; the cost of her salaried hour would be $50. If her associate’s salaried hour is two-thirds of her own, say around $34 per hour, you need to ensure that higher-level ability is matched to more complex tasks.
If you discover that valuable skill sets aren't being properly utilized, it could be time to fill in those gaps with extra headcount at the appropriate level.
6 When Client Dissatisfaction is Linked to Staff Shortages
Providing world-class service is critical in growing and maintaining a firm’s reputation. Today, with competition at an all-time high, more and more clients are referring to their day-to-day experiences to differentiate between brands. Every encounter the client has with your team will be reflected in their rate of satisfaction. When your team performs solid, best-in-class service, those incoming referrals all lead to future opportunities.
The digital age enables a customer, on a whim, to walk away from a perceived negative interaction and leave a scathing review online. Your team must have the bandwidth to resolve client grievances swiftly and professionally. When not done promptly, it reflects poorly on the firm and may lead to costly client churn.
If you fear this is happening on your team, check for an uptick in negative reviews. If you find there is a pattern, it may be time to give the team a refresher regarding their servicing responsibilities. If it turns out your team is actually being stretched too thin to return those phone calls, the problem could be that you’re understaffed. When client satisfaction is left as a lower priority, it won’t be worth the price paid in the loss of repeat business.
7 When PTO Causes Chaos
For some firms, it’s impossible to maintain business as usual when their top performers are out of the office. Too many employee absences quickly lead to project delays. And while no manager ever wants to deny vacation requests, these absences may begin to threaten business continuity.
To mitigate this, some firms have become more selective around approving vacation time, but take caution if you’re considering this approach. Firms that ignore the time-off needs of their employees will likely find themselves struggling to operate as disgruntled employees take matters into their own hands by giving their two weeks.
Cabin fever continues to brew as workers have had to cancel vacation plans due to the pandemic, especially if they planned for international travel. That left many with more accrued vacation time that has been saved up. When you can clearly see that your staff’s unused PTO is climbing, it could be an opportune time to get ahead in your hiring.
Moreover, if it’s an extended absence such as family leave or long-term disability, it’s not realistic to ask those present to pull double duty to cover their colleague’s accounts. If possible, once you know an employee will be absent, allocate those PTO hours across the projects they work on. Doing so will provide transparency into which projects are affected and which skill sets the firm needs to hire for.
Hire with Confidence
Hiring additional staff is never an easy decision. Take time to consider carefully the workload coming in, the skills you have on your current team, and your overall business objectives. Adding headcount should bring direct value to your team that justifies the added cost. If your business is experiencing the signs above, it may just be time to start hiring.