Fighting for talent – What’s the answer to the advertising industry’s recruitment issues?

It’s a truism that an agency is nothing more than its people. With few agencies actually owning any IP, their staff are the reason they win and retain clients, pick up awards and build a sustainable business.

However, this lifeblood of the agency is also its biggest threat.

Employee recruitment and retentionare estimated to cost the advertising and media industry a staggering £184m per year, according to the 2014 IPA Talent Adaptathon.

The advertising and media industry has of course always been incredibly competitive, as agencies bid for that rare genius creative director they dream of securing them the clients that’ll turn around their business, for example.

Agency heads have also for a long time now, had to face facts that the City would continue to cream off the best of the graduate talent.

However, the digital revolution has also introduced a new threat – the new giant technology brands, from Facebook to Google via Apple, offer the same promise of creativity but with salaries beyond the reach of most agencies. And the lure of changing the world!

“The people we’re fighting for talent aren’t the professionals anymore,” said Ben Bilboul, group chief executive of Karmarama in a recent feature by The Drum. “We’re competing against the techs, the start-ups, even their own start-ups – for those who aspire to be on the cover of Wired.”

So a perennial problem is only getting worse.

But let’s take a closer look at that £184m the IPA says is being splashed out on recruitment and retention, as such headline figures can often make it difficult to understand what it can mean for you.

In a company with 100 employees, an average staff turnover is 20 per cent, around 20 people a year moving on from your agency. Including both direct and indirect costs, we estimate it costs around £25,000 a year to recruit for each replacement. Landing the business with a £500,000 a year bill.

Once you look at the other end of the scale, companies with over 1000 employees with a 20 per cent staff turnover can face a replacement recruitment cost of up to £40,000 per employee. Resulting in a frankly terrifying £8m cost to the company.

This may strike you as unlikely. That’s probably due to the unrecognised and often forgotten indirect costs of recruitment. The most obvious are leaving costs, interviewing, recruitment agency fees, temporary cover, admin and training.

However, don’t forget the often significant costs of lost productivity, overworked remaining staff, loss of knowledge, strained client relationships, on top of the impact of an employee asset lost to a competitor.

Again, let’s look at this in more human terms. Losing just one account director could result quickly in the loss of crucially valuable clients. In smaller agencies, just one new employee can be a proportionally huge investment and risk, with the wrong choice having dire consequences.

So it’s clear we have a huge problem in this industry. The question is what are we going to do about it?

At the CAM Foundation, we want to understand the real issues facing the advertising and media agency industry around recruitment and retention, and identify the market needs of this in relation to people and skills.

Only then can we determine what we, with our parent the Chartered Institute of Marketing (CIM), can do to help.

We’ve launched a survey to dig a bit deeper into all these issues and we’d love your help. So please join in here and help us understand the real issues and challenges you and your business have with people, skills and recruitment.

We’ve had a mission to support the agency ecosystem since our formation in the 1970s and we need your help in our next step, so please get involved!

Alaina Roberts CAM portfolio manager, CIM

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