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Slashing training budgets costs more in the long run. Here’s how to argue for funding

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By Sam Bradley | Senior Reporter

January 31, 2024 | 8 min read

In search of lighter balance sheets, many agencies have cut learning and development budgets to the bone. As we find out, however, that’s a mistake that leads to higher staff churn.

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You can't see his screen, but let's assume he's doing his Google Analytics certificate / Unsplash

A recent survey of 100 marketers and agency leaders found that 49% complained of being unable to compete with deep-pocketed rival sectors in the hiring market. It also found that a large number refused to promote internally or invest in the training and development programs that might create an in-house pool of qualified candidates.

According to Major Players, the recruitment firm behind that survey, 24% of marketing organizations lack any kind of internal training scheme. 83%, meanwhile, aren’t focusing on fostering internal mobility. Early figures from the company’s annual census survey, which tracks employment attitudes and investment across the UK sector, suggest that the number of organizations with budgets allocated to diversity, equity and inclusion has also fallen, from 71% to around 50%.

It won’t come as news that ad agencies are being outgunned on salaries. But developing and training staff from within would mean agencies would find themselves in fewer shootouts to begin with.

“To be able to look at internal mobility, you need to be able to have a robust learning and development program within your organization, but what we’ve seen is that budgets have been slashed,” says Joanne Lucy, managing director of Major Players.

That kind of austerity haunts agencies further down the line. Searching for replacements takes time, recruitment agencies aren’t cheap and the cost of hiring the wrong person can be far higher than what a business might have spent on a training course.

“One of the biggest things candidates want is learning and development and if you want to keep somebody in your organization, training is a really a really good way of doing it,” says Lucy.

Inevitably, a lack of internal opportunities is pushing staff out of companies they might otherwise stick with. Major Players has seen a 33% rise in applications over the last 12 months, adds Lucy. “Talent is moving.”

Previously, agencies knew that staff would learn by osmosis, but remote working patterns have broken that system down. “There’s an austerity and a seriousness within the industry that permeates every single layer,” says Neverland managing director Josh Harris.

“When I was a grad, if I fucked up, my whole team was there in a minute in support. In the pandemic, all those young, enthusiastic people were treated quite roughly and many have just left the industry.”

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Formal training does cost cash and time to do properly and the benefits that a careful approach to staff development can bring aren’t obvious from looking at a balance sheet. Managers shouldn’t live in fear of their colleagues in the finance department, however.

Brad Simms, president and chief executive officer of Stagwell-owned agency Gale, says that investing in learning and development at his business was a simple argument to make.

“It’s easy calculus. If I can keep my turnover at 13%, as opposed to 27%, avoid the efficiency we lose when those folks leave, the quality of work, the mis-hires, the recruiting fees… I can make that argument in two seconds.”

Reducing staff churn, he argues, is a key responsibility for agency leaders – not only as a means of keeping outright hiring costs down, but as a means of maintaining the quality of service for clients.

With that in mind, Gale puts aside $1m a year for learning and development, with $300,000 of that allotted to external training. Dodging this kind of investment in an agency business, says Simms, is “completely insane.”

The agency employs eight dedicated careers coaches to cover its 750 staff and offers several courses developed in-house by senior agency talent for Gale.

“I was really fortunate to have unbelievable managers. It was luck, to be honest with you. But I have so much appreciation for the time they put in to grow my career, so I tried to return that.”

It has paid off. The agency’s staff turnover rate currently sits at 14%, says Simms, down from 25% a year ago.

To promote internal mobility and provide a transparent path for staff hoping to stay with the agency in the long term, Gale provides a ‘competency matrix’ covering its service areas, showing each job title on the ladder.

“You can look at what you need to do from a competency perspective to get promoted,” he adds. The agency says it promoted 130 staffers last year, approximately 17% of its workforce.

Lucy says that few agencies map out the skills of their talent in this way, though. Just 15% of the organizations surveyed said they used a skills-based framework to direct their hiring or promotion plans. The firm’s data suggests this approach can reduce the number of mis-hires, but it’s also important as agencies grapple with the impacts of AI upon the business.

“Because of AI, skills are going to be completely different within our industry,” she says. Training related to AI will likely become a priority among competing agencies in coming years; Publicis, for example, earmarked €50m ($54m) of investment for learning and development last week.

Gale has begun to incorporate AI-related skills into its training, with a dedicated course covering the area. As well as contributing to staff retention, Simms says it’s a way of distinguishing the agency’s client offer.

New starts that go through the agency’s in-house courses “are going to understand our language and see examples of how we view things,” he says. “It makes their onboarding and their integration so much better.”

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