I was asked yesterday for my views about over-servicing, an issue endemic in the PR industry and whether there are processes you can put in place to stop this happening. The discussion followed the PR Week article that appeared on Tuesday of this week, in which over-servicing – where agencies do more work than a client is paying for – was said to dilute the financial rewards of running an agency.
That’s kind of a no brainer – if you’re doing work for no money (or not being paid as much as you should), there is obviously something wrong and your profit margin is evidently not going to be as high as it might…
There are a couple of points that need to be made here. The first is that agency bosses who regularly throw in added time because they see this as adding value for a client are doing the industry a disservice. Doing extra work without payment is not a way of providing value for money – what it does is mismanage client expectation and stop agencies recovering the fees they are due. Effectively by doing this you are shooting us all in the foot in the long run. Let’s see this stamped right out and find other ways of adding value - they are out there.
Secondly there are agencies whose staff cover the burden of over-servicing and the only people negatively affected is the team. What do I mean by this? Well if staff stay late and work weekends to deliver the promised extra hours without being paid overtime or being given time off in lieu, it’s the agency (and of course the client) that benefits. Something else that most definitely has to stop, right here, right now.
Now I’ve got that off my chest, I believe there are ways to avoid the issues created by over-servicing without payment. I’ve collated a few of them here, many of them drawn from life in different agencies so therefore from direct experience.
Want to ensure you get paid what you’re due? Consultancies can start by:
- Only working with clients that value PR and understand how resource-intensive it is (or by educating those new to PR about this) - Managing expectations from the start and cutting the cloth to fit the budget rather than promising more than can be delivered to win the work - Ensuring all parties are clear on the agreed outputs and not just the expected outcomes of the project – this way you can negotiate should requirements change or increase - Ensuring employees understand what hours they have been allocated to work and use timesheets effectively so you can identify areas of wastage (this could be travel time; admin that the client wants done that could be passed back to increase efficiencies etc. Travel time is important – if you are travelling on client business and unavailable to others, the client should pay for that time). - Not passing higher level work down to a more junior member of staff (who may not be able to fulfil the brief and will probably take longer about it due to inexperience) just because their time is charged out a lower rate - Addressing how you as an agency rationalise activity; for example planned time to grow a client account is investment time and should be non-billable. Charging this to the client account could cause tensions and is arguably wrong, although it is something I have seen done a number of times - Being clear about how much time, if any, you are prepared to write off to keep an account (again I see this as investment time rather than over-servicing) - Never discounting your rate and finding other ways to add value (and regularly reminding clients about any extra activities carried out so they are aware of the extra efforts being made) - Being proactive with ideas and starting discussions on next year’s budget early to ensure the right level of fees is allocated - Increasing hourly rates annually with appropriate justification so clients continue to value the service offered - Stopping work whenever payment is late - NEVER offering payment by results.
I’d be interested to know your thoughts and what works for you. What more as an industry should we be doing? There has got to be plenty.