Turnover Continues to Cost Ad Agencies

Posted by Mark Wisniewski, Account Executive, Oracle NetSuite

Employee turnover at ad agencies may be a fact of life, but it begs one question, why does it happen and what does it really mean?

While agency turnover will always exist, there are ways to curb it to strengthen employee engagement and the bottom line. Agencies themselves are often the cause of the turnover. A big new client can result in a hiring spree, or in turn, losing a big client can bring on restructuring.

Employee turnover at agencies is approximately 30 percent a year according to the ANA, with only the tourism industry being higher. Given that people are an agency’s most important and (expensive) asset, being able to prevent or delay an exit becomes extremely important. The first choice is obviously that the employee doesn’t leave to begin with and that the initial investment into training and development to make that employee productive, reaps rewards for years to come. However, employees are still going to leave and try to find greener pastures at the agency down the street. Just delaying a move can have a tremendous impact. By keeping an employee six months to a year longer means 6-12 months of productivity and one less employee to ramp, train and develop.

Turnover costs vary with each agency and position. According to the Society for Human Resource Management, replacement costs can reach as high as 50-60 percent of each employee’s annual salary, with total costs associated with turnover ranging from 90-200 percent of annual salary. Multiply that figure by the number of employees who leave within a year to determine your organization’s annual turnover costs. The figure can be quite shocking!

There are a number of ways agencies can retain their talent such as focusing on culture, quality hires and fostering creativity. Making work meaningful and investing in employee growth (an area often neglected in the fast-paced agency world) can all be big factors on whether someone stays or goes.

Finally, technology and giving someone the right tools to perform their work properly has never been more important. Millennials expect their corporate technology to be as seamless as the technology they use in their personal lives. For example, being able to easily log time and expenses, see their work calendar, collaborate with their peers, see the project burn rate or project profitability should all be easily accessible. Oh and by the way, they expect to be able to do all this simply and intuitively on a slick UI on their phone.

Luckily solutions like this exist, but agencies need to identify and invest in technology and other areas to help curtail and prevent employee turnover. All of which can have a profound impact on the employee, agency culture and oh yeah, the bottom line…

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