The truth about headcount

In its second year of trading, Rise at Seven onboarded a new employee every single week for a full 12 months. We publicised this relentlessly, so no hard feelings if you think we celebrated this as an achievement. But headcount is not a goal in itself; it's a means to an end.

The number of full time employees (FTEs) an agency has can be a competitive advantage in only three circumstances:

1. If it's very small
2. If it's very large
3. If it's a specialist.

Size is relative. An agency staffed by a hundred specialists (like Rise at Seven was in its second year) is, in most specialisms, massive (although it's usually too small to thrive as a full service shop).

Rise at Seven grew fastest during/because of/by fuelling the Digital PR boom. At a time when big brands were investing in Digital PR for the first time, Rise at Seven had a team of more than 50 Digital PR specialists: possibly twice as many as anyone else, which made it more capable of servicing the biggest spenders in Digital PR than any global network could be.

A full service agency with 100 employees won't have half its staff working in the same field; it might have 2 or 3 in any given specialism, meaning that it's not as capable of servicing a large account as a network might be. A fact that's not lost on most large brands.

Small enough to have no impact, big enough to not care

Agencies (and especially full service agencies) with between 50 and 250 employees are often fond of the idea that they’re “big enough to make a difference, small enough to care”. They try to sell clients on the idea that the size they are has value to them, but no client has ever said “we need an average sized agency” (although even a large brand might say they need a small and nimble one).

In reality, an agency with 100 staff is likely to have as many people problems as much larger businesses, only without the resources to be able to solve them.

The agency will be at its most agile when it has fewer than roughly 50 people: the difference in nimbleness between a 100 person business and a 1,000 person business is negligible in comparison to the difference between, say, 25 and 100, because both 100 and 1,000-person agencies need to be managed through process and professional managers, whereas the leader of a 25 person firm can sit every member of staff in a room and talk to them.

When a member of the team leaves a 1,000 strong firm, there's likely to be a deep enough bench to cover that person’s accounts by the end of the day. That’s just not true in a 100 person firm.

This is even more problematic for a hybrid or office-based agency with 50-250 employees distributed across multiple offices. For example, when someone leaves a Manchester-based team (maybe servicing a Manchester-based client), the agency has to find a replacement from its workforce in Manchester or it loses most of the advantages it had by being an "in person" business; adding a team member from the London office is going to cause friction for both the agency and the client.

A 1,000 person business will have teams of people dedicated to hiring staff; onboarding them; looking after them; and developing them. A 100-strong agency will still need to make this part of the jobs of its busiest people, which results in unintentional but systemic neglect of talent.

An agency with fewer than 250 employees is small enough for its Senior Team to have an impact on each employee’s workload, whereas larger agencies must rely on systems and processes to make change. This means that systems and processes get thought about more professionally in larger agencies out of necessity (and if it's not absolutely necessary, most agencies won’t do it); whereas the owner of a 100-person firm can easily ignore all the processes and influence the workloads of every person they employ on any given day.

How big do you want your agency to be?

The agency owner must determine the agency’s desired headcount early on. “A handful” or “thousands” would be decision enough, but this decision has enormous strategic implications because a 24-person specialist should look absolutely nothing like a large network. For example:

• An agency that needs to find a thousand people is likely to need to recruit entry level staff and be willing to train them; an agency of 10 people will not have to if it doesn’t want to
• An agency that needs to find a thousand people is likely to be remote-first because it won’t find a thousand great people within commuting distance of a single building; an agency of 10 people can be office-based, if it wants to, even if it’s in a relatively small town
• The owner of a 10 person agency can have a personal relationship with every client; the owner of a 1,000 person firm cannot
• The scale of work required to consistently feed a thousand hungry mouths requires a professional sales team; a 10 strong agency can be sustained by the owner’s network
• An agency that wants to be "full service" must choose to be small, with FTEs comprised of account managers, project managers and strategists; or to be absolutely f*cking massive. The space in between means choosing to struggle.

An agency with a compelling proposition and an intentionally small headcount can pick and choose its clients. It might well be one in, one out. Use this as a helpful constraint. Many great small agencies have accidentally become average mid-sized agencies through taking on a few clients they should have turned down.

An agency with designs on employing thousands will need to be prepared to compromise on the briefs it takes on. It’ll probably need to compromise on staff too. That doesn’t mean that any agency of any size should be taking on people who don’t have the talent and attitude to do the job, but some larger agencies still only hire people the owner would want to have a pint with on a Friday afternoon…by the time you’ve hired 50 people, that ship has sailed, sadly, unless you want to be accused of playing favourites in Glassdoor reviews.

An agency that has 100 employees, but doesn’t want to grow further, can make substantial improvements to the lives of its staff by “right sizing”: losing some of the things, perks and processes it has because the thousand person agencies have them (or, more usually, because Netflix and other Silicon Valley companies have them); balancing its staff and admin costs; and getting leadership teams and rhythms in place that work for the size it’s at. It needs to stop pretending its size is a competitive advantage and start actually making the most of it.

If you want to know what the "right size" of your various teams and overheads should be for your current headcount, let's talk.