The Overtime Industry

overtime industry

35% of creatives work 200 hours or more per month, that is, 1 additional week per month in overtime, taking 160 hours per month as a regular work schedule.

The result comes from the registration of tracked hours in a sample of more than 1000 users of “COR“, an online solution for creative agencies that has timesheets and project management.

While the number may be surprising, in general terms, work overload is known and accepted in the environment, and the latter is a bigger problem than the former. 

Work overload is not normal, it is a problem.

What is the cause?

Most creatives when asked about this argue that the cause of the problem is a mixture of lack of visibility and organization, added to the stereotype of the disoriented client in terms of creative and advertising processes.

Something that the company responsible for this study also recognizes as a cause (in part), since COR proposes that there is a factor beyond the lack of organization or process problems that, although it acts in conjunction with the second, is the main factor and catalyst.

Before revealing it, let’s answer why the lack of processes is NOT the first trigger.

Lack of process is not the first trigger

During the last 20 years, the market has given rise to a large number of project management tools that can be executed offline, on a LAN or online.

Most of them focus on offering different types of help to order processes, manage projects and bring visibility.

Considering that a handful of them do their job successfully, how do you explain that after 2 decades of offering such service the advertising industry has not only not solved its problems but has made them worse?

The problem, of course, cannot be the processes alone.

Profitability (or the difficulty of measuring it) 

COR raises the issue of profitability (or the difficulty of calculating it in the creative industry) as a trigger for the problem of work overload.

How is this? Let’s start by explaining how profitability is calculated in the most basic way in any industry:

porfits calculation

That formula has been known since the time of man. The problem arises when agencies are asked if they know the profitability per client, and even worse, per project.

To calculate profitability per project in the service or intangible industry, the necessary formula is as follows: 

profitability

So, what’s the problem?

That most of the creative industry does not compute its hours or it is struggling to do so.

How is the poor measurement of profitability per project related to work overload and, subsequently, the ordering of processes?

To answer this question, we will take the factor “price” as (relatively) stable within the formula of profitability by projects (since in a competitive market it is fixed by the client) and as the main variable the amount of hours.

Both what the client agrees to pay, and the additional costs, are factors known by the agency in advance, which implies that in the case of not being profitable, the only factor to blame is the number of hours estimated vs. actually executed:

profitability per project

The CEO of an agency does not work to be at a loss, therefore if a project is not profitable, it is because there is a problem with the estimation of the amount of hours it requires.

Processes

As we saw before, that a client/project is not profitable, implies the bad estimation of the hourly cost understanding by “Hourly cost” the sum of the hours and the cost (salary/amount of hours) of the totality of employees that participated in it.

profitable projectsGreat, once we know the number of hours required to work profitably, now what?

Tools like COR take those estimated hours and distribute them efficiently using features like GANTTs:

gantt chart

 In this way, an agency could distribute the tasks having visibility of the assigned tasks, and better yet, of the available idle capacity of the members of a given team that also participates in other projects:

 In turn, COR uses project templates, which have the amount of tasks/hours required to carry out the entire project, executable in one click. In such a way that visibility is accompanied by speed and operational relief for its executors:

management software

Knowing the number of tasks and estimated necessary hours required to carry out our projects in a profitable way means that we could avoid participating in presentation efforts or pitching projects with a budget that is not beneficial to the agency.

How? Using the project templates, COR’s AI and Machine Learning projects how profitable a project will be upon completion:

project templates

Profitability and processes are the tip of the iceberg

Usually, when we discover that we are offering unprofitable projects, we realize that the client who owns those projects is completely unprofitable.

What could be worse? That there is a list of unprofitable clients to whom we are supplying, which in turn, belong to a vertical of the various services I offer as an agency.

IT’S NOT JUST PROFITABILITY

Let’s take a 30 employee agency that offers the following services as an example: 

 

ad agencies services

If all the clients we serve from the vertical “strategy” are not profitable we have 2 options:

1) Optimize it to be profitable (difficult if all of them are not).

2) Stop offering it and migrate our operations to the verticals that are.

The problem is that we have already hired 30% of our staff around a service that does not suit us. The lack of profitability measurement per project affects profitability, workload and even the HR process.

Profitability, Processes and Organization: Avoidable chain failure

creative agencies services

While eliminating an entire vertical of services is extreme, we could cite an example where unprofitable service delivery affects the entire organizational process.

In a small to medium sized agency that does work of these characteristics and discovers that animation and rendering are not profitable, the change will be substantial as well.

Human Resources will stop hiring generalist audiovisual creatives who have multidisciplinary experiences (Filming – Editing – Animation and Rendering) to hire specialists in filming and editing.

This change makes the search more specific with probably better qualified candidates.

In turn, that specialized candidate will receive jobs led by account executives exposed to more specific clients, thus being able to understand them better.

In addition to this, the team members will achieve efficiency growth through specialization, both artistically and in terms of additional costs/suppliers/costs per quantity, thus achieving a virtuous circle where profitability, human resources, efficiency in capacity and costs are mutually nourished around the quality or output generated.

Overwork is the result of a chain of interlinked factors. It is not normal, it is a problem and COR specializes in solving it.

cor projectcor.com

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