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Switching PR Firms: The High Cost of a Steep Learning Curve

Steep Learning Curve The High Cost of Switching PR Firms

The cost of replacing an employee is “higher than it seems,” according to a recent piece on Marketplace.  Citing studies, the report says “the cost of replacing an employee can be 1.5 to sometimes three times the position’s annual salary.”

But that’s not all.

Those are just the hard costs of physically replacing an employee. The softer costs are perhaps harder to measure, but arguably more expensive.  Those soft costs are the education hurdles according to Josh Bersin, principal of Bersin by Deloitte, who is cited in the article:

“But the bigger problem is you lose the learning curve of that person. The first few months you have an employee you’re really not making any money by having that person [be]cause they’re learning how to do their job so they’re relatively unproductive.”

A “first few months” is probably a conservative estimate in my assessment. The level of responsibilities in the knowledge economy, combined with headcount pressure, means fewer people do more work.  As a result, the learning curve — and the cost of that learning curve — gets steeper each year.

Similar Challenges to Switching PR Firms

Hiring and managing PR agencies is similar in the sense of human capital management.  The model of professional services, whether fixed-fee or billable hour, is to provide expertise, for a given period of time, at a set cost.

Yet there is a subtle value that is overlooked in such a simple explanation. An agency of record is familiar, or ought to be familiar with aspects of a client’s business that enables it to perform with greater efficiency. These tend to coincide with the investment in education a business has made in a firm:

1. Knowledge of people and organization.

The agency staffer that is able to execute on an assigned task from start to finish with minimal intervention is pivotal to efficiency.  No corporate communicator wants to hire an agency only to have to facilitate every writing assignment.

An educated agency learns who the key players are and how to reach them.  It goes both ways too, in that when key players are familiar with an agency, they are also quicker to respond.

2. Historical business knowledge.

As the saying goes, those that do not study history are bound to repeat it. Historical knowledge in the PR agency-client relationship means an investment in history:

  • Reporter or influencer history – areas of interest, previous coverage, and relationship with the client or business, including pitfalls and successes.
  • Product history – the customer, launches, enhancements, crisis communications and the basic strengths and weaknesses.
  • Industry trends – trends tend to ebb and flow and often times come full circle. The cost of switching PR firms is intrinsically tied to the agency’s ability to command a comprehensive knowledge of the landscape.

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3. How work gets done.

Every organization has its own unique process and procedures – from copy approval to accounts payable. The cost of replacing a firm includes both teaching the new agency about organizational processes and adjusting to those the agency itself will bring.  This is usually rendered in the form of reporting, billing and even day-to-day communication – getting a sense for each other and how to work well together.

4. Company politics.

Every organization has some level of political jockeying.  The larger the organization, the more intensive the politics.

A client that has invested in an agency’s political education is better able to navigate the power centers outside of marketing to get things done.  Certainly, business metrics matter, but it would be disingenuous to avoid saying, on some level, an agency needs to make the client look good.

5. Voice of the company.

Some businesses have a unique tone and voice.  It’s an intangible that’s hard to quantify, but shows itself in the red ink of “tracked changes.”

The cost of switching agencies in this case is time.  Your time.  Your time to manage, edit, facilitate, run interference, and a long litany of other tasks until a new agency gets over Mr. Bersin’s “first few months.”

And don’t forget, those billable hours are at least partially, what bean counters call a sunk cost.

An Ounce of PR Switching Prevention

Having worked for a handful of firms, and hiring or replacing a handful more, I believe the causes tend to boil down to planning.  Businesses tend to hire PR firms in a rush – budget allocations come through and must be spent before the end of the quarter.

There’s an old mantra among HR types that businesses should be “slow to hire and quick to fire” and I’m inclined to think, given the similarities, the same is true in hiring a PR firm.

There is an opportunity for PR firms too – a competitive advantage even.  The willingness to roll up sleeves, log a few more hours each week dedicated to learning, and ultimately, the ability to get smarter on a client’s business faster.

Is your B2B PR firm bringing ideas to the table?
If your PR firm is on auto-pilot, maybe it’s time to switch.
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Photo credit:  Flickr, Thomas Leuthard, Rushing Steep (CC BY 2.0)

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1 Response

  1. LouHoffman

    Hey Frank, I agree with your points. Yet, I think there’s more volatility in agency relationships than ever before. No doubt, some of the relationships end badly due to sub-standard work. But I also think many companies view outsourced PR support as a commodity easily replaced. On the prevention side, hiring a PR agency, it still amazes me how little due diligence is conducted given the size of the spend.