Monday, February 27, 2012

Corporate Fitness 101: Managing A Lean Studio

By Ernie Arias

 Advertising industry, with its highs and lows, offers quite an interesting challenge in financial management. The need to maintain 'healthy' quarterly financial statements regardless of business 'going south' on a downhill ride, it is perhaps the most important task and responsibility over the shoulders of a CFO and any department director presenting financial reports. And among all agency's departments, the studio is undoubtedly the quintessential, role model of a business unit within a business because of its service-provider nature, therefore it's at the same time the easiest one to be outsourced in its entirety.

I bring outsourcing into this article as the total opposite solution some Operation Managers opt for, when things go sour financially speaking. The bottom line is that it's a business and it needs to be profitable otherwise it will collapse.

Technology, The Backbone Of 'The Skeleton Crew'
Backbone and Skeleton might sound a little creepy, but the reality is that we must rely on cutting-edge technology to streamline and optimize tasks. Just like robotics technology replaced dozens of hard-labor employees in a processing plant, the same way cutting-edge technology like Dalim Twist, Xinet WebNative suite, FMP-JobCharge, etc., allow us to streamline our work flow, to increase productivity and to manage with a few good ones (√ľber studio artists.)

You can go technical if you want, and utilize sophisticated methods to determine who are the studio overachievers that will allow you to run a lean studio; SWOT analyses, performance reviews, the Pareto or 80/20 rule,, etc., the truth is that you already know who they are and if you don't my recommendation is to do the 'mental exercise' so when the time comes to cut staff you are ready for it. (This might sound cruel and heartless but the reality is every employee's salary must represent 3X revenue in order to have a healthy profit margin, hence the need of managers to make sometimes unpopular decisions.)

Staffing Agencies + Social Networks
Now that you're running the studio with a reduced number of excellent employees, one thing you don't want to do is to burn them out. It wouldn't be proper to "reward" or better say to punish them with ridiculous amount of work, unless you want to compromise the morale in your team.

It is true that in this business we have to put many times the extra effort. However, this should never be the norm. In order to create sustainability with this model you need to have a reliable source of freelancers that will cover the over flow, so having a good commercial relationship with staffing agencies plus building your own pool of talented freelancers by the means of social networks, it is the way to go.

Fluctuating Work Flow
With this business model there is absolute guarantee the staffers' profit margin will be substantially high and bringing freelancers will always have a rationale, so regardless is billable or non-billable you should have a positive profit margin or worst case scenario, at least you'll cut even.

Communication between departments is critical. Getting timely heads up from Project Managers and Print Producers will allow the studio manager to staff properly and to keep any project within the estimated budget. There is also the need to incorporate certain preemptive measures as part of our billing and staffing process to avoid undesirable situations with the requester.

Get Lean Without Being Mean
As I mentioned before, this is a business and it must be profitable otherwise it might collapse. But you don't need to be a corporate tyrant in order to achieve this, on the contrary, now that you have a crew of super qualified and talented individuals who are giving you 110% whenever is required, you must consider putting your management efforts towards keeping a high morale within your group by the means of compensation, reward programs and even salary raises. If you used the 80/20 rule to pick them up you should know that they were the 20% of your crew responsible for generating 80% of the revenue, so they really deserve it.


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Ernie Arias