The rising salary demands of agency employees

With labor costs usually accounting for the largest share of agency expenses, it is no surprise that owners are particularly sensitive to any indication that salaries might be creeping up.

Recent conversations that Chip and Gini have had with agency leaders suggest that both prospective hires and current employees are asking for much higher salaries than many owners feel comfortable paying.

In this episode, Chip and Gini talk about why salary expectations are on the rise and what agencies can — and should — do about it.

Often the problem is that agencies have held their own rates steady even as salaries have increased, effectively reducing the firm’s profits. Paying more without charging more is a recipe for disaster.

Beyond that, agency owners need to understand the realities of the current labor market and ensure that their expectations are reasonable and not based on their own recollections of what they might have earned in similar roles 10 or 20 years ago.

Key takeaways

* Chip Griffin: “The fundamental problem is that most agencies have not kept pace with their own fees as their expenses have gone up over the years.”

* Gini Dietrich: “Agency owners say, well, it’s just my time. It doesn’t really matter. No, it does matter. It 100 percent matters.”

* Chip Griffin: “Be really clear about what you’re expecting to pay because it’ll help you with compliance in states that require it, but it will also help you to attract the right people so that you’re not bringing in someone who thinks that the job is much more than it is.”

* Gini Dietrich: “Don’t guess instead of doing the hard work of figuring out what it actually costs.”

Related

* The right way to do agency nonprofit discounts and pro bono work

* An honest conversation about agency owner compensation

* Calculating your agency’s labor costs correctly

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin

Gini Dietrich: and I’m Gini Dietrich.

Chip Griffin: Gini you know, I just want so much more money. You need to pay me so much more to keep participating in this show.

Gini Dietrich: More than zero. Okay.

Chip Griffin: I want to triple my salary.

Gini Dietrich: Alright, let’s do it. I can triple your salary. Done.

Chip Griffin: Yeah. Well, probably not the best example, but I keep getting asked by agency owners about what the, the salary market looks like in small agencies and usually it comes along with I keep getting asked by prospective hires or current employees to pay them way more than I think I ought to be paying them or that I’m prepared to pay them and is it just me or is this really what’s going on?

Gini Dietrich: It is not just you. That is really what’s going on. And I would say since 2020 we’ve seen a huge shift.