Apologies to all about the huge gap between posts. Things jumped the rails for a while, but I’m back for good now. Looking for a new job again too, btw – if you have any good leads, I’d be eternally grateful for any and all referrals or suggestions.

Meanwhile, one of the topics that’s been stewing in my mind in the last few months is the question of why so many PR agencies are just so horribly bad.

I’ve worked at three different agencies now – including two of the very biggest in the world. I’ve also had the task of selecting and managing the agency of record at three different tech firms. And I’ve faced off against competitive agencies on many, many occasions and learned a fair deal about their means and methods in doing so.

Not all agencies suck - the ones I've worked with have had both good points and bad. But far too many firms out there seem to be just fundamentally dysfunctional.

The ones on the dark side tend to fall into one or other of the categories I’m going to call The Seven Deadly Agency Types. Over the next few days, I'll write up my thoughts on these, and some ideas about how to diagnose (and avoid) each type.

Type 1. The Classic Sweatshop

I don’t think any agency actually sets out to become a sweatshop, but it’s a grim fact that an awful lot of them are.

Running a profitable agency is a fine balance. You need to keep the right level of staff, working at the right level of utilization – with enough spare time to keep them sane, and allow some extra capacity in the firm to accomodate pitching (and then servicing) new business.

Too many staff working not enough billable hours, and your profitability starts to suck.

Too few staff, with too much client work, and you’ve got a recipe for a sweatshop - if you're not careful.

Cut your cloth a little too close when your agency is in growth mode, and you can quickly become a victim of your own success – you send the dream team in to win a big new account, but not one of them has an ounce of spare billable time. No way you can hire and groom people fast enough to keep just ahead of the growth curve. It just doesn’t work that way. Your best people end up working three times as hard just to stand still.

So you try to build a practice with some buffer capacity – staffing for success with the right kind of people; people who get to go home at 5:30 and have time to do something other than worry about billing their brains out every hour of every day. People who lead fuller, more engaged daily lives and produce superior work for their clients because of it.

It’s entirely possible to run a successful, money-making PR firm on this model. Trouble is: it’s rare that you’ll find an agency owner or boss with the business sense to recognize that profitable growth is not all about utilization.

At one of the firms I worked with a few years ago, all staff were expected to account for at least 7.5 hours of time, every day – documenting their work in 15 minute increments in an arcane and aging time billing system. Junior staff were required to be eighty to ninety per cent billable. Even the most senior members of the firm (I was a VP) were still expected to bill at least five hours a day. That’s on top of admin, people management, prospecting for new business, client development, keeping up your media relations, and all the other non-billable but essential stuff that keeps the practice ticking. Bloody insane.

It’s common practice in sweatshop agencies for the bulk of the work to be carried by the people on the very lowest rungs of the ladder. These people are typically fresh out of college, or maybe have a year or two of experience at most – they’re earning (in North America) perhaps $30 to $35K, and being billed out at anything from $50 to $175 an hour.

The typical agency model suggests that staff need to bill between two and three times their annual salary for the practice to run at a profit. In extreme cases, there are firms out there where junior staff are generating almost ten times their pay in billable fees; generating a very healthy profit which gets convered into the VPs bonuses at the end of the year.

The only way they’re doing this, of course, is by grinding away from dawn to dusk with little time to focus on anything other than the next billable task in front of them. It’s dignified with the label of “apprenticeship”, but that's not quite what I’d call it.

The thing about a typical sweatshop, though, is that it’s kind of hard to identify from the outside. One of the surest signs is an unusually high level of staff turnover at the lower levels – but you won’t normally uncover that until you’ve already been working with the agency for a while.

So how can you avoid hiring a sweatshop? I have a few suggestions. Ask candidate agencies what their policy is on staff utilization. Do they have productivity targets for staff? What are they?

Even more important, get them to tell you the actual current workloads of their proposed team members. The people they bring into the room for the pitch should be the people who are actually qualified and able to work on your account. But how busy are they already? Will they really have the time to take care of your needs too?

Next up: The One Trick Pony