COVID-19 has hit many operating in the digital space hard, with clients pausing work to preserve their own 'war-chests', leaving them struggling to pay operating expenses (OpEx) such as salaries. In fact, many are trying to balance doing the 'right thing' by their employees whilst keeping their business alive at this unprecedented time.
In a recent podcast, the global research and advisory business Gartner explains that cost management must not be a defensive action taken in a brash one-off effort to reduce costs, and must instead be a planned and sustainable, systematic initiative.
There are many strategies available for reducing operating costs, with the most common renegotiating leases for premises and other occupancy charges. But what about optimising staffing costs as part of an approach that also creates a nimble workforce, fit for the future, which still delivers outstanding client work?
At Daydot, we work with a number of experienced and knowledgeable partners at all levels of our business who we use to increase our capacity quickly, as required, without the teething problems that come when hiring new full-time equivalent staff (FTE). In fact, we consider our third-party suppliers to be our 'friends', and focus on ensuring we have a mutually beneficial relationship with them.
The global professional services organisation BDO recommends this approach, and suggests having a core foundation of FTE staff, supplemented with a strong network of third-party suppliers to call on when needed. These should ideally be independent contractors, who are often significantly cheaper than their equivalent full-time employee counterparts.
If you don’t already have a network of such suppliers, reach out within your existing networks. For example, conversion rate optimisation (CRO) is a small industry and it’s very likely that you will know someone who knows someone who is very good at this discipline and is seeking new partnerships.
Should you already have developed partnerships with contractors, weigh up the option of switching to work with them on a flexible contracting basis. While the rate may be more expensive than a fixed contract or retainer, the benefits of flexibility to ramp work up and down quickly as required, speak for themselves.
When bolstering your FTEs with third-party suppliers, it’s important to consider what soft skills your organisation values. At Daydot, contractors contribute to the company culture and the feeling of family, just as much as FTEs. So, when we are seeking new partners, their hard skills are valued as being equally important as what they bring to our communal table emotionally, culturally and personality wise.
It’s also worth looking at having the right balance of junior, mid-level and senior roles in order for your business to run like a well-oiled machine. The decision-making around the level of seniority you employ will be unique and depends on your and your client’s needs. It also hinges on managerial values. For example, do the c-suite of your organisation want to have juniors starting out in their careers who are very adaptable to change and keen to learn and grow? Or prefer a more senior team who bring a wealth of knowledge and experience, along with firm ideas and ways of doing things? Or a mixture?
When recruiting, you need to think which roles tend to be easier to recruit for within your industry, and which are more slow burn when it comes to sourcing quality people. Often, it’s the more senior, strategic roles that can take the longest to fill. When looking to build on the core foundation of the team you already have, think about which departments or roles you would choose to recruit first, and why.
The importance of scenario planning to ensure the successful management of client requirements as work waxes and wanes cannot be understated. Think of one-off projects that burst into life and then conclude rapidly, or short to medium term (think six to twelve month) retained projects.
For example, if you have an upcoming project that requires a specialist touch that you don’t have within your organisation, does it make sense to employ a new FTE, to then potentially have nothing for them to do after the project concludes? Or do you bring in a new 'friend' to meet the short-term need for you?
Here at Daydot, we conduct scenario planning quarterly, and our Delivery team reviews these as required when our clients’ needs change. Gartner advocates for this approach to scenario planning, and suggests that based on this planning you should look to augment your FTE roles with new “friends”, and frame it from a cost and resource use optimisation perspective.
The needs of your organisation, and more importantly those of your clients, will tell you which roles are key, and which are supplemental. We recommend utilising your key roles on critical projects – even internal ones – and considering pausing or deprioritising tracks of work that are more loosely attached to what your clients require from your organisation.
Constantly evaluate the areas in your business that are most likely to bring in revenue. If, for example, a client wants to pause work on production, can you offer value in other vital areas that will benefit them? Can certain staff members act in a consultative role for your clients that will add value to their business, as well as yours? Maybe your team can shift their focus to different, but related duties with clients, or even internally, in order to contribute to emerging revenue streams? Having staff that add additional value are those you want access to, as it’s they who will help you to deliver a solid foundation for your business to build on in the future.
At Daydot, we recognise the importance of planning regarding future workforce requirements and operating costs. This involves evaluating what we want our business to look like in the future and why. This keeps us nimble and means that we’re able to pivot in the direction that we’d like to take our business as needed, as well as react to moves by the market. When undertaking these exercises, we ensure that we’re keeping the present at the front of our minds, so that our client’s key requirements, and the matching roles, responsibilities and capabilities are being fulfilled.
When undertaking any augmentation of your FTE network, always practice radical honesty with new partners and your core FTE family. This means delivering frequent and transparent communications to make sure they feel valued and included in the business, which is something we value highly and do at Daydot. We hold weekly 'Town Hall' style catch ups - conducted as a virtual catch up during the lockdown - where key company updates are shared, and all team members - FTEs and contractors - are encouraged to contribute. This bolsters the employee experience and we’ve found that it encourages engagement and productivity.
Should there be any cost optimisation measures that need to be implemented, this practice of consistent and methodical transparency can help avoid potential long-term negative effects among your team. You’ll also have a nimble workforce fit for your and your client’s future needs.
By having an agile and flexible organisational structure with a core team of FTEs backed up by talented contractors, as we do at Daydot, it’s possible to thrive with low operating costs, while facilitating standout and cost-effective project delivery for clients. For those digital businesses serious about unleashing growth in such a challenging economic climate, this approach is critical.
Head of Delivery, Daydot