I’m not a career agency guy. I didn’t cut my teeth at Spong. I didn’t work my way up from intern to VP at Weber. I just don’t have a ton of experience in the agency world.

But, I did spend time at two agencies earlier in my career (Concept Group–a small marcom shop in St. Paul, and Beehive–a PR shop in St. Paul).

And I can tell you this: The agency billing model is broken.

Sure, we’ve read all about this before. And sure, it’s probably not changing any time soon.

But, most of the articles I’ve read don’t touch on the REAL reason the model is broken.

It doesn’t reward your top performers.

Think about it. Agencies make money when they win big accounts. Big accounts = more billable hours. More billable hours = more money for agency owners.

But not necessarily more money for top performers.

Sure, top performers raise up the ranks faster than others. They might earn more money in the long-term due to their work ethic, ingenuity and innovative spirit.

But, they’re not rewarded on a day-to-day basis for those things. In fact, the system actually rewards those who work SLOWER and more INEFFICIENTLY.

Take the following scenario.

Let’s say Joe needs to write a blog post for a client. Joe is a high performer, so he’s pretty darn efficient. He can bang out the post in 5 hours, including research, writing time and editing.

Sue, on the other hand, is a middle-of-the-road employee. For the same request, Sue can write the post in 10 hours.

Who made the agency more money? Sue, right? 10 hours vs. 5 hours.

What’s more, Joe was efficient. So, his reward for that efficiency? TAKE ON MORE WORK! BILL MORE HOURS! MAKE US MORE MONEY!

That’s a broken system, ladies and gentleman.

I know I’m simplifying it immensely, but at the crux of it, that’s the problem as I see it.

Now, I don’t know what the solution is. And, truth be told, I don’t care. Thankfully, I don’t run an agency–and I don’t have any aspirations of doing that any time soon.

All I can do is tell you it’s broken.

I’ll let the agency owners figure it out.

photo credit: days of our lives via photopin (license)