Tackling the people challenge

Putting it into context

As my recent mediafuturesPULSE article details, the trend in headcount is one of the key metrics that defines the health of the industry from year to year. Industry staff numbers dived in pandemic 2020, but then grew strongly in 2022, as reshaped organisations began to staff up again. This was usually from a much lower base than pre-Covid and was led by B2B and by smaller companies. In 2023, headcount is still growing, but this growth has slowed down markedly and has some complex undercurrents.

The recent Q4 2023 survey asked, “Over the next 12 months, how do you see your total staff numbers changing? … increasing, steady or reducing?”

The number of companies increasing headcount has dived from 54% in 2022 to 29% this year. The resultant net score (increasing minus decreasing) shows that the industry is still growing in terms of staff numbers, but at a much slower rate: it had a +47 net score last year, but is now only at +16, with the majority of companies reporting that their staff numbers are steady.

Yet these topline averages are being driven by hotspots in different segments:

• B2B (42% increasing headcount) is much stronger than Consumer (17%).
• The fastest growing companies are in the £5-9m turnover band (43% increasing headcount) and slowest are the £50m+ majors (22%).

Productivity – a growing focus

As staff costs rise and with the growth of automation and the advent of new AI tools, there is more focus on productivity than ever before. Looking at the topline ratio, this currently stands at an industry average of £150,000 of turnover per FTE. Yet this mean conceals a massive range from £30k up to £400k+. Here, Consumer (£156,000) is stronger than B2B (£144,000). The level of outsourcing is the single biggest driver of the ratio, then – predictably – company size: the majors (£50m+ turnover) are leveraging their scale and are running at £205,000, whilst the smalls (under £5m turnover) average only £89,000. Other key factors include the geographical location of the business and the nature of the ownership; the dynamics of private equity, PLCs and family-run operations are very different.

The issues behind the headlines

Behind the appearance of relative stability, there is increasing churn and some major issues that many companies still have to resolve. These include:

• Staff costs & retention. In a competitive job market, the salary bill is rising and holding on to good staff is a linked and growing problem.
• Headcount churn. There is a clear – and usually deliberate – loss of older (more expensive) execs, with an influx of younger (cheaper) staff. This is radically changing the profile of many organisations.
• Staff “greening”. The average age of most companies is getting younger. This is bringing in new skills (essential) and new attitudes (a real mix of the positively challenging and the negatively disruptive). There are clear downsides to this greening process, one of them being the loss of corporate memory and valuable experience.
• More outsourcing is taking place in order to control costs and to become more responsive to changing conditions. Also, automation is delivering real productivity gains.
• Executive burnout and mental health. This is seen across all ages and pay-grades. The pace of change is unrelenting and the “to do” lists just get longer.
• Working-from-Home and the New Workplace. The work-life balance is now a massive issue and not just for GenZs and Millennials. Many companies are still feeling their way into how to set workable and fair WFH practices, sometimes department-by-department and role-by-role. There is also a major rebalancing in the value exchange between employer and employee – another real mix of pros and cons.
• All this is stress-testing internal culture and values (which must be relatively stable and consistent), organisational structures (necessarily in constant flux) and skills…
• Reskilling the organisation raises lots of questions. Do you really know what capabilities are needed? How much are you prepared to pay? How much value do you place on experience? Do you rent the new skills (outsource), buy them in (recruit new people with new skills) or upskill existing staff? Each route has its own cost dynamics and speeds of implementation.
• Increasing M&A activity is driving many organisations forward in terms of business growth, but it can also create major disruptions in culture, organisation and ways-of-working.

So, it isn’t just the business models of media companies that are changing. It is the whole way in which we harness the creative power of people in a morphing workplace. And that has never been as challenging, stressful, exciting and potentially productive as now.