How To Justify Hiring New Marketing Staff

 

One of the questions I always hear is:

“How many marketers should my firm have?”

That’s a very good question. And there are different rules of thumb used to answer that (like one marketer for every 20 people). I’m not sure if any of them are valid.

I think the real question is, “How do I justify hiring new marketing staff?”

So, today I’m going to show you exactly how to justify hiring new marketing staff in a manner that would be difficult to argue against.

But first, we have to answer a question that may have been in the back of your head for years…

“Is my own employment justified?”

Is Your Employment Justified?

This is an interesting question that I want you to consider. Is your firm losing or making money from your efforts? Or are they at least breaking even.

This topic was touched on at one of the Build Business sessions I attended. Some of the “insights” in that session were great. But one, in particular, seemed incorrect.

The Fallacy of Salary

Many years ago, I heard an engineer state that as long as he billed an amount that equaled his salary, he had justified his employment.

Wrong.

It’s the exact opposite. He just justified himself as a financial liability.

You see, what you cost a business is far beyond your salary. They have to lease the place you sit, give you the tools you need, match at least a portion of your healthcare, pay taxes on you…

…they pay people like administrators, human resources professionals, etc., to support you…

…they spend money to acquire and retain clients their staff can bill…

… They may even match your retirement contributions.

Believe it or not, those extra costs could easily amount to 150% of your salary. How much ranges from firm to firm.

At the very least, you better be billing 250% of your salary. I say, “very least” because if the firm isn’t making a profit off you, you are not fulfilling your function (which is to help your firm realize profits).

How That Relates To Marketers

In the Build Business presentation, they spoke about how marketers can justify themselves. They used a metric known as Total Payroll Multiplier (which you can learn more about here). They suggested marketers just multiply their salary by the total payroll multiplier to calculate the total return a firm should expect from their investment in you (i.e. The cost of having you around).

how to justify hiring new marketing staff

The problem is that calculation ignores several factors:

  • Non-Reimbursable direct expenses
  • All indirect expenses
  • The point, which is firms need to make a profit off you (or at least someone)

So What’s The Right Equation?

The short, but challenging, answer is:

All the costs associated with employing you + 10% of those costs (i.e., a reasonable profit).

The best approximation of that would probably be:

Your salary + (firm’s audited overhead rate x your salary) + (your salary x .10)

Because a lot goes into (and is left out of) the firm’s audited overhead rate, this will just be an approximation. But it will probably be closer than using the total payroll multiplier.

Let’s say you make $50,000. Your firm’s audited overhead rate is 1.5 (150%). Then the calculation would be:

$50,000 + (50,000 x 1.5) + (50,000 x .10)

$50,000 + $75,000 + $5,000

= $130,000

Revenue vs. Savings

$130,000 sounds like a lot, but there is another factor to consider. That is savings.

For marketers, it’s not always simply about bringing in revenue.

If having you around saves your firm $130,000, then you’ve just justified yourself.

And that brings us to the useful insight from that same presentation.

Justifying New Marketing Hires

One of the speakers talked about how he justified a new marketing hire at his firm. And he illustrated it with the chart below.

justify hiring marketing staff 2

The argument he was making is, since the cost of technical staff is higher than marketing staff, there would be significant monetary savings by bringing on a new marketing person (who could do that work).

He could have even done the math to show the difference between the current costs and a scenario where a marketing coordinator was doing the work (and the technical staff was billing).

Because of opportunity costs, there would be a stark contrast.

His pitch wasn’t that a new marketing coordinator would make the firm more money. It was that the savings would far outweigh the costs.

That’s a smart way to justify a new marketing hire. Do the math and answer this question:

How much more money would the firm save or generate by hiring this new person?

Do you think this is the right approach? What do you think is the best way to justify new marketing hires? Let us hear your thoughts in the comments.

Comments

  1. Rebecca Twiss says

    I am a new hire at a construction firm that previously outsourced its marketing. Having an in-house person was definitely a leap for them, but also a benefit. The owners, along with office administration, used to handle marketing as they tackled their own important, time consuming tasks. With me here, I handle all the advertising, promotional events, press releases, photography, graphics, inbound marketing etc. I also do business development and research current trends to open new markets. So while my job is vastly different then theirs, my presence and skill frees up their time so they can focus on their projects without distraction. While I would love to be landing one big contract after another (that will come!) I have to also look at the value of their time, and the money spent prior to my hire for outside resources. Thanks for your work Matt, it helps everybody.

  2. Great article Matt! Thanks for sharing. I didn’t get to that presentation at BB so I really appreciate your summary.

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