EDITORIAL: Productivity is key to successful firm

UK PR consultancies need no reminding that the last three years have been pretty horrific, but if any further proof of this were needed, Plimsoll Publishing's research published this week - putting close to one in three firms on what it dramatically termed the 'danger' list - should do the job.

Notably, the key factor the report highlights is not turnover, market value or profit, but productivity. This is important because it lays bare that combination of management efficiency and staff craft in a way that transcends the size of the agency involved, or its ownership structure.

It is the kind of performance statistic that is widely used in the furiously competitive US market, and that strikes fear into the heart of the lazy agency boss. In short, it shows you how effectively staff are working, rather than how hard they feel they are working.

According to Plimsoll, the average agency staffer accounts for sales of just over £72,000. With an average industry-wide salary level of over £40,000, the holy grail of billing three times salary costs is clearly being missed in a spectacular fashion. This is all the more clear since the data includes all those well-run firms that have stuck rigidly to the formula. It is no wonder that, as the report suggests, one in four UK comms firms now run at a loss.

Looking forward, one of three things could happen. Either those that are struggling will raise their productivity to the six-figure mark (the bare minimum, it seems, if your mean salary level is £30,000 and up).

Or, they will have to find other ways of driving costs down. Or more of them will go out of business. One way or another, something has to give.

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