Human Resource Management
in the Service Sector
Lectures 10 and 11: Creative
Firms
Objectives
• Understand the basic characteristics of the
sector and establish our focus on
advertising/marketing agencies
• Identify the key forms of capital present in
these firms
• Identify the challenges this presents for HRM
especially the development and retention of
staff
• Draw contrasts between two practical cases
on the way they manage these HR
challenges
2
Overview
• Introduction to the sector
• Human and structural capital
• Organisational capital: Business
process model: their way of working
• Client and network capital
• Implications for HR – balancing
conflicting needs
3
Introduction to the sector
• Creativity is widely present – all organisations
include some element of creativity – focus on
organisations for whom this is their principal
output
• Importance of individual creativity, skill and
talent (human capital) to create and exploit
ideas, experiences and images (intellectual
capital)
• Typical examples: music, writing, performing
arts, TV and radio
• Our focus is on advertising and marketing
agencies
4
Advertising and marketing
agencies
• Firms whose work includes creative output –
advertising – ‘above the line’
(branding/generic/high margin) and marketing
– ‘below the line’ (directly aimed at
consumers/dedicated/lower margin)
• Independent of clients for whom they work –
compared with in-house marketing
departments
• Huge variation in size – tiny (one-two people)
medium sized – 100-500, giants (Omnicom,
WPP, Interpublic)
5
Knowledge skills
and experience of
staff
Forms of Capital
Knowledge of
and
relationships
with network
members
Human
capital
Social
capital
Network
Capital
Intellectual
Capital
Knowledge of
and
relationships
with clients
Client
Capital
Knowledge
embedded in
values, culture
and
relationships
Structural
capital
Organizational
Capital
Procedures, policies
and processes
Ways of
structuring
work
6
Human and structural capital
• Account managers – (the ‘suits’) interface
between the client and the agency – project
management skills – the business logic
• Creatives – (the ‘T shirts’) – copywriters and
art directors responsible for creative output –
‘freshness’ of ideas – the artistic logic
• Account planners - (the ‘voice of the
consumer’) – authenticity in representing
customers – testing and validating ideas – the
scientific logic
(Grabher (2002))
7
Client project teams: structural
and human capital
Creatives
Account
managers
Account planners
8
Accounts and projects
• Client accounts – may be a contract for 2-3
years or a one off piece of work
• Campaigns – tend to be within an account –
series of activities – complex or simple
• Project teams based around clients and
campaigns – membership may fluctuate –
involve in-house and external staff
• Work with client representatives – typically
marketing managers
• Work allocation managed by ‘traffic’
9
Human, structural and organisational
capital
‘Traffic’
10
Organisational capital: Business
process model
• Formal procedures for handling
campaigns
• Process for taking a client brief and
converting that into a desired output
• Series of stages tend to be managed by
the account managers
• Different forms and interactions of
capital needed at different stages
11
Organisational capital: Business
process model
New
business
Agree
contract
Organise
project
Work
and
Reviews
Client
delivery
Post
job
debrief
12
Client and network capital
• Importance of time – need to respond
quickly to client requests
• Internal human capital supplemented by
external human/network capital
• Personal external networks – often in
the local area – interaction of human
social and network capital
13
Client contact and client capital
Client
Agency
Marketing
manager
(Grabher (2002)
14
Building network capital
Client
Agency
Marketing
manager
15
HR challenges presented by
these characteristics
• Tensions between needs of clients,
employees and firms
• The interaction between the need to
develop employees, serve the needs of
clients and achieve financial success
• Two contrasting examples:
‘Stonehenge’ and ‘Kaleidoscope’
• Virtuous and vicious cycles
16
The HR
Wheel
Resourcing
Human
capital
Social
capital
Network
Capital
Intellectual
Capital
Client
Structural
Capital
capital
Organizational
Capital
Pay and Reward
Kinnie et al 2006
17
Delivery
Pressures on HR in marketing agencies
Product market Customers and clients
Agency
Financial success –
short and long term
(Maister, 2003)
Employment market –
needs of employees
18
Managerial challenges
Retention
Organisation specific
Value capture
Multiple Identity perspective
• How can organisations retain and develop their
professionals?
• Presents three dilemmas that sit between the
employee and the organisation
Employability
Transferable
Ownership of value
19
Key challenges and tensions facing
HRM in marketing agencies
•
External Resourcing
–
–
•
Internal Resourcing
–
–
•
Developing human capital - developing client capital
Importance of coaching, feedback and development – importance of serving client
needs
Reward
–
–
•
Promotion and career building – efficient allocation of staff
Rotation of staff - building and maintaining client and network relationships
Training and Development
–
–
•
Attraction and retention of staff valuable to the firm and to existing and potential clients
Recruiting for internal development – recruiting experienced staff
Intrinsic rewards linked to development – extrinsic rewards linked to client success
Longer term rewards through promotion – shorter term linked to targets
Our focus: the interaction between the need to develop employees, serve
the needs of clients and achieve financial success
20
Client aims and consequences
for employee development
Clients
• Want best people of
their account
• Build up good
relations with them
• People who
understand their
customers
Employee development
• Work on the account
for a long time
• Exploiting existing
knowledge – low
creativity
• Become bored –
retention problems
21
Firm aims and consequences for
employee development
Firm
• Serve needs of clients
• Retain clients and gain
new business
• Repeat business, long
term and
profitable/efficiency
• Develop high value
work
Employee development
• Client led creative work
• Repeat business – low
levels of creativity
• Insufficient resources
devoted
• High value work may
have low priority
22
Employee aims and consequences for the
firm and clients
Employee development
• Interesting and
challenging work
• Develop their
employability and CV
• Chance to learn and
develop their skills
Firm
• Opportunities to work
on creative/high profile
projects
• Variety of projects
• Opportunity to learn
new techniques and
work with good people
23
Competing identities in marketing
agencies
Organisation
Professional
PSF
employee
Team
Client
24
Managing competing identities and HRM
Organisation
Aim: Develop
knowledge and skills,
improve versatility
and external
Professional
networking
Aim: Commitment, shared
values to improve retention
and knowledge flow
HR: Strategy,
staffing, values,
participation
PSF
employee
HR: Team design and
allocation decisions,
team working skills
Team
HR: Recruit
potential,
development
opportunities and
job design
HR: Type of work
and client
interactions, support
for client
management
Client
Aim: Good team
working improve
performance and
knowledge flow
Aim: Address client
needs, manage
relationship, grow
business
25
Stonehenge
26
Managing competing identities and HRM in
‘Stonehenge’
Low social capital
shared values and
language
Development needs
met in limited way by
firm and clients
Organisation
Professional
Values unimportant
in recruitment low
participation
Narrow jobs, limited
new skill opportunities
and development
PSF
employee
Movement to
and from
clients
Team pay is
important
Client
Team
Strong team
boundaries –
difficult to
contact others
Learning from
clients and mostly
economic
relationships
27
Kaleidoscope
28
Managing competing identities and HRM
in ‘Kaleidoscope’
Strong social
capital, shared
values and trust
Development needs
addressed by firm
and client work
Organisation
Professional
Recruit potential,
broad jobs, good
new skill and
development opps.
Values important in
recruitment, strong
participation
PSF
employee
Team pay has some
role
Team
Training
intervention to
improve client
creative processes
Client
Strong team
permeability –
easy to contact
others
Good ability to serve
client needs, good
explore and exploit
29
Pressures on HR in marketing agencies: virtuous cycle
Product market Customers and clients
Good clients =
interesting work =
attract & retain
employees
Financial success =
attract and retain
good employees and
clients
Agency
Financial success –
short and long term
(Maister, 2003)
Employment market –
needs of employees
Interesting work = attract
and retain good employees
= High margin
30
Pressures on HR in marketing agencies: vicious cycle
Product market Customers and clients
Lose good clients
and interesting
work = difficult to
attract & retain
employees
Low margin = difficult
to attract and retain
good employees and
clients
Agency
Financial success –
short and long term
(Maister, 2003)
Employment market –
needs of employees
Less interesting work = difficult
to attract and retain good
employees = low margin
31
Conclusions
• Advertising/marketing agencies exist in fast
moving environments where there is a
complex interaction between different forms
of capital
• This throws up a series of HR challenges
which can be managed in different ways
• Demonstrates need for HR practitioners to
understand how these forms of capital
interact throughout the firm
32