Why FTEs are not full time under the retainer

So, when is a full time equivalent resource in your agency retainer, not a full time resource? It seems like a redundant question. Of course, a full time retained resource is full time. But if that is the case, why are there advertisers who have full time retained resources who are unavailable to take a call? Or even worse, why are there advertisers paying additional hours for someone who is full time on their account?

In fact, the issue is not as clear-cut as this. Because agencies are more likely to have resources partly on your account, or allocating a percentage of their time on your account, or – even – having several people with the same or similar job titles making up the full time equivalent on your account. It gets confusing very quickly – and that’s the point. The more confusing it is, the more likely you are to end up paying for something you have either already paid for or don’t need to pay for. Find out how here .

The average cost of an FTE depends on the task at hand

Average cost per FTE is a very common procurement measure for assessing agency costs. It is basically the equivalent number of full time staff divided into the total cost of retaining those staff. The fundamental flaw of this approach is it provides no measure of quality and takes no consideration of the mix of expertise.

The average cost per FTE would be great if you were hiring a homogeneous workforce – if such a thing exists. But once you get beyond the effective cost per person measure, there is a need to consider more insightful measures of cost against quality – which effectively is value.

In fact, the use of average cost per FTE is encouraging agencies potentially to under-resource your business with more junior staff, with titles that are not necessarily reflective of their experience and capabilities. Read why this is a problem here .

20% of an FTE is unpaid overtime the client is paying for

Sitting through another agency presentation of Excel spreadsheets full of agency hours, explaining why they are spending too much time on the account. Adding up the over numbers to justify why the client needs to top up the retainer by so many hundreds and thousands and millions of dollars. The marketing and procurement team is increasingly frustrated as they ask questions about what the agency did with all this time. And the agency explaining it was meetings and admin and briefs and stuff.

Underpinning this approach, there is an incredibly misleading and deceptive practice – it could be that the agency is trying to recoup a bonus of up to 20% on their retainer. Or at the very least the client is losing 20% of the time they are buying for any given person. It all has to do with billable time. And you can read about it here .