Optimizing Agency Capacity: Strategies, Tools, and Benefits

A healthy agency is always busy. On the other hand, an agency that’s overwhelmingly busy can spell disaster for both clients and employees. In fact, 51% of those in marketing fear burnout. As much as you’d like to provide everything for your clients, there’s only so much that can be done in a day with the resources on hand.

Agency capacity is the measure by which an agency can strike the right balance and not reach beyond its grasp. There are many different types of capacity planning to consider, and many tools and strategies that can help optimize the entire process. This article will look at all these and help you find the best strategy for your agency.

What is capacity?

Simply put, capacity is how much an agency can deliver. Less simply, it’s the maximum level of output that an agency can realistically supply with the manpower, tools, and resources currently at its disposal. That said, there’s a lot that goes into defining what an agency can handle.

Types of capacity

 Capacity can be broken down into three distinct sub-categories:

1. Total capacity – This is an agency’s capabilities when firing on all cylinders. It factors in all resources, employees, and working hours without any holidays, leave, or other sudden interruptions. It’s the impossible ideal that exists only on paper, but definitely one that an agency should always strive towards.
2. Available capacity – This is capacity in context, with all the nitty gritty of life thrown at it. Other projects come in, team members get sick, and turnover leaves gaps. Available capacity takes account of these factors. Being highly dependent on context, this type of capacity can change from moment to moment, and should constantly be evaluated and referred to.
3. Billable capacity – The hours that team members work can’t always be billed. Brainstorming sessions and meetings don’t often result in tangible project work in themselves, although they certainly lead to it. Even though all employee hours worked should be tracked, when invoicing clients, each member’s billable capacity should be taken into consideration. There can be exceptions to this rule which ignore billable hours, e.g. value-based billing.

What influences capacity in an agency?

Many factors directly and indirectly affect an agency’s current available capacity:

• Human resources – An agency relies on its employees. The number of team members, their experience, skills, health, and wellbeing will all affect how many projects can be handled. Talent should be cared for and retained.
• Infrastructure and technology – An agency’s office, equipment, and the level of its technology all affect how well it can deliver on projects in a timely and efficient manner. It’s vital to keep these up-to-date.
• Other projects – Hopefully an agency should have a few projects on the go simultaneously. All need to be prioritized and effectively managed to improve capacity.
• Efficiency – Projects that are well managed and coordinated will lead to faster turnarounds and more capacity. Goals and milestones should be clearly defined before a project to prevent bottlenecks and delays.
• Client relationships – A good working relationship with a client can vastly improve the working speed of an agency. Alignment with client vision can ensure less reverts and subsequent delays.
• Finances – Project budgets, overheads, and salaries all influence how much can get done and how quickly. In the longer term, stronger finances can also help an agency expand its capacity.
• The unexpected – Life happens. Disasters, financial downturns, and other factors may influence an agency’s capacity. While they can’t be prevented, they can be planned for.

Track time and get reports on capacity in Bonsai

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Capacity planning

An agency needs to know what it can handle and deliver, both now and in the future. This is where capacity planning comes in. Capacity planning is the formal process where an agency sits down and determines not only its current ability to handle projects, but also anticipates how it’ll need to change to meet demand.

Capacity planning is a careful balancing act between the present and anticipated future. Projects need attention now, but will incoming projects require redeployment of members and a reallocation of resources? There are no easy or universal answers. A good strategic understanding of the agency and trends in the marketplace is essential for proper planning.

Agency resources need to be managed effectively to close gaps. Workers spend only 27% of their day on skill-based tasks. Effective timekeeping should also be used to cut down on wasted time and underutilized team members.

There’s a lot that goes into effective capacity planning. If done correctly though, it means more productivity, higher profits, and happier clients.

Capacity planning vs. resource planning

Some often get confused between capacity and resource planning. This leads the two terms getting used interchangeably. They are, however, quite distinct. Capacity planning comes first in the decision process and looks at the agency’s ability to deliver within a time-frame.

Resource planning, on the other hand, is more concrete and looks at the resources needed to get a project done once accepted.

The many types of capacity planning

Every agency is different and its makeup may necessitate different methods of capacity planning. There isn’t one catch-all solution, but there are well-established ways of gauging capacity and planning for the future.

Here are five methods:

• Workforce-based – An agency’s employees are its beating heart, but all come with their own skills and talents. The number of members, their availability, and level of expertise should all be considered. From a billing standpoint, their billable hours and rates should be factored into any capacity plan.
• Time-based – An agency’s year will be filled with bursts and lulls in activity. Specific times of the year, like the festive season, may require special planning compared to the quieter periods that follow. Flexibility and short-term planning are key with this method. Past experiences and thorough analysis of demand can help prepare for these changes.
• Resource-based – What resources are needed to make a project happen? How many of them are currently available? Agencies are limited by their resources, so should make the most efficient use of them. Resources such as technology, certain skillsets and other tangible materials should be properly tracked and efficiently allocated to maximize productivity. What’s more, they should be balanced between current need and predicted demand.
• Client-based – As much as you may like them, not all clients are equal when it comes to project planning. In larger agencies, long-term or high value clients may account for a large portion of income and need to be prioritized accordingly. In addition, some client’s projects may always be more resource and time intensive than others. Factor this in.
• Growth-based – What are the long-term capacity goals for an agency? How does it plan to meet them? This planning method should be closely tied to an agency’s overall vision, and its growth objectives. Planning for this future may involve hiring new talent, operational restructuring, and investment in new technology.

Plan it right

A capacity plan should never be an afterthought. The more you put in, the more robust the plan will be, and the better the outcomes. There are some key areas where particular focus is vital.

Employees

Inefficient capacity planning leads to poor use of team members’ skills and time. Some team members may become overburdened with the work of two or three people, or be forced to work overtime to meet impossible deadlines. Others may not be properly factored in to a project’s plan, and spend hours waiting for more work.

Capacity planning should do its best to nullify stress, underutilization, and the high staff turnover that may result from these. Project managers or seniors should constantly consult employees, understand their roles and responsibilities, and help them set attainable goals. Utilization should ideally not exceed 80% for account management and 90% for production level staff.

Project managers need to carefully allocate staff resources before any project begins, and consider the skills and number of the team chosen to execute it. This needs to be carried out throughout projects too, and any gaps that appear may need to be filled with team members from other projects or hired freelancers.

Communication and transparency

People feel more comfortable with plans if they’re constantly included in its planning and informed during its process. Capacity planning is no different. The agency or project manager should be open with team members about the goals of any undertaking.

This communication should also include regular capacity reviews with an agency’s project managers, traffic managers, financial department, and management. On the ground, regular team member feedback can also be invaluable and help avoid issues like scope creep. Constant planning, reviews, and resource allocation can identify problems as they arise, mitigate the unexpected, and improve overall efficiency.

Clients also like to be kept in the loop. Providing them with regular reports and holding meetings about the process can help maintain a healthy relationship. An agency also needs to be honest and accurate in its reports and billing to maintain trust. Timekeeping reports are one way in which this can be achieved.

Plan for the unexpected

Good capacity planning always factors in the unexpected. Solid strategy can help identify and mitigate major risks with any undertaking that may impact available capacity. Prior challenges with similar jobs and a thorough understanding of the agency are also important. Effective communication with team members of all levels can produce insights and potential challenges that senior management may miss.

Despite the most stringent planning and deepest insight, there’ll always be something that nobody saw coming. The best way to mitigate unforeseen risk, is to factor it into every plan and project. Project managers should ensure that plans are robust, yet flexible enough to accommodate the unforeseen. Emergency funds should be kept in reserve and potential staff leave accommodated for accordingly.

In short, the total capacity should never be the benchmark that a plan or project is set to.

Good planning reaps rewards

Capacity planning may sound like a lot of unnecessarily complicated work for little reward, but the benefits will become apparent over time.

• Better resource utilization – Staff and materials are well-balanced and utilized across all projects. Bottlenecks are avoided and wastage is reduced.
• More productivity – With demand and resources correctly balanced, projects can be run efficiently and work delivered on time. Agencies avoid overworking staff or overservicing clients.
• Better decisions – Knowing the landscape and the best course of action beforehand enables project managers to make informed decisions when a project begins. Risks can be anticipated and resources allocated accordingly.
• Client alignment – Knowing the needs and demands of a client means that projects have the right resources allocated and can be completed on time to brief specifications.
• Flexibility – Factoring risk mitigation into a capacity plan allows for a rapid response to changing parameters and unforeseen problems as they arise.
• Better finances – The better the clients’ briefs are met, the better the chances for more business. The right planning can also save money during the process, by cutting down unnecessary expenses and better allocating resources.

The invaluable role of technology

Capacity planning relies not only on up-to-date information about the resources of an agency, but relies on past projects (with their successes and failures) to better prepare for the demand to come. The daily ins and outs of an agency are complex enough on their own without needing to reach into the past.

Many agencies have come to rely on automation for streamlined and efficient capacity planning. Spreadsheets and software have long been favored as ways to keep track of the many moving parts of a project. Indeed 92% of businesses that utilize project management successfully meet their objectives.

With the rise of cloud-based computing though, apps have been developed that allow for greater connectivity, and the frequent communication and collaboration that such detailed planning so often needs.

The best app offerings are those that don’t stop at project management or timekeeping, but offer multiple powerful features all rolled into one.

Bonsai is one such versatile example. Besides its robust project management and timekeeping, it also offers detailed invoicing capabilities and seamless integration with other software. With Bonsai you can easily track employee hours on past and present jobs, seamlessly compile these into reports for clients, and accurately monitor all projects and their progress.

Bonsai places all information into user-friendly interfaces and automates a wide variety of tasks. All data and information are centralized and easily shareable with team members too. It’s an app that will make your capacity planning that much easier.

Planning strategically

The best capacity planning requires a sound strategy to be effective. There are many well-known planning strategies to suit every agency’s needs. All have their own benefits and drawbacks, so the right choice will ultimately depend on your agency’s needs and composition.

Lead strategy

This is a preemptive strategy that anticipates future increases in demand and prepares accordingly. The agency is then structured and resources allocated to meet this increased demand before it arrives. Predicting the future is a naturally risky strategy. Workers and resources pulled from current projects can remain unused and idle, should the expected demand not arrive.

As such, planners should have a thorough knowledge of the agency, its internal dynamics, and past jobs. They must also conduct a rigorous analysis of market and industry trends to make the most informed decision possible.

Lag strategy

In direct contrast to the lead strategy, this lag strategy is reactive. This conservative approach focusses resources on the current tasks at hand and adjusts to demand if and when it arrives. While this may yield the best possible result for short-term goals, any sudden changes may leave the agency scrambling to find freelancers and squeeze funds.

The lag strategy is more immediately cost-effective and is ideal for agencies expecting little change in the status quo.

Match strategy

The match strategy works to meet demand as it arises, hence the name. It acts as a middle ground between the previous two strategies, but is anything but simple. A quick and effective response to demand is easier said than done, and match strategies require an exhaustive amount of research and insight into the markets and industry.

It also requires that agencies be flexible and able to adapt to rapid change. Available capacity must be constantly monitored for maximum efficiency. Employees and resources need to be allocated quickly so that supply never exceeds demand.

Hybrid strategies

As every situation is different, planning capacity strategies are often changed to meet them. An agency may utilize a mix of all three strategies for different departments or projects. Some may switch to a lead strategy during times of growth, while falling back to a match strategy when the rush dies down.

Capacity planning in action

Capacity planning is constant in name only and there are a variety of ways that it can be executed, depending on internal and external factors. Here are some of the major steps that an agency might follow to successfully implement their capacity plan:

1. Examine the current situation – An agency will consider their current available capacity, and all resources, employees, and their hours at their disposal.
2. Forecasting – The agency investigates anticipated demand based on past experiences and current trends, and decides on the best course of action.
3. Consider the client – The agency then examines the brief and the expectations of the client. What is the current relationship and is the job of high priority?
4. Plan for risk – The agency considers possible scenarios and identifies potential issues that may arise, based on thorough analysis of past and present information.
5. Clear goals – Manageable goals should be set with clear objectives along the way to achieve them. What is the agency hoping to achieve? Do they have the capacity to do so?
6. Allocation – With the groundwork laid, the agency and project manager allocate the resources and team members they deem necessary to complete the project.
7. Collaborate – During the project, all departments should be in regular contact to ensure strategic alignment and to tackle problems.
8. Keep clients informed – Regular transparency with clients and constant reporting will ensure greater efficiency and maintain a strong relationship.
9. Analysis and feedback – 55% of executives cite poor communication as the biggest threat to project success. Throughout the entire process and especially afterwards, the agency should constantly monitor, review, and receive input and feedback from all involved, including the client. This will help to monitor the overall strategy and enable adjustments to be made if necessary.

Work smart, plan smart

Capacity planning isn’t an easy process and may need constant attention in order to maintain maximum effectiveness. The results are undeniable though. Find the plans that work for your agency and don’t be afraid to keep improving on them. Plan extensively, communicate openly, and use the right tools to get the job done.

The results of careful planning may not be visible right away, but your agency’s future will be all the brighter for it.