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The 2024 Guide to the Best Agency Structure

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Updated on:
January 29, 2024
January 29, 2024
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Companies across multiple industries rely on the expertise of agencies. According to Deloitte, businesses spend over $700 billion globally on outsourcing business-critical tasks to third parties. If you’re focusing on the growth of your agency, it’s clear that there are increasing opportunities to source new business and clients. Focusing on streamlining your agency structure makes your whole organization more efficient, productive, and competitive.

Benefits of an Efficient Agency Structure

Choosing the right agency structure can determine how your teams work and who they collaborate with. This way, you gain a clear understanding of everyone’s roles and responsibilities. The structure that works best for you might be one that encourages an “all hands on deck” approach. This may work well for small organizations or startups where roles are less sharply defined.

For larger organizations or teams including employees with highly specific skill sets, a more hierarchical structure might help ensure a smooth chain of command.

The benefits of finding a structure that works for you include:

  • Increased collaboration
  • Smoother communication
  • Reduction of data siloes — where some areas of the agency struggle to get information from other departments or systems
  • Reduced friction and conflict when allocating tasks and responsibilities
  • Actions that align better with company goals
  • Better client experiences

This last point is critical. When agencies become more efficient and collaborate better, they perform more effectively for their clients. This garners better client feedback, organically boosting the agency’s reputation and promoting growth.

How Structure Influences Agency Efficiency and Effectiveness

Agency team members who don’t understand their roles and responsibilities fully won’t be as productive as those who do. Likewise, employees who aren’t sure who they should report to or who manages particular teams will struggle. They might send reports to the wrong person or refer a client to an inappropriate department.

Mistakes like this take time to rectify and impact client experiences. An ill-defined agency structure can also make what resources firms require to support their teams unclear. For example, investing in the right agency software can help allocate projects to the right teams and individuals and help managers track progress.

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Image caption: Bonsai business software for agencies helps allocate projects appropriately within your agency structure and track progress accurately.

Image source: Author screenshot

Competitiveness

Once you have clearly defined roles and responsibilities and clear channels of communication, you free up time previously lost due to friction-heavy processes. Increasing efficiency effectively makes businesses more dynamic and competitive. When you’ve got more time and resources to focus on innovation and meeting business goals, you’re more likely to stand out from the crowd.

Onboarding Time for New Hires

Increasing your agency’s reputation attracts top talent as well as new clients. With the right agency structure, recruitment and hiring processes become simpler. Candidate info goes to the right personnel and systems, prompting swift and accurate communication with applicants. This makes onboarding faster and ensures a much more pleasant experience for everyone concerned.

Recruitment specialists Zippia reported that of employees who leave within six months, 23% said they might have stayed with better-defined roles and responsibilities. A suitable agency structure helps with both employee retention and onboarding.

Types of Agency Structures

How do you know what type of agency structure to choose? There are many variants, each with benefits and challenges. Some suit larger agencies, while others suit smaller outfits or those that bring together multiple freelancers.

Let’s take a look.

Hierarchical Structure: Traditional Top-down Approach

This structure usually has a CEO and possibly other C-suite members at the top of the hierarchy. They manage team leaders or departmental managers, who then manage lower-level management. Entry-level employees are at the bottom of the hierarchy.

The advantages of this structure provide clearly defined responsibilities and state who reports to whom. Challenges can include rigidity, resistance to change, and data siloes caused by inflexible inter-departmental processes.

Flat Structure: Emphasis on Fewer Levels of Management

A flat management structure indicates that all employees have some level of autonomy. This places higher levels of responsibility on individual team members.

This can boost innovation and foster a culture of collaboration. However, it can lead to uncertainty regarding who has ultimate responsibility for decision-making or handling challenging situations.

Matrix Structure: Combining Functional and Project-Based Structures

Matrixes tend to focus on projects and the stakeholders involved in those projects. Everyone working on a project will report to multiple leaders. This might be their own manager, their departmental head, project leaders, and other stakeholders, including clients.

They may also report to other departmental leaders to assist in collaboration. For example, a digital advertising project may require input from marketing, sales, and social media specialists. Each of the people the project leader liaises with or reports to becomes part of the matrix.

A matrix agency structure can be highly flexible and effective at removing data siloes. However, this structure is often complex to manage.

Network Structure: A More Fluid and Flexible Approach

Networks are connections of often disparate groups of employees across various departments. These groups may have their own managers but they may also be completely autonomous. One example is a marketing agency that has a pool of content creators. Each of these freelancers is part of the network and reports to the relevant stakeholders. However, they’re also individual entities and aren’t solely associated with the agency, in many cases.

Networks are highly flexible. They promote granular hiring budget management via the acceptance of temporary workers, in some cases. They also promote communication and collaboration. However, implementing corporate or client-based rules and policies is more challenging across multiple departments and external parties.

Choosing and understanding your agency structure allows you to allocate tasks with ease. It also empowers team members to ask the right people for support and collaborate effectively. Investing in platforms that complement your organizational structure enables scalability and increased efficiency.

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Image caption: Bonsai software for agencies makes it simple to allocate tasks, mark their progress, and even attach relevant resources.

Image source: Author screenshot.

Key Components of an Agency Structure

Wherever you stand on the agency structure debate, it’s important to note that no structure can be considered the “best.” Some work well for certain types of companies and others don’t. Choosing the right agency structure is about understanding the major components of effective organizations. Decide whether these components are a high or low priority for you. This will help you visualize the right hierarchy to achieve your business goals.

Leadership and Management: Roles and Responsibilities

All structures must have some type of leadership in place. Even in mostly flat management structures, there has to be a final decision maker. There must also be someone who can handle queries and challenges regarding:

  • Finances
  • Human resources (HR)
  • People management
  • Client relationships
  • Marketing

You may decide not to have a traditional structure with a chief financial officer (CFO) or other C-suite executives. However, you still need to decide who has ultimate responsibility over these areas and how employees raise concerns or queries.

Departments and Teams: How They are Organized and Interrelated

Every agency has teams or departments. These may be sharply defined or you may have overlap. For example, your marketing specialists may also work in the sales teams and social media departments. Make sure you define what teams you need and exactly who team members should report to. Make it simple for teams to communicate and share data safely and securely.

Communication Channels: Ensuring Effective Information Flow

On that last point, all communication should be streamlined and simple. If you need the marketing teams to have direct access to your IT support professionals, create workflows that enable that. If you want to empower clients to liaise directly with sales managers, ensure you have the right form on your website or client documentation.

One of the best ways to eliminate data siloes is to invest in software platforms that support communication. Whether you’re a creative agency or a recruitment agency, tools that encourage collaboration and define task responsibility promote efficiency. Your software should be like your agency structure chart: simple to understand, yet packed with features that benefit your entire team.

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Image caption: Bonsai agency software’s intuitive, clean interface.

Image source: Author screenshot.

Decision-Making Processes: How Decisions Are Made and by Whom

One of the most vital aspects of your agency structure is understanding who has the final say in multiple situations. Once you define decision makers for particular processes, you start to understand your management structure. This can, in many cases, underpin your entire organizational hierarchy or network.

Innovative Trends in Agency Structure

We’ve already seen that the traditional top-down hierarchy isn’t for everyone. However, it’s not only an agency’s leadership team that determines structure. External factors from emerging technologies to the rise in remote workers are all contributing forces.

Impact of Technology and Digital Transformation

Digital transformation is accelerating according to research experts McKinsey. Agencies understand that their clients want to engage with them via more online methods than ever before. This may include entire conversations on social media, or liaising exclusively by email. Zoom, Teams, and other video conferencing solutions, also have a major part to play.

Shifting technologies and client demands can easily impact the structure of an organization. Digital specialists may float from department to department to share their expertise. Networks and matrixes become more viable thanks to increased methods of communication and collaboration. An increasing desire for online communication could shrink traditional sales teams while expanding digital marketing teams.

Additionally, the increased availability of supportive business and task management software empowers agencies to choose organizational structures that work for them. They no longer have to tie themselves to traditional hierarchies simply because they don’t have access to the right resources.

The Rise of Remote and Flexible Work Arrangements

Remote and hybrid work became the norm during the pandemic. However, according to Forbes, over 40% of employees still work remotely at least some of the time. The acceptance of this newer way of working empowers agencies to change their structures dramatically. The impact of embracing hybrid or flexible working means:

  • Increased accessibility — disabled employees gain more opportunities
  • The opportunity to hire a more diverse workforce
  • More chance to attract top talent — flexible working is highly rated by 64% of prospective candidates
  • Opportunities to restructure firms to include employees all over the country or world

Deciding on the importance of remote working for your agency helps you choose a structure that works for you. It can also empower your firm to consider freelancers as an integral part of your organizational plan. Just remember to use an appropriate resource to check current average freelance rates for the skills you require.

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Image caption: Bonsai provides free resources for agencies needing information on freelancer rates.

Image source: Author screenshot.

Integration of Artificial Intelligence and Automation

Artificial intelligence (AI) and machine learning (ML) have become integrated into many aspects of business. Chatbots, code generators, and image-generation tools all help firms streamline various aspects of business responsibility.

The right AI and automation tools could impact how agencies choose to structure their organization. AI-powered decision-making tools could reduce the need for a highly structured leadership team. Automation handles numerous tedious or time-consuming tasks, freeing up employees to innovate and collaborate.

One of the most vital aspects of AI in business is data analysis, particularly predictive analytics. With the right forecasting tools, agencies can plan ahead and consider structures that will meet their current and future goals and needs.

Challenges in Implementing Structural Changes

Implementing structural change across an organization naturally comes with certain challenges. The ultimate goal of a structural redesign should be to better focus company resources on areas of the business that can promote growth. Understanding the following challenges helps you address them efficiently as and when they arise.

Resistance to Change and How to Manage It

It’s totally normal for agencies to experience resistance to change when suggesting major structural transformation. Change management is a vital aspect of ensuring smooth transitions. It’s so critical, in fact, that many organizations create dedicated change management teams. This reflects research from Gartner that shows 75% of firms expect increasing volumes of major change initiatives in the next three years.

The first stage is managing change is to expect it. Many employees will be comfortable in an existing structure, even if it stunts their chances to excel. They may fear the challenge of learning a new hierarchy. They may also simply believe the changes are unnecessary.

To mitigate resistance, consider the following:

  • Ensure you effectively communicate the reasons for any structural change
  • Highlight the benefits and make those relevant at an individual and team level
  • Create open channels for feedback and communication throughout the process
  • Be open to criticism — there may be challenges you have not considered
  • Engage change management specialists with experience in reducing friction during transformational processes

Change will impact different employees and teams in different ways. Agency leaders should listen and respond to feedback to get everyone to buy-in to any changes.

Maintaining Culture and Identity During Structural Shifts

Your company’s values and culture should help guide your choice of agency structure. For example, if you value a culture where every voice is equal, a traditional hierarchical structure may not be well-suited to your firm.

You can also use your values to guide the process of change. Effective communication, clarity, and openness to feedback might tie directly to your company identity. Embrace those aspects and you should find that there is little to no negative impact to your agency’s culture.

One important factor is to ensure your remote workers and freelancers are as engaged as your on-site employees. Remote employees who aren’t kept in the loop by managers are more likely to feel disengaged. This could be highly detrimental to a positive company culture. This is particularly true if you’re aiming for a network-style structure.

Use effective tools and collaboration software to ensure every member of staff is kept informed, no matter their location.

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Image caption: Bonsai business software supports the instant addition of collaborators to any project.

Image source: Author screenshot

Budgetary and Resource Considerations

It may be hard to engage budget allocators if there’s no clear evidence that the new structure offers financial benefits. Ensure that any decision to change your structure ties in to business goals and growth targets. Consider visualizing these factors in charts, graphs, and presentations.

The clearer you can make the benefits of the structural change, the more likely you’ll gain the budget and resources required to make it happen. Conversely, if you consider structural transformation and find the costs outweigh the benefits, stop and rethink. This may not be the right time to make this move.

Best Practices in Agency Structure Design

Every agency must meet client needs while not overburdening employees. Structural change can help achieve this when implemented in the right way.

Tailoring Structure to Agency Goals and Needs

Whatever structure you choose, you can adjust it to meet your agency’s specific needs. If you want to have on-demand specialists to handle ad-hoc client requests, a network structure may work best. If you regularly work on long-term projects with multiple stakeholders, a matrix format may be better suited to your needs.

As well as considering the kind of work you do and your client demands, think about your existing and future workforce. Are you planning to accelerate hiring soon? Do you plan to outsource freelancers or allow more flexible working? Your business goals can guide these types of decisions, in turn empowering you to make the right choice about agency structure.

Your overarching agency goals should also consider changing and emerging markets. Agencies that have a structure suited to today’s clients might struggle with increasing digital demands. McKinsey notes that operational model designers need to consider changing consumer needs and adapt accordingly.

Agencies that can consider all these aspects while keeping their business goals as a “true north” will inevitably experience growth.

Ensuring Flexibility and Adaptability in Structure

As touched on above, adaptability is essential in rapidly evolving markets. Agencies must be ready to accept that there is no one-size-fits-all structure. Whatever general shape you decide on, adjusting it to your needs is essential.

However, those changes aren’t necessarily a one-time event. Constantly listening to employee and manager feedback and assessing client experiences helps assess where a structure is working. And, of course, show where it may be falling down. Responding to challenges and making changes as necessary helps your agency grow.

There may be structural issues that don’t require major transformational initiatives. For example, maybe clients have noted concerns because their invoices are inconsistent. A quick check might find that one department is using a different invoice format than everyone else. While this might be a hangover from the restructuring process, a quick, all-encompassing communication can fix this.

To ensure invoice consistency, you can utilize free online resources that ensure identical invoices every time. This can also help stretch your budget further.

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Image caption: Bonsai’s completely free-of-charge invoice generator.

Image source: Author screenshot

Emphasizing Employee Engagement and Satisfaction

Your agency structure works best for you when everyone across all your teams is satisfied. Engaging them in the change process is the first step toward that. When people know why change is taking place and how it will benefit them, they’re more likely to approach it with a positive mindset.

Once a structure is in place, you must continue to monitor employee engagement and satisfaction rates. If satisfaction dips in the short term, don’t panic. It’s normal for there to be a learning curve. Work with a change manager to assess how long you want to leave it before you expect worker satisfaction to increase.

If satisfaction or engagement continues to drop, this could indicate deeper issues. These may not relate to the structural change. Research is essential to discover the underlying causes of disengagement. Consider anonymous surveys, manager drop in sessions, or “anything goes” forums to collate honest employee views.

Agency structures are changing in response to evolving client needs. The traditional hierarchy may be phased out in favor of flexible structures that provide faster results for clients. The right software can help you support client needs while increasing your employee satisfaction rates. Book a free trial with Bonsai and discover how.

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