There is probably an equation somewhere to prove that, if an industry lacks x% skilled staff, it is experiencing y% growth. If so, the marketing industry is currently on a high.
Skills deficits are concentrating the minds of recruitment agencies, clients and marketing consultancies like never before. It is no longer a question of how to find staff, but how to locate those with the right skills, and then how to keep them. The trusty old Job Centre is no longer the only solution: companies need to make strategic use of the plethora of staff search facilities now available if they are to overcome the skills shortage that is afflicting the marketing industry.
But back to this mythical formula. It can be looked at another way. If staff shortages occur, there is a direct correlation with service levels and profitability: demand for staff exceeds supply, so salary levels are driven up and, if there is no attendant growth in income, profit levels will decline.
The cost of skills shortages
According to Jim Surguy, managing director of Results Business Consulting, recent data from accountants Willott Kingston Smith highlights the problem.
He explains that overall productivity in the PR sector, for example, in the first quarter of this year, showed a small increase of 0.6%, but employment costs increased much faster, at 2.5%. The result, he says, has been a steep decline, in fact, for the second consecutive quarter, in operating profit per head, which is down by 9%.
In advertising, meanwhile, according to Surguy, agencies increased income per head by 3%, but employment costs per head rose still more - by 8.3%.
Design, too, has been hit, with profits declining as a direct result of higher staff costs.
There are relatively few sectors within marketing that have escaped the worst impact of skills shortages, he says. 'The direct marketing/sales promotion sector saw gross income per head increase by 1.8%, while employment costs rose by only half that, giving rise to increased profitability. As for media specialists, income per head went up 3%, while employment costs rose by only 2%, again increasing profitability.'
That isn't to say that the situation won't change. Take media buying.
It is having to come to terms with the fact that clients' needs are changing, and that media integration is now crucial. 'Clients are looking for communications partners with a wide range of skills across all communications,' says Jeff Hyams, managing director of Zed, a media planning and buying agency.
In turn, these partners need staff with a greater depth and breadth of skills and experience. 'As a result, staff with experience in different communications disciplines are at a premium,' he says.
The downside is that this creates a very transient workforce, with those working at communications agencies specialising in specific communications looking to broaden their experience elsewhere, and those with experience of various media channels being continually head-hunted.
'Obviously, this can't continue,' says Hyams. 'Agencies need to take responsibility and foster a company culture of education and development, not just paying lip service, but real commitment. Otherwise staff will walk.'
In PR, a 60% turnover rate for account executives is now quoted as the industry average, so what will reduce the churn? According to Crispin Manners, chief executive of PR agency Kaizo much depends on companies' attitudes: whether they rent or buy people.
'There are four main things that you have to have in place, and they all have to be there,' he says. 'The right level of rewards, a decent recognition of people's contribution, involvement in the running of the business at all levels and the creation of a working environment that stretches people.'
His staff are encouraged to get involved in cause-related marketing initiatives, for instance, through Kaizo's Byte Night project, developed and run in partnership with NCH Action for Children. Top IT executives and celebrities such as Jenny Agutter and Alistair Stewart (pictured) annually sleep out for the night to raise money for the charity's work to eradicate homelessness.
He has also introduced share-option schemes for employees, and reward vouchers worth up to pounds 150.
Hanging onto good staff
So much for the carrot. But just why are such measures necessary? Alasdair Sutherland, executive vice-president, corporate development, at Manning Selvage & Lee, quotes a number of reasons for staff shortages within the PR industry. 'First,' he says, 'there is the success of our industry.
With increased accountability and measurability of PR, clients understand that they are getting a good return on investment.'
In other words, the standard of the industry has risen and good PR people know their value.
'The second driving factor in staff shortages is e-commerce and its exploding use of PR services,' says Sutherland. This, he points out, is because a PR person seems to find the transition to dotcoms far easier than their advertising brethren.
Also, he says, globalisation is having an impact on the need for senior trained staff to help train other local people. 'The success of the US economy is driving the market worldwide,' he says. 'The consequences of business decisions taken in the 90s when we cut down on training and did not take on that year's consignment of trainees are coming home to roost,' he adds.
The outcome? 'Increased competition for the existing small pool of talent,' says Sutherland.
But how do companies choose to target that pool? Sutherland, for instance, often comes across staff at a more senior level by chance, with his own people constantly on the lookout for talent at home and abroad. Further down the line, recruitment agencies may come into their own.
Print advertising is still key, and online recruitment looks certain to increase. June, for instance, saw the launch of Telepeople.com, a leading portal for the telebusiness industry, providing both e-learning and recruitment services.
All are necessary to cope with skills shortages cropping up in a number of sectors and at different levels. Jim Norris, a partner at Spectrum Marketing Recruitment, points to product management as causing the biggest headaches with lack of numeracy a major culprit.
'The focus should be on management of data and measurement of risk,' he says. 'That is what marketing is all about, making consumption easier. Yet that is letting people down more and more. We have a numeracy test and people blow it.' His solution would be a better grounding in mathematics at the A-level stage.
Ben Vickers, one of the directors at Blue Skies Marketing Recruitment, claims that there is a general lack of good account-handling staff. 'Employers are now a little bit more fussy about the people they recruit,' he says.
'Agencies are being very precise about people's backgrounds and ensuring that there is a good skills fit. There is a lot more attention to quality.'
What he has picked up is an idea that people are now staying longer at their jobs than they were six months ago. There may be a greater number of candidates, yet people are taking more time over considering a move to another job.
Moving up the career ladder
Movement varies according to position on the career ladder, he says. Those at the bottom, senior account executives on around the pounds 20,000 mark are the most frequent movers but, slightly higher up at pounds 30,000 to pounds 35,000, senior account managers become a little more fussy.
'The real bottleneck occurs between the pounds 40,000 to pounds 45,000 account directors, and client services directors at pounds 80,000-plus,' says Vickers. 'There are more people going for fewer opportunities.' And at that stage, they no longer feel that they have something to prove, they just want to enjoy their day job.
Outside London, the market at first sight appears more static. 'Our office in the Midlands reports less activity for account handlers and people stay longer,' says Vickers. The quality of life issue and a company's location plays an important part and there are fewer agencies in a location. In London you might have a choice of 20 companies, in the Midlands just four or five.'
This is not the view of all agencies, however. At Michael Page, managing consultant Andrew Gibson charts the impact of growth in such sectors as IT and telecoms. 'A lot of companies are starting up outside of London, and you have a shortage of people in the North-East of England,' he says.
'The biggest problem is that since we have been in an expanding economy, we have a lot of fast-growing industries that require skilled individuals, which has highlighted shortages. There is no less training, just less time for it, it is all about targets.'
So what priority are companies assigning to training? At Heinz, HR manager for Europe HQ and commercial Alberto Bolognese stresses that marketing executives in key positions should attend two weeks' training a year.
'We have built a programme with the Chartered Institute of Marketing into a pan-European venture, and one that people will attend because it is an integral part of their development,' he says. 'The only question mark lies over their line manager, who has to be sensitive enough to let them come.'
At other companies the priorities might be different. Brand consultancy Dragon International states a commitment to staff to help them develop but admits it is too small to take on juniors. Five days' training a year is built into each person's personal development plan, which is reviewed twice a year.
'It's working well,' says co-founder Jane Mann. 'Part of my five days' training was a one-day workshop on 'how to interview'. There are apparently no fewer than 40 criteria that you need when interviewing - and you should cut these down to six. Leadership versus team player, manager or director, self-starter or follower: for each one there are a set of questions. You are then strategic in the way that you recruit, and can sort people who talk the talk from those who can do it as well - and there is a shortage of good people. It can take months to recruit senior staff.'
These shortages are most apparent among the middle to senior staff, particularly those involved with strategic planning, she says. 'They used to follow a classic route in our sector, either from advertising or from a client background. But now there are a lot of very mediocre planners out there, who can't communicate, and I am not sure why.'
Such shortages are often replicated in the qualitative research sector.
Though decent graduates represent a great investment, according to DRSM chairman Prosper Riley-Smith, they are not a particular problem.
'The problem is finding people at a mid to senior level,' he says. 'In the 90s, companies stopped training and we are now suffering the consequences.
Also, if you want people higher up it becomes more difficult. It is not so much a skills thing but a culture thing.
'I think market research has to work harder. We have had it quite easy in the past few years. People come in and act as job placements, it cost us virtually nothing, we get to know them and appoint them directly. But the industry has to work harder to make itself more available. We haven't even trawled the universities,' he adds.
Even advertising, which in the past attracted the best and the brightest, is suffering in the recruitment stakes. Agency CCHM, which specialises in service brands, has found hiring staff its biggest problem in the past year. Perhaps it is because marketing is increasingly seen as a marginalised function.
'This has a knock-on effect on the recruitment of real talent, with candidates seeing e-commerce as the key to career development, regarding it as part of the IT function rather than marketing,' says Paul Gordon, CCHM managing director.
'Equally, one suspects that blazing a trail with Andersen Consulting or Bain & Co. may be more attractive than a three-year slog to make brand manager on a vastly inferior salary to boot,' says Gordon.
Staffing isn't just the problem of agencies, clients have also reduced their head count and then turn to their suppliers for help. But the big bugbear, with Gordon's point echoed throughout the industry, is IT and e-commerce.
'New jobs are appearing in the technology market, and they are attracting the qualified graduates,' says Matthew Hooper, managing director of Interfocus.
'The nub is that a graduate entering a technology job could earn about pounds 50,000 - this wouldn't happen in the marketing industry.
So what is the solution? Hooper proposes a joint industry body, representing all marketing disciplines and made up of universities, clients and agencies, to ensure that graduates are cross-trained so that they are not pigeonholed before leaving college. It could also promote the industry and educate all involved in the work and results that are achieved by marketers.
The freelance phenomenon
The phenomenon that's provoking the most interest, however, arises from the bottleneck created when staff can rise no further within an organisation yet feel they have more to offer, is the growing pool of freelancers.
It crosses all marketing disciplines and is being watched carefully by recruitment agencies. Such personnel may never be able to offer the complete range of services that established companies can, yet for clients who want cost-effective quality and speed it is often a tempting option.
Some agencies have taken advantage of this phenomenon. 'Despite the trend of PR practitioners opting to go freelance - many of whom worked on a 'permanent' basis at big agencies and became dissatisfied with the culture or hit a glass ceiling - we have found it an excellent way of recruiting some very talented people,' says Ros Palmer, managing director of PR agency RPPR.
'Initially they have been signed up on a short-term contract and three months later they have accepted a permanent position.'
There again, it makes much more sense to contain a threat and transform it into an asset.
HIRING AND KEEPING EVENT MARKETING STAFF
The Sydney Olympics didn't just produce a halfway decent crop of medals for Great Britain, for once. They also demonstrated just how professional event marketing can be. Yet this is just another area of the marketing mix where skills shortages occur.
At Skybridge Group, the communications and events agency, they hit on an enterprising solution to the problem. Four years ago chief executive Randle Stonier read that Leeds University was about to start an event management degree course.
He wrote off to the university, asking if there was anything he could do to help. The result was that he was made an industrial adviser, reviewing the content of the course in the context of the practicalities of the marketplace.
He was then drawn in further and asked to lecture from first hand experience about the market's demands and requirements - and those of clients.
'The courses have a sandwich element, with most students taking a year out, and they get a low basic pay of about pounds 10,500, doing a ten-month placement in industry,' he says.
This means that Skybridge has seen a number of students pass through its doors over the initial four-year period, an exercise that has been so successful that not only have some been hired subsequently, but they are also seen as a promotional tool.
'We allow students who have been to us previously to man the stands at the assessment job fair,' says Stonier. 'They relate better to other students, who are naturally cynical - and we are now seen as a plum year-out assignment.'
Those on such assignments can become valued staff members. 'You get somebody who knows how the company works, the standards you require, who does not come with a lot of baggage,' says Stonier. 'You have moulded them to suit the marketplace and your culture, and you have them on and off for at least four years - they often come back during the holidays.'
If they join permanently, there is the attraction that they can do so as event managers rather than executives. But after that, the knack will be retaining them. 'It is up to us to provide an interesting, stimulating, challenging environment that continues to stretch them,' says Stonier. 'If we don't, people will jump ship.'