Managing staff for profitability

Your client loves working with the account team he or she has been working with for years. Why would you want to disrupt this very successful client relationship? You probably don’t. But if you don’t you will watch as your profit margins drop year over year.

Over the course of a number of years, these very same employees will receive several salary increases and probably some promotions as well. If they continue to do the same work on the same accounts, your costs will increase and your revenue will remain the same.

Profits will drop and over-servicing will increase. There are only two ways to avoid this situation. You either need to get the client to pay for the increased rates, or modify the staff and move the work down to the appropriate level.

For the sake of proper management, I would strongly urge you to try for the second option first. If the work could be handled by an AE three years ago, the same work can be handled by an AE today and doesn’t have to be done by that original AE who is now an AS. The advantage of this option is that it allows both employees to learn and grow.

If it’s not possible to move the work down to the appropriate level, you need to talk to the client to make him or her realize that the employee on their business is valuable and the only way to retain him or her is to make certain proper rewards are in place.