Prepare for business problems if your agency has the same people doing PM and client strategy.

A friend recently asked for my opinion on a staffing change at his digital marketing agency—they’ll be requiring strategists to do PM and requiring project managers to do client strategy and account management.

For most agencies, combining PM and client strategy (or PM and account management) is a terrible idea—here’s why.

Agency PMs and strategists have conflicting priorities

The strategist’s job is to ensure the project is done on-strategy for the client. The project manager’s job is to get the project done as quickly (and on-budget, and on-scope) as possible. Those priorities are typically at odds with each other.

Efficiency: The agency PM wants to get things done

The PM wants to get things done. S/he has a strong incentive to cut anything from the Iron Triangle (the “pick two” of budget, scope, timeline) to get things done.

If you can cut scope (where possible) to do an adequate—not standout—job, it means the project’s done faster and with less budget.

I’m not saying to deliver bad work, but strategists (and account execs) may want to deliver better than the client wants… or is paying for. That’s a fast way to hurt profit margins.

Effectiveness: The agency strategist (or account executive) wants to get things done right

The strategist wants to expand the scope to give the client the best results possible (and, ideally, upsell them on making that happen). Strategists ultimately want more budget to have more time to do better work; PMs typically want everyone on the team to get things done in less time.

Upsells are easier when you split the roles

I’ve worked with agencies that do both approaches—upsells are easier when you split the roles. A good project manager can (and should) do upsells, but clients are more likely to want the upsell if a strategist is the one selling them on it.

Clients tend to prefer strategy advice from someone who’s all about strategy (a strategist, creative director, or account executive), as opposed to the person who’s scheduling meetings, sending invoices, and giving them budget updates (a PM).

A compromise: When you aren’t big enough to hire a full-time PM

The only case it makes sense to combine PM and strategy is when the agency is too small to afford hiring a full-time PM. This means under 8-12 employees for most agencies (but under 6-8 employees for web design firms).

Hire a full-time PM as you approach 10 employees (and sooner if you build websites)

Marketing agencies tend to hire their first full-time PM as they get to the 10-employee mark. Digital agencies that build websites tend to hire PMs sooner, since they see the pain caused when a single person isn’t dedicated to keeping each project moving smoothly.

Due to payroll constraints, smaller agencies need to have someone handling PM plus something else—for instance, PM+design, PM+development, PM+strategy, or PM+sales.

This is an understandable deferral—PMs typically aren’t as billable as designers, developers, and strategists, which means agencies don’t hire PMs ’til the agency grows to support the overhead.

Of course, this can become a desperate cycle—the agency can’t hire a PM ’til they grow, but they can’t grow without a PM.

PM+X at small agencies: Understandable but not ideal

Any of those “PM+X” combos at smaller agencies requires significant compromises, because the agency is asking the employee to do strategy and execution work (as a strategist) while also ensuring they don’t overdo it (as a PM).

That’s a tough challenge that few people can navigate well—a strategist doing PM is a fox watching the agency’s henhouse.

Hire your first PM as you get to 10 employees, if not sooner

In my experience, once an agency is at 10+ people, there’s no reason not to have a full-time PM. It ensures there’s a good tension between the PM and the strategist (or account executive)—to ensure that clients get what they need without being unprofitably overserviced.

If you run a small agency and have someone doing PM+X, be prepared for conflicts—including lower profit margins and longer project timelines—and plan to get a full-time PM as soon as you can afford it. Everyone will be happier when you get to that milestone.

Stopgap advice: How to make the best of it if you can’t afford to separate PM+strategy yet

I see this conflict myself when I’m doing PM on myself at my strategy consulting at Sakas & Company. As a strategist, I want to give clients more than the Statement of Work (SOW) allows, since I want to keep them happy. As a PM and the business owner, I need to limit what I deliver to the promised scope and budget. It’s a challenge.

If your agency isn’t big enough to hire a full-time PM, here are some ways to make the best of it.

1) Accept that things are going to slip. When the same person does PM and strategy, they’re fighting with themselves. Expect lower margins (from the strategist giving away work that a separate PM wouldn’t let them do), longer timelines (from the strategist making promises a PM wouldn’t make), and frustrated clients (from you needing to clawback unauthorized promises). As the agency owner, expect to spend more personnel time counseling the PM+strategist about balancing things.

2) Don’t make any in-person promises to clients about scope changes, or about timelines on new requests. If a client asks the PM/strategist if they can do something (in-scope) that’s not in scope (or it isn’t clear), never say “yes” in person. Always say, “Let me check on that and I’ll follow up.” This lets you go back to the office and mentally shift back to PM mode.

3) Consider hiring a freelance PM to help in the meantime. Be sure to budget for hiring a contract PM to help on your biggest projects. Big projects means high client expectations and more opportunities for things to go wrong. You need a PM doing risk management, not just a strategist thinking about what’s possible.

Applying this approach at your digital marketing agency

To be sure, cross-training is generally a good idea for digital marketing agencies (e.g., someone who can do UX design and front-end development can do more billable work). But it’s important to keep strategy and PM separate unless you have no other choice.

Agencies get in business trouble when they combine PM and strategy—as I note above, the roles require different mindsets and have inherently conflicting priorities. If an agency wants to run profitably, the PM+strategy combination is a stopgap solution at best.

Want more? Listen to my interview on this topic on episode 10 of the Agencies Drinking Beer podcast.

Question: What have you seen when digital agencies have the same people doing PM and strategy? How’d it go?

Image credit: Janus image by Thierry Ehrmann via Flickr