The biggest cost of any organization is that of the wage bill. While commercial organizations, seek to keep costs to a minimum, there is a tendency especially in large businesses, for staff salaries to be supressed while that of senior management to be inflated.
For larger businesses, where the marketing function has expanded into various specialists sections or departments, such as customer relationship management, advertising, public relations, research and planning, the post covid situation may provoke a reappraisal of the marketing requirement. How much does it all cost? What does it contribute to the business? Is it all necessary?
Every commercial manager worth their salt should know what every part of their marketing organization costs, how much investment it absorbs, and most importantly what it contributes to the business. If commercial managers have such information, they should be able to demonstrate how marketing resources and investment are used and what collectively they return, in terms of profitable income. It is important to remember that the objective of the marketing function is to maximize sustainable profitable revenue, and to achieve this with the minimum of cost and investment. All the activities of the marketing function should be examined on the basis of cause and effect, considering what would be the overall effect on the marketing effort and the business as a whole, if a particular activity were to be reduced.
Financial restriction may also provide an opportunity to reorganize the marketing function, rationalizing the functions of sales, sales support and customer support, into an integrated and effective marketing organization. Reorganization and rationalization does not necessarily produce cost savings, but it does encourage the efficient use of resources and investment to produce the sustainable profitable revenue required by the business.
The internationally famous management consultant, the late Peter Drucker once said” if you can’t measure it you can’t manage it”. When evaluating the contribution of business operations, its performance must be measured in terms of output and efficiency. From the business point of view, the main factors will be the amount of sustainable profitable revenue produced together with a measure of its efficiency in converting marketing costs and investment into revenue. For the commercial manager, the most difficult areas of marketing to evaluate are those where there is no direct measurable outcome, which tend to be those areas of sales support. The input and output of the sales organization, including direct as well as web based sales are relatively easy to establish, but what about the advertising department and the public relations function? Effective advertising can be essential to maintaining sales and creating new selling opportunities. An external agency with a clear objective and budget can be more cost effective and productive than when handled internally. Similarly external public relations can be the most cost effective way of informing the market and potential customers, via traditional print, broadcast media, social media and the internet,
People should be paid based on their value and contribution to the organization. The question is, are they worth what they are paid? Commercial managers should get staff to write their own job description, and then compare it with their official ones, noting where jobs overlap, and where additional responsibilities lie. Formal job descriptions are sometimes considered to be too limiting and prescriptive, but a clear job description define necessary responsibilities and expectations for the benefit of both employer and employee and also enable employee’s performances to be assessed. However, the tasks and responsibilities that are written in an employee’s job description may differ from what the employee perceives to be their tasks and responsibility, and may differ again from what they actually do. Does the commercial operation work as well as it should or could? How do you know?
Performance is measured by results past and present, presented as quantitative data, but this does not tell the whole story of how well an organisation is operating. Quantitative data can indicate where performance meets, falls short of or exceeds expectations, but while such data might hint at an underlying cause, it cannot illuminate causes which may be qualitative in nature or that originate in employee organisation and management.
* How does the method of working and organisation meet the needs of employees and employers?
* Is the work process efficient and effective?
* Does the methodology and levels of responsibility motivate or demotivate employees?
* Do you know what employees actually do or how they contribute to the commercial objectives?
High salaries should be justified on overall contribution and responsibilities. Commercial managers need to identify which are the key workers and major contributors to the business success?
* Is their contribution worth their salary?
* What would be the effect on the business if they left for a competitor?
* What is the current market rate for a replacement?
* What performance measures are used?
It is an old saying that if you pay peanuts you get monkeys. If staff feel underpaid they will be demotivated and leave. Finding the balance where people are paid to the maximum of their contribution is difficult, but much will be expected from those with high salaries which will only be justified by high performance and overall contribution to the business.
© N.C.Watkis, Contract Marketing Service 01 Nov 21