When is it worth the risk to bring on a new full-time employee? This is a hard decision many agency owners and business leaders face. Previously, when there was additional work that needed to be completed, the default was to hire a full-time employee. Agencies hired contract labor or freelancers for particular skills, such as an illustrator specializing in comic book drawings – but rarely for an ongoing role on an account team.

But that’s not the case anymore. So how do you build your team? Let’s walk through the decision-making process.

Strength is Not in Size

The strength of a company is no longer measured by the number of employees on its roster. With the growth of the Internet, overnight shipping, cloud storage, and collaborative tools that allow teams to brainstorm, it’s common for an agency to have established relationships with contract laborers. These elements make it extremely easy to work with people from across the globe. Our society’s attitude about virtual teams, working from home, and cross-continental collaborations has changed. It’s gone from “You have to shore up your team with other people” to “You’ve built the best team possible.” Focus on who you need to complete your company, and don’t be afraid to look outside the box to find him or her.

Contract Labor Can Save You Money

A poor economy has resulted in smaller in-house staff and, in turn, robust freelance models for many companies. It’s often less expensive to hire a freelancer for a specific project than it is to keep someone on staff. And rising healthcare insurance and other benefit costs will only add to these expenses.

Full-Timers Can Be More Reliable

There are definite benefits to having someone on staff. Not only can full-timers be more attentive, they’re also more likely to multitask and take on several clients at once. In-house personnel can focus on billable work while collaborating with other staffers. This way, employees can learn from each other by simply observing.

Contractors Lack Exclusivity

Oftentimes, agencies use freelancers for writing, art, and digital skills, like coding and SEO. No matter how good or loyal a freelancer is, having the full commitment and attention of an employee can be invaluable. For most agencies using the contract labor model, they are contracting out for the “doers,” not the keepers of the strategy and client relationships.

Agency owners typically keep their best thinkers in-house. This allows the client to benefit from ongoing attention and consistency. Plus, the fear is that a freelance strategist might come between an agency and its client. When the relationship is maintained in-house, however, it’s less likely to be poached.

There’s No One Right Answer

Recognize that there is no single right answer — no set of absolutes. What works for one agency may not work for another. There are too many variables: the culture of the agency, the types of clients, the volume of work, etc. To be a successful agency, you do need a core team, and 99 percent of the time, you need them in-house.

To determine if the work might make more sense for a freelance or contract position, consider:
•       Is the work they will do considered a commodity, like coding a website?
•       Are skilled people who can perform this task readily available?
•       Might we need many different “specialties” of this skill set, like one writer who has a depth of medical knowledge versus another writer who is an experienced travel writer?
•       If you lost the client/project, would you have to let this person go?

If you answered “yes” to these questions, then working on a contract basis with someone who can simply execute on a project may be the best route to take.

When considering hiring a full-time employee, ask yourself:

•       Does the work require a lot of interaction with several members of your in-house team?
•       Will the person who performs these tasks be in client or new business presentations?
•       Should the position allow the person to become a part of the client’s culture/company?
•       Is exclusivity of this person’s skill set going to matter to your business?
•       Would it add a permanent level of additional work/strain on my in-house team if this position were filled via contract labor?
•       Would this be an expensive hire? Would the billable work and value of the employee be worth it?

Consider the following: If the task is specific and there are skilled people readily available, contract labor might make the most sense. But if the position requires excessive collaboration and 40-plus hours a week, it’s best to hire permanent employees. Most agencies are too slow to fire, so adding a staffer when you should have assigned the project to a freelancer can be a very expensive error (both in money and morale) by the time you fix it. On the flip side, if you’re only going the contract labor route because you’re too cheap to hire or you’re trying to squeeze more work out of your existing staff, that will backfire as well.

All in all, you must deeply analyze the pros and cons of these options before making a final call. Consider your finances, as well as the skill sets needed to establish a profitable, fully functioning company. Before you bring someone on full-time, ensure he or she will have ongoing work that satisfies everyone involved. And when possible, build a trial period into whichever option you choose. That way, if you do make the wrong decision, you can quickly reverse it without incurring any long-term costs. Building in a safety net, while creating your team, makes each move worth the risk.


For more than 25 years Drew McLellan has been in the advertising industry. For 18 of those he owned and ran his own agency. Today, McLellan leads up the Agency Management Roundtable, which advises hundreds of small- to medium-sized advertising agencies on how to grow and build their profitability through webinars, consulting, agency tools, workshops and more.