The Economics of the Choice: Hiring Internally vs. Externally

by Jason Ogden | May 19, 2016

I get asked about various aspects of this topic during sales meetings all the time. Does it make more sense to hire internally or hire an agency? For me, the economics of that choice boil down to 3 main things: Cost, Quality & Management.

Cost
For the cost of one good hire, you can outsource to a team. Read that one again. Whether you’re buying a project, campaign or retainer, it simply costs less to hire a firm to do the work than it does to hire someone internally to do that same amount of work. This will only continue to be truer as the technical disciplines in marketing get both deeper and greater in number.

For the cost of one good hire, you can outsource to a team.

The exception to this rule is a function of the scale of your business. You have to be both large enough to have a multi-person hiring plan in your budget, and you have to have the continuous ongoing business need to keep your team producing year-round (no bench time) to justify the cost.

Quality
Let’s just get this out there so we can move past it – the best and brightest in the business don’t want to work for you. Before you hang your head and start feeling bad, don’t. It’s not a reflection of you or your company (which are both awesome). The best designers, developers, and digital marketers don’t want to work for any client unless your name is Google or Coke. It’s nothing personal, it’s about their need to constantly be on the cutting edge and have a steady diet of diverse problems that need to be solved. Remember, we’re dealing with creatives here (including the developers and markers), and that’s what they want from their work. You can fight this or you can let this be an agency’s challenge.

Management
You don’t have the ability to manage a team of technical experts in fields you don’t have technical expertise. Unless your hiring plan includes a Creative/Marketing Director role that has expertise in design, development, social, paid and automation, and has the ability to set comprehensive strategy, there’s going to be gaps in how it all works together. If you do hire a Marketing Director, be fair to them and give them outside expertise to help them set the strategy and execute in the event they’re not the unicorn of a director I just described.

You don’t have the ability to manage a team of technical experts in fields you don’t have technical expertise.

The internal team model also fails to account for the breadth of skills needed within a given position as well as for certain contingencies. For example, if you hire a designer, do you expect that one person to have diverse skills to handle all your print, web and marketing needs? Some senior designers can handle that breadth of work masterfully but it’s a pretty narrow pool and in real life you need all those things.

In addition, what happens if that person leaves for some reason? Is your entire team on hold waiting for their designs until you go through the entire search, interview, hire, start and train process until you can start producing the necessary design work again? If you’re building a big team with multiple people at each position, this becomes less of an issue, but consider the breadth of skill and redundancy when evaluating your options.

Once you take a look at these three areas of your business, it’s up to you to decide what makes the most sense for you.