Agency capacity planning: right people, right place, right time

Capacity planning plays a pivotal role in preventing employee burnout and creating a healthy agency culture.

Peaks and troughs are an inevitable part of agency life. But if you want your agency to be profitable, balanced workloads and fully utilised teams are a must.

In this guide to agency capacity planning, we'll share best practices to help you get your resourcing just right.

What is agency capacity planning?

Agency capacity planning is the process of determining how much capacity you need in your agency to meet your current and projected work demand effectively.

Essentially, how many people and what skillsets you need to deliver client projects and retainers without causing overwhelm.

Synergist Scheduling Dashboard shows your team's capacity over the coming days, weeks and months

Agency capacity planning challenges

These are the six top challenges we see repeatedly in agencies. If you can get a handle on these, you’re putting yourself in a good position to deliver high-quality client work on time and in budget.

1. Selling too much or not enough of each skillset. Your teams all bring their own unique skills. If you’re experiencing a quiet time, it can be tempting to take any work that comes your way. But if you’re simply making already-busy people even busier, you’ll end up with burnout in some teams and boredom in others. In an ideal world, all your creatives will be working on chargeable work as much as possible. If you’re constantly finding an imbalance between your teams’ workload, it could be worth taking a closer look at whether your agency has the right skills mix.
2. Projects dropping out or being delayed. If this happens, do you have a back-up plan? Some agencies have a ‘pool’ of non-urgent internal work for creatives to dip into, or anytime training which can be fitted in if a job doesn’t come in as planned.
3. Projects being squeezed in. Taking on too many projects is not good for anybody. You might want to snap them up ahead of your competitors or not be seen to be turning down work. But if you haven’t planned for this, your clients will end up with a rush job that won’t do your reputation or your bank balance any favours.
4. Overservicing or underestimating leading to work going over planned/allocated time. If your team members know they have a particular utilisation rate to meet on their timesheets, they can often be tempted to draw jobs out to make them ‘look busy’. This is where awareness is key, letting them know they won’t be penalised if the work simply isn’t there for them to reach the expected utilisation. But that inflating the hours on a project will simply send it soaring over budget and make future estimating difficult. Similarly, underestimating a project can play havoc with your profits, so make sure your account managers are doing due diligence first. Look at previous work, speak to the creatives, have a clear strategy for how many sets of amends are included. Managing client expectations is important to keep project hours on track. Also, try to avoid reverse engineering your estimate to simply fit in with a client budget. You might make the decision to do this with the quote, but make sure your internal systems are up to speed.
5. Overbooking, booking ‘favourites’ or seniors or booking more time than estimated. Leaving people under-utilised sat around twiddling thumbs. If you’re consistently underbooking some people, they will soon become demotivated and disengaged. And regularly overbooking others can lead to them feeling overworked and cause problems if they’re off sick or on holiday.
6. Lack of forecasting. This is where managing your pipeline can be invaluable, so you know what’s coming in. You might know there are opportunities out there, but drilling down into when they might land, who needs to work on them and the scope of the project can help avoid nasty surprises.

What are the benefits of agency capacity planning?

These are many and varied, but some of the benefits you could expect to see include:

Knowing how much and what skillsets you have available to sell means you can forecast revenue based on the capacity of your current resource. This means that you’ll be using your existing resources to best effect, making sure you don’t have over capacity in any teams but keeping everyone busy and productive. Essentially, it’s about effectively coordinating your incoming workload to match your availability.

Optimise utilisation rates by understanding each person’s true capacity, making sure they’re busy but avoiding overscheduling to prevent burnout. This is really key. Agencies are naturally busy places, but when this tips over into becoming consistently stressful, you’ll find people are less motivated. Managing burnout will keep your people engaged and involved without going into overload territory.  

Making informed decisions means you can accurately predict if you’ll need to hire short-term freelancers, medium-term contractors or long-term recruits. Or if you’ll have gaps in workload and need to sell more or even make informed decisions to reduce staff.  This means that you’re making data-driven decisions rather than taking on expensive freelancers ‘just in case’ only for them to be sat with nothing to do.

Tracking trends in capacity helps you plan accordingly. Monitoring your capacity over time can show if there are any regular patterns in demand and workload, and help you manage this better. You can also track capacity patterns, such as if you tend to have a lot of people on holiday at the same time, and make provisions for this.

Increase efficiency by promoting better estimating for project time, better resource allocation and better workflow management to remove bottlenecks, reworks and idle time. 

Make sure you have the right resources available to deliver projects to a high standard to keep clients happy.

Enjoy better profit margins. Because you’re working at maximum efficiency, taking on projects when you’re properly resourced and not over or underworking anyone, you’ll be operating at a commercially successful level as well as having happy teams and happy clients.

How to do agency capacity planning

The first thing to get to grips with is how much time you currently have available for client work.

The simplest formula would appear to be: 

Capacity = Working hours x number of people

Unfortunately, agencies aren’t as simple as that!

Not every minute or even every hour of the working day will be chargeable. Tea breaks, bathroom breaks, meetings, briefings, lunch... all start to add up. Plus, there will be times when team members are working on internal work, new business and pitches. This will fluctuate and vary across different teams and individuals.

So we need to make our simple formula a little more sophisticated to see the true picture.

Calculate each team member’s utilisation rate

What is ‘utilisation’ rate? The number of hours they actually have to spend on chargeable work.

You can’t realistically apply the same utilisation rate to everyone, as workload and project type will vary massively across team members. Finding each individual’s utilisation rate will give you a strong platform for your agency capacity planning.

To get the most accurate calculation, we recommend this four-step process:

1. Talk to every team member and ask them how much time they generally spend on non-chargeable work. This helps you establish if there’s a pattern in who tends to be put on this type of job.
2. Look back over timesheets from the past 12 months. Assuming they’ve been logged correctly, this will help you build a clear picture. Just looking at a few months won’t be as accurate, as you might catch someone in their holiday season or when they’ve been working on some temporary internal jobs. The broader the timeframe, the better.
3. Consider your plans for the year. Are there any major internal projects coming up or new business initiatives which will divert some people’s time? Who will you be using for non-client work?
4. Map out their average week or month. Deduct the non-billable hours from their total hours to get your final number of chargeable hours. You can then convert this into a percentage, which becomes their own personal utilisation rate.

Example of utilisation calculation:

Based on this example, a designer working 37.5 hours per week with 30 hours of capacity on chargeable client work has an 80% utilisation rate.

Learn how ArmstrongB2B agency improved utilisation rates with Synergist

Calculate each resource’s capacity

Once you have a realistic idea of each team member’s utilisation rate, you can calculate their average capacity per month:

Resource's capacity = Individual's workable hours x Individual's utilisation rate

When calculating workable hours, remember to take annual leave and bank holidays into account. For example:

Number of actual working days per year = 52 x 5 (= working days per year) - 8 public holidays – 20 days holiday. 

Multiply by 7.5 to get your number of working hours per year.

Then, divide this by 12 for the average hours per month or 52 for the average hours per week.

Once you have your individual rates, you can add the hours together for skillsets. For example, if you have four copywriters, each with an average of 100 hours per month, you have 400 hours in total. That means you can sell this many hours, with a rate of £75ph, that’s £30,000 worth of copywriting available.

Forecast capacity and resource demands

Work coming into agencies is never likely to be an exact science. But there are some things you can do which can really help with your capacity planning.

First, look at what projects you already have in and establish how much time is still needed for these.

Then look at what’s coming up in your pipeline. When is it scheduled to start and finish, who needs to work on it and for how long?

Finally, look to your new business. This is the harder one as there will be an element of guesswork. But you can make it educated guesswork. Look back over your previous months/years and see what new business has come in and if there’s been any kind of pattern which may continue. Is it a particular type of project or for a specific skillset?

From here, you can look at current and estimated capacity and make sure you have the right resources in place.

Choose your capacity planning strategy

There are three main types of capacity strategy which you can use to help meet your capacity demands:

Lead capacity strategy is based on your forecasting, so you need to be fairly confident of your figures. Essentially, it means increasing or decreasing your capacity ahead of demands based on your growth forecasts and market demand.

• Pros: this puts you in the driving seat, with people in place ready to meet demand as the projects come in, giving you an edge over your competitors
• Cons: if your forecasting isn’t right, you could end up with too many or not enough people. If you’ve actually recruited more people, this could put a strain on your business if projected work doesn’t come in 

Lag capacity strategy sees you reactively increase your capacity as and when needed. So all your team members are now fully occupied and new work comes in, you hire a freelancer quickly.

• Pros: you’re only bringing in extra people as and when you need to, so you’re not spending on unnecessary recruitment or having to lay people off
• Cons: you have to move quickly to get the right freelancer in time, and if you can’t then you’ll end up with an overworked team or a delayed project

Match capacity strategy sees you increase capacity based on demand. For example, you monitor your pipeline to assess the likelihood of work dropping in and hire to match the forecasted demand. This could be hiring a new creative based on an ongoing surge in forecasted work and book a special contractor ahead of a new project that is 75% confirmed.

• Pros: you’re hiring the right people at the right time to match specific projects, saving on costs and avoiding last-minute panics
• Cons: again, you need to be confident with your forecasting as you could otherwise end up with too many or not enough people

Depending on your agency’s growth plans and projects, you can use a combination of these strategies. Match capacity planning tends to be the most effective as it matches available capacity with demand. But you do need highly accurate estimating and forecasting for it to be effective. Tools like Synergist allow you to track current capacity and future resource requirements across different teams, skillsets and individuals.

Recap: what is the agency capacity planning process?

Here are the four steps to take in your agency capacity planning:

1. Calculate each team member’s utilisation rate
2. Use this to establish each team’s capacity
3. Forecast demand and new business
4. Choose your capacity planning strategy to bridge resource gaps

Agency capacity planning software

Synergist software offers smart solutions to automate agency capacity management, helping you effectively forecast, manage, and report on agency resourcing.

Get a short and long-term view of your capacity

Once you’ve performed the calculations outlined earlier, you’ll have each team member’s target chargeable hours which you can add, along with their total (contracted) hours, to their staff record in Synergist. (Remember, not all your staff will have chargeable hours, so just leave this blank for them.)

Synergist’s scheduling dashboard lets you see how much time has been estimated on live jobs, booked on chargeable and non-chargeable work/holidays, and how much time is still remaining to be allocated. This means you can see, at a glance, how you’re performing against your targets and make sure the hours you’ve sold are in line with your capacity.

Synergist Scheduling Dashboard shows your team's capacity over the coming days, weeks and months

Plus, you can view by department, team or individual to see what hours you have left to sell for which skillset, identify any resourcing issues and see if there’s any increased demand for specific skills – which in turn can inform your hiring decisions.

The scheduling dashboard also shows you any ‘opportunities’ in your pipeline, enabling to assess the impact of landing new work. Here, you can view ‘estimated’ to see how these would affect your resources, or ‘weighted’ to view the most profitable opportunities.

“Synergist agency management software is the cornerstone of the business. It has given us the opportunity to look three, six, nine months down the line in terms of where we need people, where projects are dropping off and things are starting up. It helps us in every way possible.”

Darryl Kennedy, Director at Spike

Easily manage schedules and workloads

Synergist smart resource scheduling software makes it easy to ensure everybody is busy on billable work - but not at overcapacity - and projects are delivered within budget.

You can quickly see resource availability and make tentative or confirmed bookings based on budgets. Plus, you can add holidays, absences, training and special events such as days out, giving you visibility when an individual is unavailable.

The ‘loading’ view helps you make sure you’re not overbooking resources.

Synergist smart Calendar Booking shows where you have immediate capacity or resource-loading issues

"With Synergist’s shared schedule, we can see when people are working or not, so we can see how that impacts capacity, revenue and costs prior to implementation.” 

Steven Smith, Operations Director, Copy House

Track utilisation and recovery

Synergist also gives you an instant view of how well you're utilising and recovering your team's time. The performance dashboard shows utilisation across chargeable and non-chargeable time by team, resource type or individual. You can see their chargeable hours and value vs utilisation targets. 

If you do find any utilisation issues, you can drill-down into their detailed timesheets to see where people are spending time and the cost impact.

Synergist Performance Dashboard shows your team's utilisation vs targets

"We can now drill into the data using Synergist. For example, if a department's underutilised, is it because we're not bringing in the right type of work? Or we're not quoting or billing enough for the work they're doing? Understanding this is the key that can unlock the success of the business."

Kelly Walsh, Head of Operations, Gilroy

Agency capacity planning best practice

Agency capacity planning will look different for every agency. But here are some best-practice tips which will apply across the board:

1. Employees are everything. Their well-being should be your top priority when allocating resources. Always look for signs of overworked and overburdened team members; burnout is bad for everyone.
2. Use the right software. Step away from the spreadsheets and turn to technology instead – keeping all your processes simple and streamlined.
3. Expect the unexpected. Projects and resource needs can change quickly, no matter how carefully you plan. Add in a buffer to your resource planning so you can accommodate (a certain and reasonable amount of) changes.
4. Review, review, review. Talk to senior managers and team leaders to regularly review resource allocation and capacity planning – helping you to keep running a tightly controlled ship.
5. Consider upskilling and training. The more adaptable your teams are, the better. Of course you want them to bring their own unique skills, but equipping them with a range of skills means they can support a wider range of projects.
6. Remember to prioritise your profits. It can be tempting to give your attention to the most demanding clients, but these don’t always pay the most. Give your priority to your most profitable clients when you’re planning your resource allocation.
7. Making capacity planning a constant. This is a moveable feast and not something you can do and then stop. Capacity planning is a continuous process in your agency, using data, feedback and outcomes to adapt and evolve.

Agency capacity planning: getting your resourcing just right

Good capacity planning can help you see the bigger picture and plan your resourcing. Your data can inform your decisions on whether (and when) to bring in freelance support, long-term contractors, or even hire new recruits.

It might feel like a lot of work, but if you put in the time upfront it will pay dividends. It helps you avoid overstaffing or understaffing, manage client expectations, and deliver quality work on time and within scope. 

Glossary of key terms

Agency capacity planning. Agency capacity planning is the process of determining how much capacity you need in your agency to meet your current and projected work demand effectively.

Capacity planning vs capacity forecasting. While agency capacity planning is about your current workload, capacity forecasting focuses on predicting future needs based on expected client demand or growth objectives.

Capacity planning vs resource planning. Agency capacity planning focuses on determining the amount of capacity needed to deliver your client projects or retainers. Meanwhile, agency resource planning is a broader concept, identifying and allocating all resources you need to operate your business effectively. This means looking at resourcing internal work too, such as finance, HR, new business and client management. It’s also worth noting that ‘resource planning’ is often used in relation to specific projects, but this is ‘project resource planning’ as opposed to ‘agency resource planning.’

Capacity planning vs capacity management. The clue here is in the name. Agency capacity planning means working out in advance what you need. Agency capacity management is the day-to-day process of assessing current capacity, optimising your resource allocation and making sure your utilisation targets are met.

Agency resource management. Resource management is the continuous assignment of people and other resources to projects, taking into account availabilities, skills, qualities and costs of the elements and how they map to the projects.

Utilisation rate. Utilisation rate is the percentage of someone’s working hours that are made up of billable work. They show how much time staff are spending on chargeable client work versus work that isn’t directly bringing in any income.