Managing Your Executive Team Expenses in Your Agency

To ensure you’re making the most of your company’s resources you need to know how to track your executive team expenses. Your executive team is responsible for driving your agency’s success and their expenses can make up a significant portion of your SG&A or non-client-related expenses. In this blog post, we will discuss how to properly manage the expenses of your executive team members, ensure they are allocated to the right departments and how to balance cost and performance.

Team Members Assigned to the Executive Team Budget

The first step in managing your executive team’s expenses is to identify which members belong in the category. Your executive team usually includes your CEO and President (if you have one), as well as their executive assistants. It is important to note that if a member of your executive team is clearly in charge of a department, their expenses should be allocated to that specific department. For instance, the expenses of your CFO should go into the Finance & Accounting department, rather than being included in your executive team budget. This way, you can easily track what your company is spending on each department. The only people in the executive team expenses should be those that have no clear departmental affiliation.

Other Executive Team Budget Expenses

Apart from the executive team compensation, there are other expenses that you need to consider. These expenses include perks such as country club memberships, cars, and allowances paid to the executive team. Additionally, you will need to include expenses associated with executive team networking. This can look like fees to attend conferences or travel to get to an event. Although these expenses may seem small, they can add up and become a significant cost that you need to take into account.

Your Target for Building an Executive Team Budget

When managing your executive team expenses, it’s important to compare them to the overall revenue of your agency. A typical agency will spend around 7% of their revenue on the executive team. If you spend more than 7%, then you need to see if it has resulted in the performance of the company such as faster growth rates. Ideally, you want to make sure your executive team is being paid market rate for their performance while also aim to lower the cost of their expenses relative to your total revenue.

By identifying the members of your executive team and allocating their expenses accordingly, you can better manage your SG&A and non-client related expenses. It is essential to balance the cost against performance to ensure that you pay the team market rate while not significantly increasing the overall expenses of the agency.