(If you’re new - check out our introduction to FOL-IO here)

If you handed me the budget for almost any creative project, the biggest category of cost wouldn’t be software, locations, or equipment — it would be people. Even when “hard” costs are larger in dollar terms (a sound stage, a location, a piece of equipment) they’re outnumbered, every time, by people. Every piece of equipment on a movie set needs someone to operate it. Cameras don’t shoot themselves. Lights don’t light themselves. Software doesn’t design anything on its own. At FOL-IO, we like to say: in creative businesses, people are both your biggest asset and your biggest liability. 

So why is capturing, measuring, and managing people such a constant headache?

The short answer - people are messy. People are difficult to measure, and hard to model in the same way you model non-sentient inputs. It’s infinitely easier to calculate how many wrenches you can make from a pile of steel than to calculate how much creative output you’ll get from a team of humans.

When the alchemy of creative people management works, it really works. Everyone can tell you a time when they’ve worked on an ideal project - the perfect team was created, the workflows ran on time, the boss and / or client was incredibly happy, and the finished output was incredible. And everyone has the opposite story too: overstaffed teams, last-minute freelancers who weren’t actually needed (or weren’t right), blown timelines, mediocre creative, and ugly financial outcomes. 

These kinds of scenarios happen constantly, and they are recurring symptoms of the way we treat our most critical resource. They demonstrate the key issues we’re trying to solve with people: 

The first step in measuring your talent pool is understanding it. To return to our wrench example - in manufacturing, you’d understand down to the gram the kinds of raw inputs you needed to make an output. You’d also have a thorough understanding and accounting of all of the raw materials you had in your warehouse at any point in time, or how much you may have had in the past. You’d know your key raw materials suppliers. These would all be *neatly* recorded on your balance sheet.

When people are the main inputs of a product, the accounting becomes a bit more complex. For one, people tend to be multifaceted, and in creative outputs you also need to account for less quantifiable factors like taste and style. The second issue is structural - if you’re working with a large percentage of freelancers, those people don’t tend to be captured in any system other than your accounting system, which can’t tell you whether “Big Dawg Productions” or “SCLK Strategy, LLC” is better at scriptwriting or Midjourney. 

Today’s systems are built around two ends of the dumbbell - people, as creative inputs, are often represented in your systems as either simply recipients of W-2 wages (important information, but their tax elections won’t get the work done) or as line items in your invoicing queue. None of that will help you create a team for a great piece of creative work. 

Instead, the most important information about your people — who people are, what they’re good at, how good they are, what they cost, and whether their contract is almost up — lives in email inboxes, people’s heads, and sloppy spreadsheets. This creates massive information bottlenecks, and significant information risk. When someone leaves, the knowledge and the relationships usually leave with them. Capturing your people asset is therefore the best first step in managing it. 

The next issue in people-businesses is measurement. To use the wrench-making example one last time: if you ran a wrench-making factory, you’d know exactly how much steel it took to make a wrench, and you’d know how many wrenches your wrench-stamping machine could put out in a day. Capturing this same knowledge with people-based businesses has challenges which stems from the lack of measurable data on both people-based inputs and outputs. In creative work, inputs are far more ephemeral. Human businesses are built from effort — most clumsily, but most efficiently, measured in time. 

Whether we recognize it or not, every cost in a creative business is time-based.

Day rates. Project fees. Flat retainers. All of them are either explicit time units or attempts to smooth over time with a fixed price. Measuring time, or estimating the measure of time, then becomes a crucial tool for any creative business who wants to understand how much input (time) it will cost to make something. 

Time estimation is prone to a fallacy - has anyone ever really consistently overestimated how much a time a task will take them? (ask me how long I thought writing this post would take). This fallacy leads to constant margin compression, where the culprit is almost always underestimating the effort vs what you’re charging. Therefore, measuring time, whether habitually or occasionally, is crucial in determining accurate pricing, and to ensure margin health.

Measuring time exists to answer two questions:

The best use of time data is in real time, uniting both tracked data with future forecasts  - if I thought this task would take 50 hours, where am I in that journey? Am I over or under burning? To do this, you must unite both a look at the past and a forecast into the future. 

Forecasting (combined with resourcing) will also answer the capacity question - it gives you the ability to see how much more your team can handle, or where you might need to add extra hands. If you’re simply tracking what’s happened, you’re only seeing one element of time. 

The second best use of time data is to build institutional memory and serve as a reference for future estimates and pricing / budgeting - if it took me 50 hours to do something in the past, how long would it take me to do something similar? Most importantly - what did that time cost me? To understand the answer, time data must live with contextual information around a project - the team, the roles they played, how much that team cost, and the kind of work that was being done.  

Tracking time is easy. Turning time into dollars, and decisions, is not. Existing systems lack robust measurement data, and a way to automatically turn that time into real costs, as well as organize that data by projects, roles, and other relevant information. Even fewer systems give the ability to project that measurement and cost data, and unite it with what’s already happened, which means that people measurement fails in the same way that project codes do; if you’re only ever looking at what’s happened, and don’t understand what’s happening in the future, it’s difficult to make fully informed decisions.

The final piece of measuring and managing your people is narrowing the gap between the “two doors” concept of full time and freelance talent. Freelance talent has given companies both creative and financial flexibility to operate in today’s more demanding environment. But until freelance talent is documented, measured, and forecasted with the same rigor as payroll, creative leaders are flying blind. That’s why creative CFOs live in the same recurring nightmare: at month-end close, looking at the numbers and screaming we spent how much on freelancers?

We call this “the freelancer surprise” - and it isn’t a budgeting problem. It’s a visibility problem. When people are your primary inputs, treating any portion of your talent pool as an afterthought isn’t just sloppy — it’s risky. And as creative work continues to rely more heavily on flexible, distributed teams, the cost of that sloppiness only compounds. 

If people truly are the building blocks of creative work, then managing them with guesswork and gut feel isn’t sustainable. Placing the onus of understanding and managing your talent asset on a few people, a few spreadsheets, and some half-baked tools that do part of the job isn’t fully addressing the issue. As creative inputs and outputs continue becoming more complex, talent (and therefore people) is more important than ever. The future of creative businesses belongs to the ones who take people seriously — not just as a cost, but as a system worth building and understanding. 

At FOL-IO, we’re helping teams:

As always - reach out to [email protected] if you want to see how FOL-IO can work for you.