Leadership / Management

Another nail in the billable hour coffin?

AA017957 The more people I talk to, the more I read, the more I believe the billable hour is dying.

Granted, it's probably going to be a slow death. The idea that you need to bill for your time is too fundamental to the professional services to disappear overnight. Some folks will stubbornly cling to it until they die.

Still, a lot of key people with whom I've spoken -- young folks in positions of power -- are trashing the timesheet and billing their clients based on the value they provide, not the amount of time they spending providing it.

Take Jody Padar: The CEO and Principal of New Vision CPA Group near Chicago has this to say about the concept of value: "We're helping (our clients) with their business as opposed to giving them a deliverable such as a financial statement or a tax return. They don't want that; they want us. They want our business expertise, they want our value." The implication is this: Clients don't care about your time. They care about results ... and they're willing to pay for them.

Take Chris Farmund: As head of Chris Farmand and Company, he helped enact a transparent, value-based fee system just before tax season 2010, and the results were astounding. "I've never worked as little during tax season in my life, and we've never been more profitable," Chris said. "Plus, clients were ecstatic. Now, they could tell what their accounting bill was going to be for the entire year. They loved it."

Most recently, take Daniel Pink: OK, I didn't actually speak to Dan. But I read "Drive: The Surprising Truth About What Motivates Us," in which the best-selling author slams the billable hour as "the most autonomy-crushing mechanism imaginable" and a huge obstacle to professional motivation and productivity.

Using lawyers as an example, Pink writes:

"If they fail to bill enough hours, their jobs are in jeopardy. As a result, their focus inevitably veers from the output of their work (solving a client's problem) to its input (piling up as many hours as possible). ... These sorts of high-stakes, measurable goals can drain intrinsic motivation, sap individual initiative, and even encourage unethical behavior."

"If we begin from an alternative, and more accurate, presumption -- that people want to do good work -- then we ought to let them focus on the work itself rather than the time it takes them to do it."

Now there's a novel concept: Give your clients what they want and motivate your professionals to do their best work. What's not to like?

Want to learn more?


Bill Sheridan