Taking Dead Aim at Billable Hours
Is the ‘billable hour’ falling out of fashion?
The results from a new research poll from City University London indicates that the ‘tyranny of billable hours‘ in professional service practices leads to over-charging clients, overworking junior team members, and neglect of important client strategic issues.
The study was carried out jointly by Professor Andre Spicer, Cass Business School, City University London and Dr Johan Alvehus Department of Service Management, Lund University, Sweden.
Additionally, thanks to a rumored two-year confidential study of tax lawyers at an undisclosed Big 4 firm, along with data made possible by a grant from IVSS (Institute for the Verification of Stupid Stuff) finally the world knows empirically what first-year junior staff learn in their first 30 days on the job.*
*[Editor’s note: The following breakdown from Going Concern, an online tabloid covering the worlds of accounting and business finance, was written tongue-in-cheek in order to drive home the author’s point – Billing by the Hour Makes You Suck!]
Some of the billable hours study’s intriguing insights include the following:
- Partners and managers don’t want to get bogged down in non-billable things like “strategy” and “leading people.”
- To increase their chances of making partner, junior staffs are encouraged to bill as many hours as possible at the expense of developing the actual skills that may be required of them if they ever do make partner.
- Billing by the hour “encourages active game-playing, intervention and entrepreneurial manipulation.” I used to get beat up for not logging enough billable hours. I would also get beat up for going over budget. When I was a little kid I had a babysitter who would threaten to spank me if I didn’t stop crying. All of these are brilliant ways to both piss off and confuse your underlings. Actions labeled as “game-playing” and “manipulation” may simply be defense mechanisms.
- Many non-billable tasks are accomplished on the employee’s own time, “resulting in very long hours being the norm at most big firms.” It took two years to conduct this study, indicating that “very long hours” are not the norm at City University London.
- Clients are classified as either “bill sensitive” or “unsensitive [sic]” and are charged accurately or overcharged, respectively, because integrity and objectivity are two of the core values of our profession.
- The billable hour is an employee control strategy that in effect commoditizes staff and results in their “financialization.” CPAs are good with numbers, not people, and billing rates allow us to turn our people into numbers. Problem solved.
- Most junior staff readily accept and conform to this dysfunctional culture, putting their work-life balance, health and well-being at risk. So quote this study the next time you call in “sick.”
Cass’s Professor Andre Spicer said: “If you look at the history of how professional services firms were run, there used to be a strong professional ethos, it was all about collegiality and partnership. But as the big firms have become more like corporations … billable hours have become more and more important. They talk about client service (being their primary focus), but in fact if you just scratch the surface what you find is billable hours still dominates.”
Increasingly, there are professional service firms that do not track time or bill their clients by the hour. Corbett, Duncan and Hubly, a mid-size firm in the Chicago area, recently held a time sheet burning party to celebrate their move away from time billing.
Depending on where you are, a time sheet burning party either sounds super cheesy or deeply cathartic.
Now go bill your best customer for the 0.2 hours you spent reading this.
D. Marcus Keith is a partner in ADMAX, a local and national; “Internet Marketing Optimization” agency that has been performing SEO-related services for Cloud9 Real Time since 2009.