Ultimately, real culture is the unspoken rules followed during the daily grind not simply a contrived mission statement or list of values. It is observed and organic - for better or worse. Understanding this is the first step towards creating something worthy of admiration.
The toxicity of time-based billing
Answer this question, what happens when employees see their world through the binary lens of a billable hour versus a non-billable hour? In our experience, the important things that produce a sustainable business and future value for clients and employees are perpetually cast aside. Unfortunately, this perverse incentive structure is rampant within the average professional firm.
The misguided focus on “utilization” puts billing hours ahead of all other objectives that the firm wants to achieve. Tim Williams, a Senior Fellow at Verasage Institute, a think tank dedicate to the eradication of timesheets and the billable hour, says “curiously, the more an organization focuses on utilization, the less accountable it becomes”.
Here’s the real kicker, how many times have you put off hanging out with your kids or family because you calculated the cost of that time in terms of how many billable hours you would miss? That trade-off mindset is toxic.
Unwritten ground rules can hurt
It’s the little things that add up to big effect, such as:
employees frustrated by poor client alignment muttering grievances by the water cooler or online message boards
inflating billable hours on timesheets to meet minimum “billability” (such an odd term) requirements or to qualify for bonuses tied to high/over utilization
marking employee hours as non-billable because the budget is consumed, without regard to what that tells the employee of their contribution
clients demanding last-minute or extended travel, disrupting personal lives, without a clear understanding of how physical presence adds value
A misguided focus on utilization and lack of strategy are major contributors to the above scenarios. When “the customer is always right”, “we sell time”, and “full-service” mentality rules the day, culture suffers. They represent implicit social norms that the organization accepts because it values the wrong things. And, therein lies the rub, the firm is inadvertently inward looking instead of outward (aka customer) focused. Utilization (maximizing billable hours) is prized over all else, which always leads to unhappy employees and clients, alike.
Embrace results instead of rewarding effort
For too long, most professional firms have focused on internal metrics (inputs) while losing sight of why their business exists (outputs). It appears to be such a simple concept - businesses exist to add value for clients - yet, in practice, so misunderstood. It’s not to ensure internal processes are efficient or employees are highly utilized, but that’s exactly how many professional firms are operated.
If, instead, we focused on results, our firms would magically align with what clients expect and what our firms need. An emphasis on results breeds accountability; it makes it crystal clear what matters and when it should be delivered. In such an environment, employees would know what must be done and know where they should focus to hone the necessary skills to become more effective. Results don’t require huge effort, they require effectiveness, which is far more important for happy clients and employees.
We need to reward effectiveness and it starts with focusing on what truly matters to meet and exceed client expectations. Unfortunately, this flies in the face of how many organizations operate, especially when timesheets and hourly billing are at play. If you want to instill accountability in your workforce, set objectives based on what needs to be done for the client and then get out of the way. After all, you’ve worked hard to hire professionals; they don’t need to be managed and coddled, they need you to facilitate by removing obstacles and adding clarity. If you do that, you’ll have very happy employees that you can count on to add exceptional value for your clients.