To borrow a line from Oscar Wilde, "The billable hour has no enemies, but is intensely disliked by its friends."
It's hard to find an ardent defender of the billable hour anymore. Oh, they're out there, but they are a marginal fringe group--late adopters on the diffusion curve; the type of people who only buy a touch-tone phone because rotaries are no longer available.
The theoretical and practical argument against the billable hour is over, especially since you can trace it back to Karl Marx's labor theory of value.
Fortunately, more and more firms are realizing this everyday. Yet, when it comes to keeping timesheets proponents deny there is any alternative.
The Four Defenses of Timesheets
Even though the debate over the billable hour is over, this debate over the necessity of tracking time rages on, and is far more controversial than hourly billing vs. Value Pricing.
Just within the past month, I've had several blog posts sent to me expounding the requirement to track time, especially if firms are going to offer fixed prices.
There are four primary defenses used by the proponents of timesheets:
- We need them to price
- We need them to track team efficiency
- We need them for cost accounting
- We need them for project management
We've refuted every one of these defenses, and even replaced them with superior methods, more conducive to a professional knowledge firm that sells intellectual capital, not time.
Not only that, many firms have implemented our ideas, with salutary results.
Empirical Evidence--Facts are a Stubborn Thing
John Maynard Keynes once wrote:
When somebody persuades me that I am wrong, I change my mind. What do you do?
Apparently, for defenders of timesheets, the answer is nothing.
This has always confused me. If I see something that works but contradicts my worldview, I'll investigate it, seeking to understand the anomaly.
Yet proponents of timesheets engage in no such behavior. All swans are white to them, even if they encounter a black swan in their own country, state, or city.
There are over 1,000 firms that we know of--and I'm sure there are many more--that don't track time.
These firms exist in all professional sectors--advertising, consulting, CPA, IT, and law firms. Some are among the most profitable firms in their sectors.
How do these firms do it?
Why do proponents of timesheets continue to advocate a theory that others have replaced with a superior theory?
I'm fascinated by this behavior. For firm leaders, maybe it's fear of the unknown, or just satisficing--doing good enough, as posited by economist Herbert Simon.
Witch Doctors or Consultants?
But what about consultants to the professions?
Supposedly, these are thought leaders to the professions, who should not be happy with "good enough."
These are the folks allegedly at the cutting edge, constantly advocate change, who take the time to think, create, and innovate superior strategies to help their customers. After all, any competitive advantage would be worthwhile to pursue, would it not?
What's a bigger competitive advantage than pricing commensurate with value, along with not having your knowledge workers track every six minutes of their day as if they were prisoners?
Wouldn't this act like a lightening rod to attract both customers and talent?
Why the dogmatic insistence on maintaining timesheets without any acknowledgment of firms that operate successfully without them?
Why do they insist on linking timesheets and cost accounting when time recording is not the only way to perform cost accounting?
Why don't they recognize that project management is based upon looking into the future, not backwards with lagging indicators?
Why do they continue to expound an "efficiency" argument, when what matters in firms is effectiveness? And why do they continue to believe that timesheets even measure efficiency? This is the illusion of control.
Why haven't any of them studied firms that have implemented a ROWE (Results-Only Work Environment). This is no timesheets on steroids, and many organizations now have one, even some professional firms.
Why do they continue to deny the black swans right under their very noses?
"Idiot" is Greek for "private," "merely personal."
The consultants' views seem to be based on their own internal worldview, impervious to external empirical evidence.
When I see a consultant write on the necessity of timesheets, I want to ask them: Do you know the difference between a Key Performance Indicator and a Key Predictive Indicator?
Do you understand the difference between a leading and lagging indicator? The difference between efficiency and effectiveness?
I have seen very few of the consultants even refer to knowledge workers, or how they are different than manual laborers, which is who timesheets were developed for.
Why is this? Peter Drucker coined the term knowledge workers in 1959; it's not exactly a management fad.
Why do they refuse to engage in debate those of us who advocate a different business model for the professional knowledge firm of the future?
The most plausible theory I've heard so far is this:
The consultants are worried that if they advocated replacing timesheets they would alienate their customers--and hence, their revenue base.
If this true--and I suspect it is until I hear a superior explanation--it's a sad commentary on the ethics of these supposed change agents.
They are perpetuating a status quo that is already dead, and keeping their customers from entering the knowledge economy.
Most companies in every other sector besides professional firms don't use timesheets to track projects, perform cost accounting, or determine productivity, but this argument is dismissed by proponents as being irrelevant, or worse, with the retort, "professional firms are different."
But why are they different? Procter & Gamble has to produce results, yet no one there is filling out a timesheet. Ditto Microsoft, Apple, and practically every other organization on the planet.
If you have a counter theory on why the consultants continue to believe all swans are white, I am all ears.
After all, if these consultants continue to deny black swans, why should we listen to them?