Billable hours are sick

Friday, November 11, 2016

1. It misaligns the interests of the professional and the client. What the firm wants more of (hours), the client wants less of.
2. It focuses on efforts, inputs, hours, costs, activities, rather than what clients really buy: outputs and results.
3. It places all the transaction risk on the client.
4. It fosters a production mentality, not an entrepreneurial spirit.
5. It penalizes advances in the firm’s effectiveness. The faster the firm can solve a problem, based on deepening expertise, the less the firm earns.
6. It commoditizes the firm’s talent and intellectual capital into a unit of time, which significantly reduces the firm’s ability to differentiate itself from the competition.
7. It places an artificial ceiling on a firm’s income since there are only so many hours in a day.
8. It rewards busyness and utilization instead of effectiveness and accountability.
9. It discourages innovation. With time constantly measured, a professional's motivation is to be "billable," not innovative. 
10. It provides no useful information about what really matters, such as the quality of the work, the satisfaction of the client, or the effectiveness of the firm.
11. It incents the wrong allocation of resources. Instead of assigning the talent that can most effectively solve the problem, firms assign people the client can "afford."
12. It builds silos and produces a disincentive to collaboration. The goal becomes coming in “on estimate” rather than drawing on internal brainpower that can solve client problems.