Is the Billable Hour Dying?

Source: CPA Success

The following includes excerpts, reproduced with permission, from a blog entry by Bill Sheridan.

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. 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 on the amount of time they spend 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 Farmand: 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.

For the complete blog post, read “Another nail in the billable hour coffin?”

From CPA Success, the blog of the Maryland Association of CPAs, www.cpasuccess.com, September 26, 2011.