Billable Hours vs. Value Pricing: Who Ya GOT?
You may have heard I almost got my butt kicked over value pricing at AccountingWEB Live. After Adrienne’s article about the incident and its related comments, I need to clarify some things.
I think timesheets and billable hours suck, and it’s not because I’ve been brainwashed by our Glorious Leader, Ron Baker, praise be onto him.
Greg Kyte Almost Got His Butt Kicked Over Value Pricing at AccountingWEB Live
In case you haven't noticed, the GC Brain Trust is in Dallas, TX this week for AccountingWEB Live, which would explain why we've been a little quiet the last few days. After Ron Baker's session, entitled Trashing the Timesheet: A Declaration of Independence, AWeb Live panelist Mark Lloydbottom stormed on set and accused Greg of […]
Three Ways Public Accounting Firms Could Replace Performance Evaluations
This week I spent some time at Sage Summit in Las Vegas, an event for CPAs and entrepreneurs who want to learn how to make their small businesses better, or alternatively, just want an excuse to party until their faces melt and call it a business expense. There were lots of interesting sessions and I've […]
How to Charge the Client: Killing the Billable Hour with VeraSage’s Ron Baker
I’ve long wanted to track down VeraSage’s Ron Baker and pick his brilliant brain; at last, JDA had the opportunity to steal a few minutes with the man credited for killing the billable hour.
In his 15-some years crusading against the ridiculous measurement of “time” as a performance gauge, Ron has made quite a few steps in the right direction. Seven to ten percent of 90,000 firms have moved away from time sheets and toward “value pricing”, with 1,000 or so firms eliminating the billable hour completely. While he admits it’ll be a cold day in hell when the Big 4 follow suit, he’s encouraged by the momentum.
“There is a change and it is coming from customers,” he says, “[unfortunately] the billable hour has survived many recessions.” The rigid “that’s how it’s always been” structure of public accounting, specifically, doesn’t seem to be taking the idea well. “They’d rather be precisely wrong than approximately right,” he says of major accounting firms trapped in the billable hour vice.
Encouraging value pricing in pay structures is a slow process, he says, equating the movement to that of Germ Theory in the 1800s. It was hundreds of years from the time “contact contagion” was theorized to the time it was generally accepted in medicine and eliminating the antiquated pricing structure of employee incentive won’t go down without a fight either.
Billed as “a think tank dedicated to promulgating and teaching Value Pricing, Customer Economics, and Human Capital Development to professionals and businesses around the world,” VeriSage seeks not to revolutionize business but improve it.
“You don’t let your surgeons pierce ears,” says Baker, meaning value pricing implies a company’s best soldiers will be dispatched to serve their respective battalions. In simpler terms, employees are paid results, not for how long they’re sitting in a chair. And in an uncertain economic environment, aren’t results what matter above all else? I’m not sure it could be much simpler.
Baker knows he’s got his work cut out for him but yours truly is 100% behind the idea. As a person who can tear up in one hour what five people can’t even accomplish in two, I get it. Boy do I get it.
Lucky for those who choose to accept what Ron is selling, he’s also a brilliant business mind. Knowing that Michelle Golden may have potentially criticized his website, he chose instead to hire her as a consultant. Genius! (Disclaimer: JDA loves Michelle Golden and isn’t just saying that because she doesn’t want to get torn up on her website – her “Accounting Blog list” is the most comprehensive I’ve ever seen.) She sits on their Board so she gets it. Excellent!
Want more JDA? Check out all of her posts for Going Concern here.