This week, I want to get into how to stop using timesheets in your firm.
This topic started brewing 2009 when, for the first time, I magically allocated 20 hours to jobs I did no work for.
No suspicion was raised by my manager or any of the engagement leaders.
I was confused – what was the point?
Since starting and selling my firm, this is what I’ve learned:
Timesheets have been a staple in accounting since the dawn of time.
It is an easy and ( I dare say) lazy way to manage team members.
I will not start a debate here about the value of timesheets. I will simply state that there is a better way.
However, I see four critical firm design components that must be in place before any firm should attempt to stop using time sheets.
1. A Clear Set Of Services
You will never be able to build the firm you want if you offer to do everything for everyone.
Your clients will dictate what work you do. It will be impossible to build repeatable workflows and train team members.
A clear set of services creates boundaries. It defines the beginning and end of each service you provide. It is a building block for a highly profitable and scalable firm.
Some of you have already downloaded a spreadsheet model I prepared to help firms better understand their fixed pricing models.
This model is also great at helping you create a clear set of services.
You can grab it here.
Once you have a defined set of services, you will quickly grasp the cost to complete those services, and that’s when everything switches.
But Mark – my clients sometimes have unexpected issues. What should I do?
One-off projects will surely come up for existing clients, but this should be the rare exception and not the rule unless your firm (or part of your firm) is built for project work.
Tax resolutions and Audits Firms are designed differently than bookkeeping and regular tax prep firms.
Ad hoc project-based work is hard to fit into an already busy firm handling recurring work.
Even bookkeeping and tax clean-up/catch-up work can tip the overtime scales for a recurring work firm. Catch-up work should be charged at a premium.
Project-based firms have built-in extra capacity to allow for the ebbs and flows of work and a more extensive scoping process. The pricing for project work must reflect the nature of the work.
2. Track Value, Not Time
When services are defined, the cost to complete that work is significantly easier to estimate. From here, you stop assigning hours to team members but instead assign work items.
We will use time to determine capacity but not efficiency or profitability.
If you don’t remember anything else from this week’s newsletter, remember this:
When value replaces time in measuring work, efficiencies and productivity increase. Team members no longer check off hours but tasks and projects.
It is like issuing your team members work projects for which they get paid regardless of the time spent completing the work.
The worry might be that the team member wastes a bunch of time, the job budget is blown, and you make no profit.
But on the flip side, you have two options if the team member wastes time and overcharges more than expected on the file:
- Eat the hours and still pay the team member; or
- Overcharge the client and risk impacting the relationship
At least with value-based management, you will create an incentive to get faster. You will encourage ways to deliver the same value in less time.
3. Proactive Team + Project Management
A fully adopted firm management app will be crucial once your services have been set.
You create your services and job templates in the app and assign them to your team members based on due dates.
Seems simple? Not so much.
I find that many firm management tools are only half implemented.
The biggest reasons they don’t get used properly include:
- The leadership team has not spent the time to learn how to use it;
- There is no quick/ templated way to onboard a new client and their work requirements;
- Too many features make the adoption overwhelming;
- Projects and tasks are not granular enough for accurate tracking.
The new and younger team members never have an issue learning the tech. It is the firm leadership that determines the adoption.
Don’t expect your team to embrace something if, as the leader, you won’t.
Here is a quick list of tools I used to manage my firm at various point:
- Jetpack Workflow
- CCH iFirm
All of these tools are good, but I kept switching as I wanted high visibility of my work and the progress of my team’s work.
You will need that high visibility to ensure team members are on track with their work – you’ll check their completed work instead of hours worked.
4. Better Team Communication
In a timesheet-free environment, better communication is paramount.
Instead of weekly meetings where everything is discussed, communications will be shorter and more frequent – three to four times a week at least, outside regular weekly mentorship meetings.
Remote team members will need more attention outside the ‘shop talk’ touch-ins.
Touch-ins between three to five minutes should be the norm.
Your management tool provides visibility of where the project is at all times, so you won’t have to start each touch-in with “How is the project XYZ going?”
Instead, you will say, “Is the client not responding to your document request for the unsupported transactions?”
Your management tool will do most of the diagnostic communication between you and your team.
The sequence of work in your set service offerings will be the same for each client. You’ll know exactly how to support your team when the work has slowed.
Your communication will be solution-orientated when it occurs, minimizing the time wasted getting everyone up to speed.
Bonus: Attracting + Keeping Top Talent
Finding good talent is hard. Keeping good talent is even more complicated.
A value-measuring environment will give top performers the autonomy they want to be happy. It gives them the space and flexibility to think for themselves.
Employees stay engaged when they can impact profitability for themselves – providing the same value in less time – and compensation plans should reflect that.
If you want to retain good team members, moving away from a timesheet environment has to be near the top of your list.
The benefits of a timesheet-free firm are clear. It will take time to get there, and now is the time to start.
Build The Firm You Want,