billable hours = ?

[Guest David Lipkin]

Do most of you set a goal for the minimum number of billable hours required per week per person? If so, do you track it and evaluate employees (partially? totally?) by it?

How do you address time spent training and marketing?

Any suggetsions would be appreciated! Thanks

[Guest ERead]

When I was in a "Billable Hours" environment, the tracking was used to determine if the fees charge to the client were sufficient, or if we needed to add on for extra time spent in areas of administration. Most of the employees were getting between 4 and 6 hours a day that were billable. I think if your going to implement billable hours for a review and employee tracking system, then you should really hash out the specifics. Discuss goals, and allow time on a monthly, weekly, or daily basis for research and Q&A. I've found that when congress passes new law, or the IRS issues new guidance, my time is diverted in those directions.

Good Luck

[richard]

Tracking billable hours is both a good idea and a bad idea, depending on how it's used.

It is a good idea if the purpose is to honestly assess how long it takes to perform work on clients. To provide a guide on how much to bill clients in general.

It can easily be a bad idea if tracking billable hours is used to monitor and reward/punish employees. That is because billable hours is, at best, an art.

What counts as a billable hour? Time spent chatting with the client and keeping them happy, time spent on work that has to be redone when mistakes are made, time spent on fixing computer glitches on client work, time spent on general work that affects many clients, time spent on secretarial work, time spent supervising secretaries, etc.)

If you have billable hours goals for employees, I can assume you that the requisite number of billable hours will find itself on a timesheet. Funny how that happens. Also, how willing will employees be to work on non-billable work that is valuable to your firm? Can they bill time for improving a relationship with an advisor? Resist the temptation to use billable hours as a means to monitor employee performance; other ways are much better.

Also, you need a good timesheet / billing computer system. There are probably quite a few good ones available; I defer to other respondents to recommend specific ones.

In short, it's a good idea if you use it to manage the firm, not to manage your employees.

(The above is all my humble opinion)

[Guest JPAdmin]

Please see the thread titled "Tracking Time!"

[Larry M]

Richard,

Our charges were almost entirely fee for service.

Therefore, we tracked time - billable and non-billable.

And we had goals which were set for each category of employee.

The goals recognized some non-billable time was necessary in order to provide efficient and appropriate billable time. Client development, continuing ed, staff meetings, etc., were the kinds of non-billable time which were part of the individual's goal.

Further, the rewards were both periodic and annual - recognizing there are times when an individual is out of the office (physically, mainly).

In addition, the billable time was reviewed, monthly, for each client and for each project to determine whether the project's time (and fee) was beyond a reasonable expectation.

When we first established the procedure, all members of the staff were told its purposes and were told it was in a state of flux - to be revised as warranted (and warrants arose on occasion - among the first was to change the reward from annual only to include those who exceeded their goals within a month or quarter).

At our peridic staff meetings, this was one of the items available for discussion...and we encouraged staff comments and improvements.

[Guest JPAdmin]

Larry: What standard did you apply to determine a resonable goal for each category? So you do not use a fee schedule, just an estimate of the hours involved? Thanks

[Larry M]

You are making me jog a memory about something which was put into effect umpteen years ago.

My recollection of our thought processes is:

The stimulus was our seeming to be working long hours with lots of customer satisfaction but relatively little financial reward.

So, we reviewed our system (which was having individuals charge time according to their own interpretation of what was "chargable"), and then:

1. we estimated the amount of billable hours necessary to meet our expenses (including salaries) and profit goals (and checked with other professional firms - including those outside the actuarial/consulting field - to determine their expected work loads).

2. we compared that to the hours being charged by our staff, and found we were far short of the ideal.

So, we established some interim goals - as minimums - and set higher goals with the financial incentives to those who reached the higher goals. (A monthly incentive was paid if the individual met something like 10% of the annual goal - quarterly incentives were reached if 1/3rd the annual was reached.)

Goals for hours charged varied according to staff functions - so file clerks, secretaries and assistants could get bonuses as well.

We defined "chargable time" as any time spent with or on behalf of a client. The staff person was to record that time and the work performed - even if it was to correct something we had done. [Monthly, we reviewed the individual time sheets and would adjust charges to a client to reduce time spent on corrections or if we felt there was some waste.]

Chargable time also included training time (the client was our firm) and time spent promoting business. The latter encouraged our staff to become sources of business.

The results were almost immediate - we increased our hours charged and net billings (and collections!!) and improved our staff's income and attitude. A win-win situation.

Then, after we implemented this "perfect" method, we kept amending it to reflect our needs and capabilities.