Trailblazer Update: Integrity Wealth Pty Ltd

Michael Stewart, Director of Integrity Chartered Accountants & Business Advisors—one of our Trailblazer firms—sent me an update on his firm’s progress since trashing timesheet.

What’s great about this update, which Michael is so graciously allowing me to publish, is that it is a compilation of the firm’s team members’ attitudes to operating in an environment without timesheet. Regular readers of this site know we believe that one of the major impetuses for driving the change to Value Pricing and no timesheet is the competition for talent. Increasingly, knowledge workers understand the value they create for their firms is not predicated on the time they spend, let alone accounting for every six minutes of it on a daily basis.

This update from Michael is good timing, as I just responded to a letter to the editor from my November 2008 Journal of Accountancy article, The Firm of the Future. Here’s an excerpt from that letter:

My college production management professor back in 1983 stated, “Happy employees are not necessarily productive employees. Many employees are perfectly happy doing next to nothing.”

Most current management experts, outside CPA practice management experts, teach that you get what you track. If you want productivity, you have to track productivity.

Here’s part of my reply:

I was in college in 1983 as well, where I learned the same “happy employees are not necessarily productive employees” axiom. But the article wasn’t about happy employees, it was about effective knowledge workers, who are less effective when they are micromanaged, and demoralized when they must engage in a low-value activity such as tracking every six minutes of their day.

The letter further asserts “you get what you track. If you want productivity, you have to track productivity.” But this is nonsense. We don’t change our weight by weighing ourselves more frequently, or accurately. We must look at the root causes, and processes, which timesheet emphatically do not do.

We at VeraSage do not advocate trashing timesheet in order to make employees “happy,” but rather to remove an incredibly low-value activity from their routine. It’s all about increasing their effectiveness, though we will admit happiness seems to rise as well.

Which leads us to Michael’s update. Here are the words of his own team members on functioning in a no timesheet environment, allowing you to judge for yourself if this firm is comprised of more effective knowledge workers. I have included some commentary (in bold) below some of the comments.

Samara, Accounting Division Manager

The way accounting firms set a job budget based on last year’s fee always seemed to me like a recipe for failure. Last year’s fee probably had a write off, so basing this year’s fee budget on last year’s puts you behind from the start. The only way to avoid taking a write off is not to record all your time on a job, but then you’ve got a problem finding enough chargeable hours to make productivity.

Alternatively, if you want to try to justify charging the time instead of writing it off, you have to sell the value of the work you did by preparing a fee narration that goes for 2 or 3 pages, and the time that takes isn’t chargeable, so then you’ve got to stay back later to try and keep your productivity up…And so it goes—madness.

Take timesheet out of the equation, and your perspective really shifts from yourself to your clients. I’m still busy, but I’m busy working for my clients rather than trying to figure out how many extra hours I need to work to make productivity this month, or any of the other ridiculous time-wasting activities you find yourself engaged in when you’re trapped in timesheet hell.

You can be so much more proactive with your clients when they know there’s no clock ticking when they call. They’re more likely to call us before they rush into anything, which gives us an opportunity to do more special work for them as well as saving time and hassle (and sometimes tax dollars) at the end of the year. We also have the luxury of time to spend looking over our clients’ financials so we can provide more value-added service to them.

The biggest challenge I’ve found with life without timesheet is the idea of stopping work on a job when the scope changes. Under the timesheet system you just recorded all the time you spent, so if the client sold some property or his GST was a nightmare to reconcile, it was there in the timesheet and you’d explain in the fee what extra work was involved and why it cost more. When you don’t keep a timesheet and you’ve already quoted a price upfront, you need to down tools and talk to the client as soon as you realise the job isn’t what you thought it would be. It’s a difficult habit to form but you just have to train yourself to look for the signs as you go.

Contacting the customer when scope creep arises is a difficult habit to form, especially since we’ve all been taught to just do the work and worry about the bill later. But this is a prescription for an unhappy customer, who need to be kept informed on the price, scope, and payment terms of their jobs. I have faith that if auto mechanics and contractors can be taught to use Change Orders, so can accountants.

And consider this from the customer’s perspective rather than our own inward looking, myopic view. Shouldn’t they know before hand that you are performing more work that will cost them extra? Isn’t the moral and ethical course of action to communicate with them up-front? Isn’t that what we’d want from our service providers? The Golden Rule applies to professional relationships as well.

Mark Stewart, Director

Things that bugged you about using timesheet?

Trying to remember what you had done in a day/week. Often, especially as client contact/practice management duties increase, timesheet would be an after thought. Therefore they were rarely accurate as they weren’t done consistently at the time of doing the work.

How you felt when a partner used to “write off” work before billing?

This really indicated to me that the price was in fact set in advance anyway. I would love a dollar for every time a partner said “we can’t recover that”. The sad thing is that when I became responsible for preparing invoices, I found myself saying the same thing.

What’s good about not having timesheet?

There is a freedom to your day without having to remember what every 6 minutes consisted of. Things such as marketing & training are done without the pressure of thinking that it is affecting your “productivity”.

What is harder without timesheet?

The main challenges are from a management point of view—controlling scope creep, planning the workflow and assessing team member performance via different measures. However meeting these challenges is far better than the alternative.

Has your job changed or do you have a different focus with/without timesheet?

Job has changed in that the focus is now on managing the challenges mentioned above. Also though, with the introduction of fixed pricing, more frequent client meetings/calls has allowed more cross selling of other/additional services.

Has it changed the conversations you have with clients about billing, prices, etc?

Absolutely. Gives us the “upper hand” in that no work is done until client agrees to the price negotiated. I have found clients far more accepting of price when the conversation is in advance of work being done or as problems are encountered on the job.

Sunny, Intermediate Accountant

I used to work for a firm using time sheets before I joined integrity. I had to spend at least 2 hours every week to prepare my timesheet which reduced my time to work on client work. Also, I was worried about the “write off” all the time. The pressure can be quite high when I see a partner have to “write off” my work before billing.

Having no time sheets but monthly budget makes me feel far less stressed and I have much more control of managing my work life. Now I can focus more on client work rather than preparing timesheet. I feel much happier to come to work everyday.

Barbara, Receptionist

I found timesheet to be inaccurate because they were not an accurate record. Specific time was allocated to me to type a covering letter, sometimes this went way over as an ATO portal investigation needed to be carried out which wasn’t recorded on the time sheet.

Filling in the time sheets were extremely time consuming and time was not allocated for the time I spent filling in time sheets.

Denise Gibbons, Managing Director

I learnt fairly on when I became a principal of an accounting firm that I needed to discuss pricing for work that I was going to be doing for a client upfront. When I didn’t do this with new clients or even current clients for additional work, I would have great difficulty having the discussion at the end once the work in progress report was printed. Invariably it would end with resentment either on the client’s part at the price or on my part because I believed I had undersold my services. I am sure that I lost clients because of the process.

I would say to myself that I needed to have these discussions but because of my indoctrination in big and medium accounting firms my mindset was still focused on the timesheet and billing method after the job was complete.

It wasn’t until I met Ron Baker at a conference that I knew I had to find another way.

When I looked at how I was using timesheet in my firm, I realised that I was really only using it as a guide anyway. I never really used them to monitor team members or the performance of the firm. I had budgets set on overall income and expenses and I had client analysis that showed me that I could meet the income targets so long as I maintained and grew my client base during the year.

I also knew that I spent many hours agonising over the billing sheets to invoice my clients and invariably I would come up with a figure that I thought was reasonable and fair anyway. In some cases, I would make myself quite ill because I knew with the price sensitive clients that I was going to have to have a discussion on the fee that I was going to charge anyway.

The worse aspect of the timesheet model was that I felt guilty at the start of the relationship with a new client because, in my head, I would be thinking about how I was going to bill for this and really cutting short the “getting to know you” phase of the relationship because I couldn’t really charge for it. Now without timesheet I don’t worry about the time and I focus on what the client needs and in my head I am already pricing the work to be done. I don’t disclose this to the client until I have discussed it with our value council but I advise the client the process of engagement agreements and that I will contact them to discuss the price.

It may be that we have to have further discussions about the price, but I know the figure that I am prepared to do the work for and if this does not suit the client they can seek assistance elsewhere.

So the best outcome of doing away with timesheet has been that I have much more time available to spend with my existing clients or new clients to discuss the work they require and when they require it by. I am also spending more quality time focused on the delivery of service and keeping the clients happy to remain clients or our firm. This is because I am not spending hours every week recording my time, reviewing work in progress reports, discussing performance on jobs with team members, agonising over invoices and having awkward conversations with clients.

I am sure that all of this applies to the team members as well.

The difficulties of not having time sheets are identifying things that timesheet otherwise made obvious—training needs, current work in progress, scope creep and indicating where there might be inefficiencies.

Which is why we advocate excellent project management skills, After (and Before) Action Reviews, and Key Predictive Indicators.

In any event, Integrity has made fantastic progress. It’s obvious to us that environments without timesheet are far more effective at servicing customers. It also makes for happier team members, and what’s wrong with that?


After I posted this, Michael sent me another email with another critically important point regarding Value Pricing: Its effect on customers:

Ron, a couple of points I meant to add and if you can add to the article if you’d like:

  1. Since quoting prices upfront, we have not had one complaint about prices. Not one, in 18 months. Previously probably at least one per month.
  2. On the occassions we have written to clients regarding scope creep, on every occassion they have written back with acceptance, no objections.

Ron, thank you for listening to us and for your help. I hope our contributions continue to spread the message—the profession, and more imprtantly their clients, need this change.


Thank you Michael; looks like happier team members and customers!

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