The Kiwis Teach the Yanks

VeraSage Senior Fellow Brendon Harrex is an amazing visionary in the New Zealand accounting profession. After becoming the world’s first Chief Value Officer, as well as being named Young Chartered Accountant of the Year in 2006, he then went out on his own and launched the Harrex Group.

Brendon’s new firm is 100% Value Pricing and no timesheets. In October last year, he presented at the VeraSage Young Professional CPE program, along with Chris Marston. Given Brendon’s role as a thought-leader—and a thought-doer!—his advice is sought out from all over the world.

Last month, Brendon and his CEO, Nicki, had a conversation with a USA accounting firm that is making the transition to Value Pricing, and eventually, no timesheets. As we at VeraSage firmly believe in After Action Reviews, Brendon sent me an email with highlights of the phone call.

I think you’ll find Brendon and Nicki’s insights profound in the area of practice management and customer relationships.

Hi Ron,

Yesterday, Nicki (Harrex Group CEO) and myself spent a few hours on a teleconference with the firm. I was thrilled to hear that they have made the decision to trash timesheets next year. A summary of what we covered in our conference call is as follows:

Practice Management

We had a great discussion on how to manage an accounting business in the absence of timesheets, including how to manage workflow, how to assess people’s performance, and how to ensure that outcomes agreed with customers are being achieved. We gave them many insights into our learning and detailed for them how we manage our workflow, which is both compliance and project based. We talked about our KPIs and how we believe it comes down to an organisation having a collaborative culture rather than a competing one (as often occurs in firms with silos by partner). Our strongest message here was to emphasize the critical importance of performance management. This includes understanding your people and keeping ahead of their performance, rather than crucifying them at month end when you find out they have taken too long on a job, yet give them no help with how to improve it. A key part of this is because no clear expectation has been set at the start.

Customer Relationships

They had several questions here regarding how to involve the customer in the pricing process, how to understand what they value, and how to avoid replacing timesheets with a cost plus premium system, rather than relating it to value perceived by the customer.

In summary, we explained our learning as follows:

  • Never price or give an indication of price at the first meeting with the customer, as usually they will have not properly considered all the ways you could add value and assist them with their objectives.
  • Open communication and input is the key—you have to centralise pricing control, as everyone has different pricing abilities. If crappy pricers know that they have to have their process and pricing reviewed by either an individual or a group, they will price differently than as if they can do it in isolation with the customer. We involve at least two other relationship managers, a tax specialist, and an accounting team representative (usually) in the pricing process. The purpose of this is to ensure we have thought of all the ways we can add value for the customer and provide them with a fully fleshed out scope for the engagement.
  • Collaboration—we explained the critical importance of operating together rather than competing. This is particularly important as first class passengers must take priority over economy class, regardless of who the relationship manager is. Often we will need the skills of another relationship manager to assist with a customer and it may be that one of the relationships they are responsible for will have to take a back seat. In order for this to work, all within the organisation must understand that we are all about the success of the business, not just one silo.
  • The conversation with the customer is crucial to understanding what is important to them and where they want to go. Once you understand this, your entire solutions should be tailored to helping them achieve their objectives and this is how the most value can be extracted for the business, because this is most valuable to the customer.

      Ron, isn’t it ironic that the two essential skills to make value pricing work are performance management and selling, yet these are what is most lacking in a traditional professional knowledge firm!

      Both Nicki and I really enjoyed our conversation with the firm. They were a pleasure to work with and very open minded. We have tried to create the expectation for them that if they are to achieve the 2009 deadline for trashing timesheets, they need to communicate they are serious about this. They should expect to have to discipline some partners, change several roles around, and probably lose a few along the way. This is just a reality of change—some people will not cope.



Thanks, Brendon. Words of wisdom we can all learn from.


  1. so I had a customer ask me for “breakdown of hours” on my last project proposal to him.

    How does that work with value pricing? I know I can turn away customers/prospects that insist on detailed proposals, but yet many vendors in the tech area provide this info. Yes, I know I can snuff “toyota doesn’t!”, but really, how should it be handled?

  2. Eric,

    Good question. Why should a customer care about hours if you give them a fixed price, one backed up with a service guarantee?

    Tell them you don’t track hours because there’s no correlation between hours and value provided. You’re providing them a fixed price in order to give them certainty, hence your firm is assuming the risk of the transaction.

    If they insist, it’s because you haven’t communicated the value effectively.

    Customers don’t care about your costs, profit desires, profit margins, or hours. They care about results.

    Discuss value, results, outputs, timelines you’ll meet, etc. Guarantee it with a 100% unconditional money back guarantee. Then you won’t get this question anymore.

    But if you do, turn down the customer, as they don’t care about value and are probably only price shopping. It’s a Yellow light–a warning signal they are not a good fit for your firm.

    Also, offer them options on your RFPs, a Green, Gold, Platinum bundle. Never submit a proposal without options!

    All of these strategies work to take the discussion of hours off the agenda.

    I’d be interested in our IT Trailblazers answer to this question as well.

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