Ric Payne: From Jolly Good Fellow to Senior Fellow?

As many of you know, Ric Payne and I have been engaged in a fierce debate over the value of timesheets, which started when I was on a speaking tour with Paul Dunn in Australia and New Zealand from February through April 2000. Paul and I would stand on stages around each country and say the timesheet was a cancer in the professions and they had to be eliminated. This was the genesis for the book we wrote together, The Firm of the Future. Meanwhile, Ric was back in the office getting inundated with e-mails from his customers asking why we are saying that when so many of the resources Ric had developed have time as an instrumental measurement.

This led to an exchange of e-mails between Ric and me, running probably over 20,000 words. In the spirit of full disclosure, I need to say that Ric was always very supportive of my Value Pricing message, and how time did not equate to value. Where we disagreed was over the usefulness of the timesheet as a cost-accounting and productivity tool. We took some hard shots at one another, and Ric even equated it to a boxing match, where he stated, “Bruiser Baker is in one corner in the red trunks, and Thugger Payne is in the other corner with no trunks.” It was a fantastic exchange, always done with the utmost respect, and I even incorporated the full debate in my book, Professional’s Guide to Value Pricing, beginning in the Third Edition through the Fifth Edition. I removed the debate from the Sixth Edition in order to incorporate a new debate with other consultants to the profession. Also, I believe history has proved me right, now that we have many more firms operating without timesheet than we did in the year 2000.

Everytime Ric and I would converse, the topic always came up, and mostly my emotions would get the best of me, even to the extent of yelling in a restaurant in Lake Tahoe, throwing wine corks around (while Kerry and Paul nervously tried to carry on a normal conversation). I used to joke Ric’s was the only company to provide me with a 1099 denominated in hours. He once told me he was going to write his own book in defense of timesheets, and therefore refute my work. I told him I looked forward to reading it, and I’m sure I’d agree with every word—in the index.

But I owe Ric an enormous debt. Because he would never let me get away with sloppy thinking, or bad logic, he improved my thinking and my message. Ric is a towering intellectual, and a fantastic thinker, and you better be well prepared if you challenge him because he’ll destroy you with logic. It forced me to find examples, and become empirical. It was if I was in a graduate course where Milton Friedman would ask his students the two most terrifying questions you can ask any scientist: “How do you know?” And, “So what?” When I reread our debate, I can see the logical flaws in some of my arguments, and thanks to Ric I had to really hone my theories.

In any event, when Paul O’Byrne and I attended the Principa Practice 2020 Conference this May in Hamilton Island, Australia, Ric asked how one becomes a Senior Fellow of the VeraSage Institute. I replied: “Ric, you have to sign our Declaration of Independence. You have to renounce the validity of timesheets. And, you have to be blessed by the Lady of the Lake—unfortunately, Ric, I’m the Lady.

Well, now we have Ric’s response to Geoff Richmond’s firm trashing timesheets, which you can read here.

To continue the boxing analogy, I think Ric might be facing a TKO. But please do not think I’m gloating about this. As William Wrigley, Jr. [1861-1932] once said: “When two men in business always agree, one of them is unnecessary.” And that is, I’m afraid, what might happen if Ric ever comes over to our side. I will become unnecessary, since we agree on practically every other issue facing the profession. I always would tell Ric I never wanted him to agree with me on this issue, otherwise I would become superfluous.

But it’s a risk I’ll take. When and if Ric publicly denounces timesheets, and signs our Declaration of Independence, we will welcome him with open arms as a Senior Fellow in VeraSage Institute, and our collective IQ will rise immeasurably.

Sophocles once wrote: “One must wait till the evening to see how splendid the day has been.” Ric, working closely with you has been the highlight of my professional career. There’s not an accountant I know who knows you and doesn’t have immense respect for you, your accomplishments, and the passion with which you have tried to better our profession. You have been my teacher, my debate partner, my colleague, and my mentor; but most important of all, you are my dear friend. Thank you, Thugger—a splendid day indeed.


  1. I think the world of Ron Baker. He has done more to raise the level of debate in our profession than anyone else I know. I am truly humbled by the nice things he has said about me in his blog and at the risk of this sounding like the minutes of the mutual admiration society I feel exactly the same way towards him.

    But we don?t always agree.

    It is true that some firms have successfully replaced time sheets with a better system of organization and management. I have no argument with that and I will happily dedicate my life to doing whatever I can to help and encourage other firms to do likewise.

    However, I know of many firms that are also doing extremely well, who have a great team of engaged and motivated people, who are creating real value for clients who truly appreciate the work they do for them and who are seeing quality profits coming to rest on the bottom line. Those firms are living quite comfortably with time sheets even though many of them also utilize Fixed Price Agreements built on the principle of Value Pricing (or what Ron now calls Pricing on Purpose) and all of the other fantastic ideas that he advocates.

    For this reason I don?t feel my time is well spent being on a crusade to trash time sheets and I certainly do not want to re-open the debate with Ron. Perhaps he might like to post the debate we had (but which is no longer in the current edition of the Professional?s Guide?) and let others be the judge.

    For the record I need to state my position on this matter. I wholeheartedly support the notion that there is a need to break the nexus between timesheets and billing. I do not believe that the only way to do this is to trash timesheets although I have to agree that if there are no timesheets then clearly there can be no nexus. But it?s not timesheets that result in time-based billing, that?s a management decision.
    To say that the only way to break the nexus is to trash timesheets is tantamount to arguing that heart disease is a serious health problem so we should advocate the removal of hearts?this, of course is sloppy argument but no less sloppy than the trash timesheet argument.

    Timesheets can, in my opinion, provide valuable information to management about how people have invested their limited time on. How management uses that information is the key to its value at the end of the day but this is not the place to further expand on that concept.

    Having said that, I can live quite comfortably with the view I expressed in my email to Geoff Richmond. I said words to the effect that firms may need to do something as radical as trashing timesheets to break the nexus with an outdated business model.

    Geoff Richmond essentially re-engineered his firm to accommodate a new and better way of running his business. It took courage for him to pursue this strategy (and of course, the priceless inspiration delivered by Mr Baker) and I know Geoff has the ability and the drive to pull it off.

    I?m certain that he will end up with a more profitable firm, a happier and more stable team and better quality clients. But he will get these things because he is Geoff Richmond and he has a great team?I have met several of them. In other words, I?m suggesting it?s Geoff?s leadership and management skill that will produce the results, it?s not merely the trashing of timesheets.

    I would love to qualify to Senior Fellow status of VeraSage Institute.

    I would be in the company of extremely talented, passionate and committed people who are making a positive and lasting difference to everyone they come in contact with. However, I can?t denounce timesheets or sign the Declaration of Independence. I have already explained why I can?t denounce timesheets but even if I qualified on the timesheet issue I could not sign the Declaration because I don?t understand many of the words e.g. magnanimity, usurpations, consanguinity and rectitude.

    In taking this position it seems that both Ron and I can remain relevant as well as very dear friends. Most importantly and in all seriousness, the work that Ron and his colleagues at the VeraSage Institute are doing to encourage the profession to re-think not only its business model, but its value purpose, is absolutely necessary. I believe that history is going to be very kind to Ron Baker and the thought leadership he has exhibited. He is in a league of his own.

    And the good news is that because neither Ron nor I are superfluous we at Principa are going to be working with him and his colleagues to develop systems that will help hundreds more firms fast track the construction of a business model like Geoff Richmond?s and others who have successfully implemented the Baker/VeraSage philosophy.

    For the record, the debate Ron and I had over trashing timesheets was never properly adjudicated and now I find that he claims victory on the basis that ?history has proved [him] right?. A bold claim indeed Mr Baker. I think when we are both old and grey (well, more old and grey than now, anyway) will be the time to determine what history has or has not proven and in the meantime, I look forward to working shoulder to shoulder with you to help save this profession that we both care so deeply about.

  2. Ric,

    Thank you for the kind words. We will post the debate because I look back on it with fond memories of how it inspired and improved my thinking.

    I’m not sure if arguing firms should remove timesheets is tantamount to arguing that our heart should be removed because it gets diseased.

    What I have seen across firms in multiple professions, including accounting, law, advertising agencies, and IT firms, is this cause and effect: firms that are the best pricers do not have timesheets.

    Now, I believe that is a direct cause and effect, because firms with timesheets are still sub-optimal pricers, because they fall back on rate per hour, and hence ignore value.

    That said, I should also concede when you are right, and you are about Geoff Richmond’s firm. I don’t think a firm becomes great by trashing timesheets (I won’t argue wet streets cause rain).

    I do believe great firms (or those inspiring to become great firms) are more likely to trash timesheets.

    I respect your response with respect to not signing our Declaration of Independence, and that will, unfortunately, prevent you from being a Senior Fellow.

    However, we will continue to work with Principa because we believe you guys are doing such profoundly important work, and if we can get more of your customers to convert maybe one day you’ll change your mind.

    In the meantime, I look forward to the journey.

    Thanks Thugger,

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