Ask VeraSage: Why get rid of timesheets?

RainToday recently published an old article of mine about the obstacles to implementing Value Pricing and getting rid of timesheets.

I received the following email question from a reader:

I enjoyed your article on the end of billable hours and timesheets.

I've got a consulting business and over 95% of our revenues come from value pricing contracts. But we track our time. Why get rid of timesheets? Isn't there some value to knowing where time is allocated? How do you analyze client profitability if you don't track the cost inputs? I'd love to get some perspective on this, as we all hate time sheets.

Thanks for your consideration.

One thing that has always amazed me about the VeraSage Quest to bury the billable hour and trash timesheets is how people ask us questions they think we've never thought about before. The most common with respect to trashing timesheets is: "How would you know if you're making any money?"

Part of me wants to be impudent, slap my forehead and respond: "Damn, I never thought of that. You're right. Let me recuse my 5 books and millions of written words on this topic until I can find a satisfactory answer to your question."

Nevertheless, the question illustrates how endemic that belief is that professionals sell time. Not only that, it's the wrong question.

Here is my reply to the reader:

Why get rid of timesheets? Because they measure the wrong things. They are lagging indicators.

I get your question all the time, it's not new, or original, nor insurmountable. Let me ask you a better question: How much money are you leaving on the table? Timesheets will NEVER be able to answer that question.

The professions are not going to become better at Value Pricing by being better (or more accurate) cost accountants. If that was true, CPAs would be best the pricers in the world, and they are among the worst.

Here's what replaces timesheets: Excellent project management skills, Key Predictive Indicators (not performance indicators--there's a huge difference), and After Action Reviews. You can read all about this in my book, Measure What Matters to Customers: Using Key Predictive Indicators, available at:

You can also read about firms that have ditched timesheets on our Community Blog and Trailblazer sections of our Web site. One particularly insightful essay is by Paul Kennedy:

Other essays on the subject

Basically, your clients don't care how long it took you to do something, so we should measure things that matter to them: like turnaround time, responsiveness, etc. Firms that don't waste their time filling out timesheets can focus on adding value, rather than measuring a lagging indicator no one cares about.

Bottom line: It's being done around the world. You can do it too. If you do, you'll become a lightening rod for attracting talent ("If you work here, you don't have to complete timesheets. We treat you like adults, not children").

I hope this inspires you to read more about this. We at VeraSage offer a huge reward to anyone who come up with an objection to Value Pricing or getting rid of timesheets that we haven't heard before. It amazes me how people think we haven't thought long and hard about all of these issues, especially when many fellows operate firms without timesheets! We know it's possible to trash the most anarchistic legacy in the professions.

Of course, to understand that you have to understand that we are knowledge workers, not union employees.

I will have more to say about the right question (how much money are you leaving on the table?) versus the wrong question (how do you know if you're making money?) in a future post.