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Paying by the Hour

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These days, dropping $4 for a cappuccino or a few grand for a fancy flatscreen television is a considered a typical purchase, not a wasteful extravagance. So how do we react to hourly wages?

Tipping waitstaff 20% or slipping a few extra bucks to a skycap is standard practice. Popular opinion on billable hourly rates for business consulting and professional services, however, varies from begrudging acceptance to outright mockery. Should we open our wallets or raise our fists?

In Colorado Springs Gazette editorial, columnist Jim Flynn wrestles with the debate over hourly rates at law firms—a type of business consulting. His question: what should we pay for services?

On the one hand, rates of $1,000 per hour for superstar attorneys sounds preposterous, but the power of the most elite legal team will often earn settlements that easily cover their fees. Some claim that charging for time encourages service providers to pad estimates and dawdle to earn more funds. If you do less work in more time, you get do get paid more.

Process Improvement - Attorney\'s Wages

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The problem is magnified by overachieving junior staff, who are competing with each other for the most billable hours and the least amount of sleep. Furthermore, providing incentives such as bonuses and accolades as rewards for total charges rather than quality of work surely benefits the firm at the detriment of the client.

On the other hand, Flynn clearly articulates a reasonable counterargument:

“Good lawyers are too busy to revel in inefficiency. They want to get their work done, provide cost-effective services for their clients, and have enough time and energy left to go to their kids’ soccer game or read a book.”

Should business consultants charge by the hour? It’s certainly easier than charging for a project or tying compensation to results. But just as we know that the best employees are those who aren’t motivated by money and who aren’t supervised minute by minute, the best business consultants are often those that stay away from hourly billing and come up with more reasonable solutions for compensation.

Learn more. Reach out to our Indianapolis consultants at AccelaWork today!

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