Is The Billable Hour Business Model Antiquated? You Be The Judge.
Recently, I filled you in on some of the “macro” stressors that lurk in today’s workplace, and the ways in which they drag down productivity and prompt employee turnover. Such seemingly-inconspicuous oversights like poor EQ among recruits, leadership by fear, a disconnect with millennial employees, and a general lack of sustainability are catching up with many companies in today’s evolving corporate culture. And get ready for this: there’s even more to the story.
There’s a HUGE macro stressor in the professional services sector, and it’s woven directly into the fabric of a vast number of firms. It’s not a secret; In fact, it’s the “elephant in the room” for those who work alongside leadership at law and accounting firms, and it might be entirely incompatible with a 21st century workforce. It’s the antiquated business model of Billable Hours, the mere mention of which is the basis of workplace stress for untold numbers of folks in these industries….the kind of stress that jeopardizes soft skills on a grand scale, flattening the growth of your firm.
Will The Happy Law Associate Please Raise Your Hand?
According to a 2013 article in Forbes, “Associate attorneys stated they felt most unhappy with their company culture”. That article references the findings of Heidi Golledge, chief executive of CareerBliss, who indicates that, “In many cases, law firms are conducted in a structured environment that is heavily centered on billable hours....People in this position rated the way they work and the rewards they receive lower than any other industry.”In deciding for yourself whether or not this equals or fosters workplace stress, remember that stress is derived from emotions such as impatience, worry, defensiveness, resentment and anger….in other words, the bottom half of the mood elevator. This notion alone should raise a red flag, and serve as a motivator for your firm to take action before more ground is lost.
The “More Equals Better” Myth
The demands of a billable hours model are ambitious to the degree of being brutal. The standard currently in place is a yearly goal of 2,000 billable hours per associate. And for those of you who use it, you’re well aware that those 2,000 hours do not account for necessary administrative work, mentoring, business development or company "chores". Taking on such a workload clearly doesn’t give an associate adequate time to recharge their personal energy, or the incentive to take your firm to the next level. Furthermore, it proceeds to eat away at EQ in a cyclical manner. The undesirable results can take the form of diluted billable hours, erosion of interpersonal morale, and a staff that thinks of their job as a ball-and-chain rather than a ladder to success. The math just doesn’t look good.
Are Millennials In? The Jury Is Out.
Some studies point to millennials not being willing to work the number of hours that previous generations have endured. Plus, they are already known to have limited company loyalty. Other studies indicate that millennials have a capacity to spend more time on their careers than preceding generations, and are potentially responsible for increasing the expectations from a 2,000-hour billable year to a 2,500-hour model in the near future. In either scenario, the productivity outlook is grim when considering the continued viability of the billable hours approach, whether it be due to a shift in the cultural mindset or the unanticipated potential for employee burnout. In terms of the latter, consider this Washington Post article which confirms the notion that overwork, which accounts for anything over 5o hours per week, is anti-productive, and subsequently leads to poor employee health and high turnover. It's more evidence that the 2,000-hour model is unsustainable and is in danger of running even further out of balance.
A Daunting Task?
Managing your associates and keeping up with turnover can seem like more than a full-time job. How could you even begin to consider restructuring the way your professional services firm operates while still tending to your core responsibilities? DRIVEN works with clients to create a sustainable workplace while providing employees with the soft skills and stress relief they need. Connect with us today to get started.