Abolishing Timesheets at Brains on Fire – straight from the CPA’s mouth

The following is a guest post from Brandy Amidon – not only our Princess of Particulars, but one the smartest CPAs we’ve ever met. Yeah, we’re braggin’ on her. Read on to find out why.

One of the great things about working at Brains is that you do a little of everything. Yeah, I’m not only a CPA & half of our accounting team,  but here I’m also an event planner, assembly line worker, catering chef, snow flake making machine and now a writer for just a day.

Starting January 2009, we’ve abolished timesheets. You heard me. They are gone. Not just for some, but for all. It started with a simple question of “Why?” not and grew into “Let’s do it!”

We don’t sell our time. We sell happiness for our clients, which comes in the form of results, exceeded expectations, and solutions to problems – none of which are measured by a billable hour. Why did it take us so long to let go? Because we had to relinquish control. Control over profitability and being able to measure something tangible.

How long it takes us to create something memorable and out of this world doesn’t matter. What matters is that it’s awesome and changes the world.

It may take some time for this to sink in. So let it marinate. Take a shot of tequila – we did! Then leave a comment or if you have specific questions for your company, feel free to email me – brandy (at) brainsonfire (dot) com.

Timesheets-Promo

24 Responses to “Abolishing Timesheets at Brains on Fire – straight from the CPA’s mouth”

  1. January 09, 2009 at 6:57 am, Jason B. said:

    Way to go. That is a huge leap to make. “We don’t sell our time” is a philosophy that I can totally get behind. Would be very interested to hear a progress report in 6 months time (what challenges this poses from a billing / client relations angle). Thanks for sharing (and leading the way?)

    Reply

  2. January 09, 2009 at 7:01 am, Todd said:

    Whoa. That’s a big step. I eagerly await the three-, six- and 12-month updates on how this change is going – straight from the CPA’s mouth, again.

    Seriously, congrats on the bold move.

    Reply

  3. January 09, 2009 at 7:21 am, Kyle Flaherty said:

    As someone who has worked most of his life at an agency and has filled out hundreds of timesheets I say BRAVO! I’ve always believed it was possible and that someone needed to take the leap, so thanks for doing it and I can’t wait to hear how it helps you in the future.

    Reply

  4. January 09, 2009 at 7:32 am, Jay Donovan said:

    OMG, it’s reason #1023 why all branding folks should want to work at this place! No innovation takes place by playing it safe. In the end, this may work and it may not work, but the set of ba**s it takes to attempt this is daring and honorable. You all REALLY DO put your money where your mouth is! Btw, I think this will be successful, if people are committed to making it be successful. Bravo!

    Reply

  5. January 09, 2009 at 7:39 am, Loki said:

    As a Web Content Producer I have pretty much always sold the deliverables, not the time it takes to produce them. For instance, I’ve been brought on board by several companies to do new roundup blogs focused on their respective fields. Sometimes research and writing on a post takes half an hour, sometimes it takes four hours. The bottom line is that the client is pleased with the results and I am not selling myself short.

    It s a brave move and one that I look forward to comparing notes with you about as time progresses.
    As they say in theater, break a leg!

    Reply

  6. January 09, 2009 at 10:52 am, Laurie Ruettimann said:

    It sounds like you’re well on your way to implementing ROWE:

    http://en.wikipedia.org/wiki/ROWE

    Good luck and great job!

    Reply

  7. January 12, 2009 at 10:08 am, Jill Spaeth said:

    This is a brilliant idea. Just out of curiosity, how are you managing contracts that might normally run on an hourly basis? Will they now run on a “happiness” basis? If so how would you manage that? Sounds like a great concept to brainstorm.

    Reply

  8. January 12, 2009 at 11:25 am, Brandy said:

    Jill,
    We only have a few projects that are hourly and not ‘Fixed Pricing Agreements’. We will establish clear deliverables and an estimate of the project before the job starts instead of after & based on billable hours. What’s great about letting go of time sheets is that we can take time to see what value we can add to our client projects without worrying about write offs.

    Check out this website for more details on the process of abolishing time sheets.

    http://verasage.com/

    Reply

  9. January 12, 2009 at 12:51 pm, John Lane said:

    I’m very curious about your move.

    Even with a Fixed Pricing Agreement or “not to exceed” limit you would still have to estimate the cost for projects; and that would probably be based on people’s estimated time which logically breaks down to a cost per hour. Then you calculate profitability of the job by knowing the actual cost to do it, which again is tied to time.

    What’s the new math to get yourself away from time?

    Reply

  10. January 12, 2009 at 2:05 pm, Brandy said:

    John,
    You have to completely let go of the billable time concept and the old formula to calculate profitability.

    It’s no longer about how many billable hours it takes to complete a project. It’s all about the value you provide to your client and what your client is willing to pay. It starts at the beginning when you are estimating the project and flows through when you complete the deliverables. You no longer determine profitability based on time.

    It’s based on the simple principal of did you do what you said you’ll do and was the client happy.

    Reply

  11. January 12, 2009 at 2:14 pm, Tim Williams said:

    Congratulations on making not only a change in practices, but a significant change in paradigm. By trashing time sheets, you’re acknowledging that clients don’t buy cost or efficiency. They buy outcomes and effectiveness.

    As your firm clearly understands, most financial systems tell us the costs of everything and the value of nothing. So in our experience, the next step is to replace the old cost-based tools and reports with new value-based reports that measure and demonstrate effectiveness, so that you’re able to show your clients (and your own associates) the value you create, not just the costs you incur. These include:

    Value Plans
    Value Briefs
    Value Reports
    Value Case Histories

    For too long marketing communications firms have tracked only inputs and not outputs. They’ve been chasing the wrong rabbit.

    Keep up the great work.

    Reply

  12. January 12, 2009 at 5:42 pm, Ron Baker said:

    Hi Brandy,

    Congratulations on your firm’s transition to becoming a Firm of the Future.

    Marketing firms are professional knowledge firms that sell intellectual capital, not time. No customer buys time, they buy value and results. By pricing on purpose you are dedicated to capturing the value you create for the customers you are privileged to serve.

    By trashing timesheets you will begin to focus upon that value, as well as the results and outputs you create, rather than costs, activities, and efforts. You will also become a lightening rod for knowledge worker talent, since no knowledge worker enjoys accounting for every six minutes of their day.

    We at VeraSage Institute are dedicated to burying the billable hour and trashing timesheets in professional knowledge firms around the world. We have helped thousands of firms across all PKF sectors–from accounting and law to ad and IT firms–make this transition.

    There are plenty free resources at our Web site, including Trailblazer case studies from firms that have made the transition, an active Blog, essays, books, etc.

    It’s way past time to bury the billable hour! Congratulations on being part of the Revolution.

    Regards,
    Ron Baker, Founder
    VeraSage Institute
    http://www.verasage.com

    Reply

  13. January 13, 2009 at 6:52 pm, Amanda said:

    Think of all the time re-cooped trying to fill out time sheets that will be used making your work even more remarkable than it already is. I don’t think you can put a price tag on that.

    Reply

  14. January 17, 2009 at 9:31 am, Jim Caruso said:

    Brandy,

    In your response to John Lane, you said you “no longer determine profitability based on time” – but you did not describe how you determine it instead. Although I agree that clients do not buy time, payroll is still your primary cost. It would seem to me that, without timesheets to allocate payroll to clients and/or projects, you can only look at profitability in the aggregate for the entire firm – correct?

    Jim Caruso

    Reply

  15. January 23, 2009 at 5:17 am, Brandy said:

    Jim,

    Payroll and operating expenses are relatively fixed costs. Using the billable hour method, we marked ourselves up (for overhead) and then used write offs to bring ourselves back down to what the client paid us for the job.

    Once you eliminate timesheets, you stop allocating overhead based on hours worked.

    Instead, we determine profitability of each client using Leading and Lagging Key Indicators. Check out this link and read both articles to help think about which Key Indicators would work for your business. (http://www.verasage.com/index.php/resources/C59/ )

    The closest Key Indicator to the old method is where you allocate overhead to each client based on AGI (Revenue less COGS). You’ll find that once you take out the allocation of time, your profitable clients are still your profitable clients. You are assuming that the more revenue clients bring in the more company resources (overhead) they’ll use.

    This is the hardest part of the whole process. Wrapping your mind around how to measure profitability. I urge you to start testing how your client profitability will look if you eliminate timesheets and compare to your current method. This really helped us feel secured that the new method was more effective.

    Please feel free to call or email me and we’ll chat this out!

    Thanks!

    Reply

  16. February 22, 2009 at 8:54 am, You can’t sell time « Daniel Atwood said:

    [...] They’re abolishing timesheets. [...]

    Reply

  17. August 19, 2009 at 6:07 am, Trash your timesheets | Blogizm said:

    [...] based system earlier this year. In addition to these two interviews you can read about their first steps to trashing timesheets and why, and an then the follow up report some months later after they have done it listing the benefits – [...]

    Reply

  18. November 09, 2009 at 5:10 pm, Laura Dellinger said:

    Congratulations on this great leap. What great confidence you express in your team and the value of creative thinking and great strategy, which we all know truly can’t be measured in time. I will look forward to hearing more about how it works.

    Reply

  19. February 09, 2012 at 5:35 pm, Payton_vege said:

    Amazing write-up! This could aid plenty of people find out more about this particular issue. Are you keen to integrate video clips coupled with these? It would absolutely help out. Your conclusion was spot on and thanks to you; I probably won’t have to describe everything to my pals. I can simply direct them here!

    Reply

  20. January 30, 2014 at 8:08 am, 5 Ways Digital Has Forced Agencies to Adapt « MindCorp | Newsfeed said:

    […] business operations. In 2009, Brains on Fire turned some heads when they announced they were abolishing timesheets -– as well as the typical agency billing model. While a large percentage of agencies still bill […]

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  21. July 01, 2014 at 1:30 pm, Join the NO TIMESHEET MOVEMENT (and check out our new store). - Brains on Fire said:

    […] we first shared our NO TIMESHEET journey on this blog, we’ve had hundreds of people reach out to us and want to know more. […]

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  22. July 01, 2014 at 3:28 pm, Follow-up to Abolishment of Time Sheets – Two Months Later - Brains on Fire said:

    […] of Particulars, Brandy Amidon, is back to report what’s happened in the two months since we abolished time sheets at Brains on […]

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  23. July 01, 2014 at 3:29 pm, Abolishing Time Sheets follow-up: Interview with Ron Baker - Brains on Fire said:

    […] Ron Baker. And he’s the inspiration behind Brains on Fire abolishing timesheets back on January 1, […]

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  24. July 01, 2014 at 3:31 pm, FireCam - Viking Funeral for Timesheets - Brains on Fire said:

    […] may remember that we recently did away with timesheets. That’s right, we killed them off. So Joe Dannelly thought that – as evil as they are […]

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