Is it time your firm ditched the timesheet?

Are you part of a rare breed of “creative” that cherishes those moments each day where you finally get to fill out your timesheets? While I’m sure you exist, most people in truth can’t stand it. So, if the general consensus is that we hate capturing time, then why do it at all? Why not save ourselves the grief and just ditch them altogether?

The goods news is that there are certain times (excuse the pun) that you can and probably should ditch timesheets. However, the reality is most creative firms are not set up in a way to throw away the stopwatch just yet.

So how do you decide whether or not your firm should be capturing time?

What type of firm are you and should you capture time?

I know all creative firms are uniquely different. You could be identified as a digital agency, a design studio, an advertising agency, a PR agency, or a branding agencies, to name a few. Or you could possibly provide some or all of these services and call yourself a “one stop shop”, an “integrated communication firm” or something elaborate (and creative) like “channel agnostic communication experts”.

But all of these firms have something in common. The services you provide your clients will ultimately be done by a “thinker” or a “doer” and the price for that service will be based on time or value. Depending on where your firm and the people within it sit on the map (below) will determine whether you should be capturing time or not.

Thinkers are the idea generators, the strategists, and the people who provide the solutions to their client’s problems.

Doers are the people that work on the tools and get stuff done. They are the project and account managers, the designers, the finished artists, and the producers.

Time Based Pricing firms sell their services based on units of time, (or at least calculate on that basis and then provide their client with a one-line estimate, giving themselves and their client the illusion that they are charging based on value).

Value Pricing firms sell their services based on the value they are ultimately providing to their clients.

Although their may be a few firms that can identify and sit neatly within one of the four quadrants above, it is more likely that you will sit across at least two of them.

Thinkers / Time-Based Pricing: If your firm prices your thinkers on a time-basis you need to capture and measure time.
An example of this could be a creative director who dabbles into the thinker/ value pricing quadrant when the right type of project comes in, but generally they sit here, overseeing, mentoring and providing guidance to the designers.
(Consider this: even if you are not ready to fully adopt a value based pricing strategy across your business, you should consider moving away from charging your “thinking” in units of time.

Thinkers / Value Pricing: If your firm or certain people in your firm sit (exclusively) in this quadrant they don’t need to capture time. If you charge a “concept fee” (thinkers/ value pricing method) and time-based pricing for production (doers/ time-based pricing) make sure you quarantine the value of concept fee from the rest of the project.

Doers / Time-Based Pricing: If your projects are estimate on an hourly basis, your designers, finished artists, producers, and account managers, etc. need to capture their time.

Doers/ Value Pricing: If you sit exclusively in this quadrant, it is likely that your business has evolved from time-based pricing to product based pricing. You have done so much of something over the years on a time basis that you have figured out an efficient way to deliver these “things” at a fixed and low price. E.g. $999 WordPress websites or $249 word templates. Timesheets in this quadrant are on a case by case basis. If you have only recently moved to product pricing, you may still need to capture time to confirm that your pricing is correct and profitable.

Before you decide to ditch timesheets in certain departments or across your business, consider the benefits that timesheet information provides.

Watch out for my next post on the importance of capture timesheets (for those who should)

About

Michael McGee

Michael McGee is the creative industry's leading expert on systems and performance management. He is a qualified chartered accountant, financial planner and management/business consultant with local and international experience, as well as a sought-after industry keynote speaker. It was Whybin Lawrence TBWA that launched Michael's career and lifelong passion for the creative industry after he joined its small finance team in 1999. For a young, green, finance gun, it was a baptism of fire as he plunged into overhauling the agency's process and accounting system due to the introduction of the GST. Two years later, Marketing Purchasing Company (MPC) appointed Michael as its Finance Manager, giving him autonomy and visibility into the innermost workings of a creative business. Within weeks, Michael recognised MPC wasn't harnessing the full potential of JobBag - one of the pioneers of automated creative systems. He rewrote MPC's systems and procedures manual to correctly capture project timesheets, purchase orders and quotes, giving the owners unprecedented visibility into the profitability of their client work and increasing their bottom line within six months. Michael worked with the JobBag team to refine the software so that it worked for MPC, enabling more informed decision making. He became an expert at streamlining information between MPC and its clients, working closely with procurement departments and suppliers. After recognising the vast potential of automated creative systems in increasing business profitability, Michael approached Instinct Systems, the founders of JobBag who immediately appointed him as their Business Systems Consultant expert. Within three years, Michael grew JobBag into the platform of choice for creative workflow systems. During this time, he invested thousands of hours speaking to hundreds of creative firms of all types and sizes to understand their challenges and opportunities. He helped set up and implement their creative systems, so they worked best for each business, training teams and consulting on system integration along the way. In early 2008, Michael recognised his unique position in the creative industry. Using his intimate understanding of how creative businesses work and the common challenges they face, he established himself as an independent consultant, trusted advisor and expert in the area of systems and performance management for creative businesses. Michael feels passionate that the creative economy will fuel Australia's next boom. He's driven to see creative companies lead the way in small business success, and reduce the number of wholly avoidable start up failures. Through M'Gee & Partners, Michael and his team harness a breadth of leading tech and automated systems for the finance and creative industries. Their goal is to ensure integration that works hard for each business, allowing them to capture, measure, manage and predict, so they make highly informed decisions and increase short and long-term profitability. Outside of work, Michael is the doting father of three beautiful teenagers and a rather lazy Bernese Mountain dog. He (not the dog) is an avid adventurer, explorer and mountaineer, but these days he tends to plant more flags on the summit of his newly profitable clients, than he does out in the open air.