Trashing Timesheets: Ron Baker's crusade to bury the billable hour.

At the AICPA Practitioners Symposium in Las Vegas, June 3--5, Ronald J. Baker made presentations on "Value Pricing" and "Implementing Value Pricing." In addition, he added a well-attended--although unscheduled--presentation called "Trashing the Timesheet." Baker says his mission is "To, once and for all, bury the billable hour in the CPA profession." He is disseminating his message far and wide. He also presented his "Trashing the Timesheet" message at the 2002 Association for Accounting Marketing Summit in San Antonio. Here is a summary of that presentation by Karen Bergh, senior vice president, RainMaker Pro, Inc., written for the Association for Accounting Marketing.

In "Trashing the Timesheet," Ron Baker, founder of VeraSage Institute, shared his philosophy of how accountants should free themselves from the "tyranny of time" as an indicator of performance.

Baker suggests that Key Performance Indicators (KPIs), especially those that are "leading" rather than "lagging," should be used rather than timesheets to measure the productivity of team members. The advantage of KPIs over timesheets, he said, is that they measure:

* Results, not efforts.

* Productivity, not activity.

* Outputs rather than inputs.

A leading indicator would be one that is production oriented, whereas a lagging indicator would reflect measurements "after the fact." For example, lagging indicators that economists use are "unemployment rates" and the "prime rate." Leading indicators would be "new orders," or "building permits."

Baker cited the example of Continental Airlines' leader Gordon Bethune, who wrote a book about the airline's turnaround under his leadership entitled From Worst to First: Behind the Scenes of Continental's Remarkable Comeback. Using Bethune's story, Baker pointed out how the airline improved its financial performance by defining its success by the same measures that its customers do. Under Bethune's tutelage, the airline began to operate according to KPIs that showed how they were performing in such areas as:

* On-time performance (flights arriving on time).

* Lost luggage.

* Customer complaints.

Baker suggested there is a high correlation between such measures and profits. He conducts workshops to help accounting firms identify their own unique KPI measures. Many accounting firms continue to use lagging indicators, such as "labor as a percentage of gross revenue" or "cycle time" (the number of times a file was "handled" and the average number of...