It’s about time – Why are agencies and their clients chained to the billable hour?

3 min read. 22 February 2024

Having had a taste of working from home full time, many office workers – clients and their agencies alike – are unsurprisingly reluctant to go back to the 5 day-week commute. Management have had little choice but to trust their employees and those of their agencies to do their work unsupervised – with little evidence of their effort except for the fruits of their labour. But what implications are there for agencies which are traditionally remunerated for their time?

Is this an opportunity to reflect on our fixation with the billable hour?

Having worked in and run agencies myself I can state with complete confidence that time sheets aren’t anything like forensic in their accuracy. Time measurement might be useful for factory piece work or manual labour with tangible fixed outputs, but in the media sector time isn’t an accurate measure of effort nor is effort a guarantee of value. Hence we can have busy fools and moments of genius.

In 2011 Cali Ressler and Jody Thompson published the subtly titled book Why Work Sucks And How To Fix It: The Results-Only Revolution. A book that is far better than its title might suggest, it promotes the idea of the R.O.W.E. – the Results Only Work Environment. In an R.O.W.E. companies allow their employees to come and go as they please, attend meetings in person or dial in, not attend meetings at all (none are obligatory) start and finish their working days as they wish – as long as they perform their jobs well. The results were productivity went up, employee engagement went up, employee satisfaction went up, absences from work went down.

I’ve seen many of my clients’ organisations adopting many of these principles, yet still so many also insist on paying their agencies by the hour. There’s a disparity between client organisations being at ease with a lack of visibility of their own employees efforts but requiring evidence of their agencies’ employees, why? Often the answer is – if we don’t pay them by the hour, then how can we agree project prices with our agencies?

The price of strategic or creative projects is always somewhere on a continuum. At one end is the bare minimum required to do anything at all, at the other end is a point where the increase on investment provides no increase on return. To reach a budget I usually suggest my clients plot multiple investment options on that continuum:

            How much money do we have available for the job?

            How much does the agency say they need?

            How much do we want to risk that our investment will achieve our objective?

            What do we think our competitors spend on the same kind of thing?

…then, like all other investments, we choose how much we would like to invest. Because once we can accept that there isn’t a way to oversee how much time anybody actually expends on a task we have to just agree a number.

The question of risk in making such a change comes down to client satisfaction. But how many disappointed clients look at their agency’s substandard work and say to themselves

“That’s OK, I know they tried really hard!”? I predict exactly zero.

The portentous reality that faces agencies every day is that if they don’t satisfy their client with value for money they won’t be clients very long, regardless of the time or effort the agency may have expended on them.

The notion of allocating time to task is self-fulfilling anyway. Parkinson’s Law, published in 1958 states: Work expands so as to fill the time available for its completion.”. But the greater advantage to briefing for outcomes rather than effort are:

  • People working on your account are more motivated by their additional control
  • If your agency exceeds your budget that’s their problem if they agreed to it
  • Save your own time or that of others from poring over time sheets.

Time measurement is just one example of how organisations have fallen into the habit of more defensive/protective behaviours to look after their own interests and make sure nobody takes advantage of them. But all the time spent on such behaviours detracts from the time that could be spent creating value for customers and growing businesses. As Stephen MR Covey noted (son of the Stephen Covey of 7 habits):

Low trust equals low speed equals high cost.

High trust equals high speed equals low cost

I’m yet to meet an advertiser who has moved away from the billable hour and regretted it. And now more than ever there are surely more productive things we can be doing with our own time than poring over agency spreadsheets?

David Meikle is Founder of intermediary The HTBAG Co and author of bestseller “How to Buy a Gorilla – the Ultimate Guide to Selecting, Paying and Working with Agencies.”

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