the professional hitman
Considering the amount I get paid for consulting, the expectations are usually quite low. I tend to work in project-based roles. What does that mean? I tend to put it this way: some jobs are task-based; for example, a factory worker who puts the windshield in a car on the assembly line. The car moves on, and the factory worker puts the next windshield in – the job is only done once the assembly line shuts down for the day. A project-based job, though, would be more like someone who builds the car by himself – when one car is done, the job is done.
What’s strange about project-based work is that most companies still treat it like task-based work. I can understand a salary or an hourly wage for task-based work. You’re paid X dollars to sit in a chair in your cube and do your task or tasks. If the task is held up elsewhere – the guy in accounting hasn’t signed off yet – you can’t do your task, but you are expected to be around once it’s ready. Project-based work may be held up, too, but the idea is that you’re supposed to deliver a completed project as soon as you can. If it’s going to take 500 hours, fine. If it’s going to take 8, fine. But the project is not about attendance.
Teaching is a good example of task-based work, too. Teachers can’t really ‘hurry up’ their ‘projects’ (students). The work of a teacher is completed over a 9-month period (at least in the States). A home-builder, on the other hand, just needs to build the home. The model ought to be a salary for a teacher, and a fixed fee for the builder. If the builder can get his job done more quickly or efficiently, he makes more money, because he can go build other homes.
I work on projects. I have a client, I audit the client (or do something similar) and issue a report. I’ve often wondered if I suddenly asked clients for a fixed fee instead of an hourly rate what the response would be. I imagine this scenario:
…
“Listen, I understand audit is an amazingly hidebound profession – as are its cousins, finance and accounting – but let’s try something. Instead of paying me $100 per hour (for example) on a project you expect to take 640 man-hours (about 16 man-weeks at 40 hours per week), just give me $50,000. That’s more than a 20% discount.”
“What’s the catch?” grumbles the client.
“I get to do the project the way I want. I can use technology how I want. If the client’s located in Kansas City, instead of going there I’ll have documents emailed to me. I’ll outsource the one day of on-site work to a contractor there instead of traveling there. I’ll use free tools like Skype and Open Office and Google Docs instead of fancy video-conferencing and Microsoft Office. And I can do it when and where I like.”
“But you need to come into the office – how do we know you’re actually working?” the anguished client replies.
“You won’t,” I’d reply. “I may be washing my socks while you’re having a meeting. I may be collecting information by email while you’re stuck in traffic on the way home. But you know what – I’ll deliver the project report to you within the same number of weeks – or less – than I would have in the office. You’ll save money and smell like roses to your boss. And I’ll save money, because I’ll be able to do the work more quickly without the handcuffs of an hourly billing rate that encourages me to perform tasks as slowly as possible.”
…
The conclusion, of course, should be obvious: that’s how I need to run my contracting business. That’s how anyone who does project-based work should do it. I may just give it a shot – and why not? The world of audit, finance and accounting is a hidebound profession in many ways. Most of the time these kinds of professions are resistant to growth – but fertile ground for growth once the resistance is broken. Finding clients who are willing to take a chance might involve some sacrifice at first – traveling to meet them face-to-face just to convince them I know what I’m doing (the only real purpose remaining for business travel, as I see it). But I’ve wondered a lot recently why I’m being paid like the world’s most expensive burger-flipper when it might work out much better for everyone if I was paid more like a hit man: use the best tools, work stealthily and finish the job – all on a flat fee.
photo by nathaniel.andre
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Sounds like a good plan. Let's say you don't deliver the project within alotted time frame and go way beyond it. What happens? Do they start subtracting the money from your $50,000 fee?
They say here's $50,000 for the project to be completed no later than 16 weeks from now, no exception. You may deliver in 8 weeks which is good for you, or you can deliver 18 weeks from now. As a client I want to be protected. What do we do?
I think flat fees are a good idea… It's how some law firms charge clients for transactional work (patent law, immigration law, etc). Too bad law firms don't pay their associates the same way; flat fees are not really compatible with the traditional billable hour system.
A lot of people do it this way because of the freedom aspect, you bid the job and not the hours for the job. It also sets the client's expectations on how much it should cost. In the end, their risk is still the same (you either meet the milestones or you don't, the billing process is independent) but you get flexibility to work more efficiently. It's a closer marrying of priorities and incentives.
The other side of this is you have to have a very well defined scope of work prior to starting the contract. This must include all the things that are not included. You could say in the scope of work that you can work on outside projects, etc. for an additional hourly fee. The final thing is that you need to have strict penalties for them to do their work in a specific time frame. What I mean by this is that you need to say that you will have 3 day turn around from all formal documentation requests, etc. This will set the expectations, and also CYA if you are going to get penalized, you can charge more if they are notoriously late with providing evidence.
“The world of audit, finance and accounting is a hidebound profession in many ways. Most of the time these kinds of professions are resistant to growth – but fertile ground for growth once the resistance is broken.”
You must have worked for vastly different people than I have in those professions. I have seen successful non-traditional changes killed.
A major issue would be their responsiveness to your requests (documentation, etc.). In my experience this is not done well. Plus, they would have an incentive to not do it well if you monetarily penalized yourself for missing the deadline.
Changing how companies charge or pay is probably one of the toughest areas to overcome.
If you can complete the job in minutes they feel upset because the majority of people think in terms of $/hr. They have a good feel for the wage per hour they are earning even if they are on salary.
I have seen this reaction even when giving free help. I have worked with Excel for years so many tasks only take a few minutes to get done that would frustrate most people for hours.
I had a friend who had been working on getting a spreadsheet set up for several days (spending many hours trying unsuccessfully to get it to work). He mentioned his frustration at lunch one day and i offered to fix it for him. It took me about 20 minutes to get cleaned up the way he wanted it.
The look on his face that is could be done so quickly is the same reaction you get when you complete a job using less effort than they expect you too.
For some reason a lot of people want to see you suffer to earn the money. I much prefer delivering good quality work and making it look effortless. The problem is they want to pay you like it was effortless.
Knowledge is far more valuable than people realize.
@Bubelah: I would imagine you could find a few different ways to deal
with it. The easiest way would be to have a penalty for late delivery –
$500 per day, or $5000 per week, or whatever. The client could pay half
up front, half on delivery. Etc. But I'd imagine that if you want to
be successful at all with that business model you'd have to deliver on
time, or else you're not going to be very highly recommended in the
future.
It's really the point about the post, though: if I'm paid hourly, I
don't really care about the deadline myself (except as a reputation
issue) and will actually make MORE if I run over the limit. If I have a
flat fee and know that I'll be LOSING money if I miss the deadline I'm
going to be exceptionally motivated. So it seems like the company would
be better off with a flat fee, too.
@GP: Right – we pay attorneys flat fees for real estate transactions,
for example. And the traditional billable hour system is just that –
traditional. It's sortof like the insistence on signatures on paper
contracts: resistance to the more sensible digitial signatures remains
strong. It takes a long time for people to change, even when the need
for change is obvious.
It sounds like a great plan. I'd love to know if you can get it to work. Sometimes, things just make too much sense to NOT do, but ohhhhh, the corporate world.
It sounds like a great plan. I'd love to know if you can get it to work. Sometimes, things just make too much sense to NOT do, but ohhhhh, the corporate world.