July 25, 2024 • 27 mins
There have been a number of high-profile media stories recently - including suicide - that have highlighted the toxic cultures within consultancies, law firms and accountants.
This week on the Inside Out Culture podcast we look at the ‘billable hour' model employed by these companies and ask whether it creates the conditions for toxicity.
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Join us as we reveal strategies to close the gap and craft a workplace where values are not just spoken, but lived and breathed, paving the way for a more authentic and engaging organisational culture.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Colin (00:02):
Welcome to the Inside Out Culture Podcast, where we look
at insides of working cultureand provide ideas, insights and
actions for you to take on theoutside.
I'm Colin Ellis and I'm Cath.
Cath (00:13):
Bishop, and in each episode we'll examine a
different question or adifferent organization, and
we'll use case studies, researchand our own insights and
experiences to help you changethe way things get done in your
world.
Colin (00:27):
We hope you enjoyed today's episode.
Please like, subscribe and, ofcourse, let us know what you
think.
Cath (00:33):
Hello and welcome to another episode of the Inside
Out Culture podcast, and todayour topic is does the billable
hour model undermine culture?
So I feel this is a bit of ataboo, this is a bit of an
unspoken elephant in the room incertain organizations and we
want to, yeah, get it out, getthe elephant addressed and think
(00:56):
about what does it mean, whatare the implications?
And it's one we've had a fewdiscussions, sort of offline,
but was always going to be animportant topic for us to think
about from some different angles, to explore a bit more fully.
So how do you come to thistopic?
Neither of us are lawyers oraccountants.
I haven't worked in a billablehour organization, although I've
(01:17):
worked in a sort of if you onlydo, medals, that's what counts,
which is maybe a little bit ofthat mentality.
But what's in your mind comingto this topic?
Colin (01:25):
Well, this was a request that we had and just a reminder
that if you'd like us to cover atopic, you can drop us a note
at insideoutculture at gmailcom,from an accountant and he's a
partner and he asked me not tomention him, but you know who.
You are listening to this, sothank you for the suggestion and
(01:45):
someone who takes great pridein the culture of their
accounting firm.
And he basically said listen,is it something that you would
cover and talk about?
And there was a particular highprofile suicide in a law firm
in London earlier this year Ithink it was no, it was last
year, it was the end of lastyear and I remember it because
(02:07):
the person in question had beenworking on the sale of Everton
Football Club.
If you listen to the podcast,you know that's my football team
, so it kind of came up into mynewsfeed and they were under
lots and lots of pressure.
And then there was a great piecethat I read earlier this year
in lawcom because it was a storyI was following that basically
said and we'll share the link inthe newsletter that it reminds
(02:32):
us that law firm culture isstill toxic.
Why does it survive?
And so my accounting friend wastalking about this and said
listen, it drives a certain kindof behavior and ask the
question is it something thatwe're seeing changing
generationally?
And certainly from the researchthat I've done and I did some
(02:54):
research for my next book, detoxyour Culture, and there was a
particular story about Clevelandlaw firms and how the billable
hour was creating toxicity there, and so I think it's definitely
worth covering.
Cath, I'm not sure that we'vegot the answer to solve the
problem, but you're absolutelyright.
Let's talk about the elephantin the room.
I've never worked in a billablehour culture myself, although I
(03:16):
, as a former senior director,particularly in the public
service, I worked with a lot ofbillable hours cultures and
often they left a lot to bedesired.
Cath (03:28):
So billable hours, actually often a billable six
minute increment, so even thatis probably worth thinking about
.
We want to deepen ourunderstanding of what the costs
are of these environments.
Are there some benefits andwhat is likely to perhaps happen
over the next period?
I certainly see increasedinterest in culture coming from
(03:50):
senior leaders in professionalservices firms, in the work that
I do at business schools andsome of my own coaching work,
and so I think there isdefinitely a sense of we need to
be alert to the importance ofculture to performance and, in
particular, to attracting talentand retaining talent.
So I think there's then oftenthat dilemma of being stuck in
(04:10):
this very finite, constraining,dehumanizing model and yet
wanting really good people whowill help, in an increasingly
competitive world, take theorganization to the next level.
So I think there is definiteinterest, but also to some
extent, a dilemma, because itfeels like there aren't really
many organizations who are sortof willing to kind of step out
(04:32):
of the model.
It's almost how do we still dothis without completely damaging
people?
It's a little bit like that howdo we still control our
athletes and we'll still go formedals, but just let's have a
little bit less maltreatment ofthe athletes rather than do you
know what.
The way to change the highperformance culture in sport is
actually to have a differentvision of why you do sport, to
(04:53):
help athletes feel a sense ofpurpose in what they do and to
connect to a greater community,to find a deeper meaning that
then means that medal is oflasting value and that then
helps them both to perform andto thrive in the process of
performing.
And so I think some of theprofessional services world,
where they're having these sortof daring to begin lightly to
(05:15):
question their models, are atthe moment quite a long way from
going.
Do you know what?
We have to rethink our purpose.
But ultimately, I think if yougenuinely want culture change,
that is the route you'd have togo, but that would feel probably
too revolutionary for many inthis space.
Colin (05:30):
But make no mistake, expectations of these
organisations have changed.
The most high profile story wasactually in Australia for PwC,
who were subject to a governmentinquiry over a couple of
scandals.
They buried a report.
But also the big one was wherecertain PwC partners were
(05:53):
involved in marketingconfidential government plans to
combat tax avoidance schemes.
Basically, it was found thatthey compromised ethics.
We'll share the links to thereviews and the news stories in
it and ironically, they had avalue of act with integrity, and
so you know.
Here was an example of aprofessional services company
(06:17):
that said we're a values-basedorganization and the irony is
Peter and UC actually producedsome really great research on
culture, which I use all thetime and call out all the time.
But here's a place where theygot it wrong and it actually led
to almost to the closure of thebusiness.
They had to sell the businessoff, particularly in Canberra,
which is the capital ofAustralia, because people didn't
want to work with them anymoreIn the past.
(06:39):
I'm not sure, Cath, that thatwould have happened In the past.
I think the excuses would havebeen made for them, maybe 10,
even as soon as 10 years ago, Ithink.
Certainly, in my experience, itreally started to change.
Post-global financial crisis,where, all of a sudden, we were
bringing our children updifferently Greed for want of a
(07:00):
better word was not good anymore, even though it had been
beforehand, and so I still findthere's some really
old-fashioned approaches andthought processes that that come
with culture, and I think thatwas a great example of hey as a,
as a world, we're not preparedto accept.
It's like turning a tank around, though.
Right, it's going to take along time, but I think you know,
(07:21):
and the point that I made onlinkedin at the time, I think,
was, maybe the threat to thebottom line is when these guys
actually start to take cultureseriously, maybe yeah,
undoubtedly, and so, yes, thosedrivers then are around bottom
line profit, performance and, aspart of that, talent retention
and the capacity for individualsto sustain performance through
(07:44):
a career.
Cath (07:45):
Because the mental health issues, I think, are coming much
more to the fore.
I saw a survey from 2019 whereit said that sort of one in 15
junior lawyers had suicidalthoughts.
There are quite a few of thesemental health surveys now that
various organizations are acrossthe law sector where I've been
doing some research, you knoware showing really worrying
(08:08):
trends that are not going to begood either for individual
thriving or for performance.
So that's again what creates aninterest in change.
But I think the dilemma is canyou sort of put a, can you treat
the symptoms you know we'reback to the sort of yoga on
Thursday lunchtimes or do youaddress the root cause, which
might be then, sort of yoga onThursday lunchtimes, or do you
(08:28):
address the root cause, whichmight be then, yeah, this kind
of billable hour model where youare commodifying time, where
you know, as Oliver Berkman andhis brilliant book 4,000 Weeks,
which I hugely recommend becauseit really makes you stop and
think about how you spend timewhere he says the logical
conclusion is that an hour notsold is automatically an hour
wasted, which is perhaps notgoing to be a healthy or
(08:50):
fulfilling approach to life, butthat is the conclusion.
That's the trap we get in whenwe're in a model that is defined
in this way.
Colin (09:00):
I haven't read that book, oliver Bergman, so I'll
definitely look out for that andwe'll pop a link to that in the
action sheet as well.
Definitely look out for thatand we'll.
We'll.
We'll pop a link to that in theaction sheet as well.
So I I captured the key issuesas I see them and and for me,
some of these are based on myown experience, uh two, of
working with organizations inbillable and what.
What was interesting to me is.
(09:21):
What's interesting to me isthat whenever we started working
with a consulting company itwas largely consulting companies
, one or two accountants is wetook care to actually define the
culture of working togetherfirst, and you could see that
that was alien to them.
And this was the early kind of2009, 8, 9, 10, 11.
Every time I worked with aconsultant, we built a team with
(09:43):
them.
So these are the five keyissues that we see Now.
Cath just mentioned the firstone, which is increased stress
and burnout of employees.
I think the expectation onpeople in billable hour is more
and more and more, and I spoketo a Gen Z employee who just
resigned from a consultingcompany.
She said it was just too much.
She said it had been sold toher by her parents as this
(10:06):
really great career opportunity.
You meet these people, you playyour cards right, you become a
partner, and she said it wasjust too much, the expectation
was too great, and so I'veincreased.
Stress and burnout is the firstone, and quantity over quality.
One of my favorite quotes isfrom Charles Dickens, who said
that the one great principle ofthe English law is to make
(10:27):
business for itself, which is agreat example of the billable
hour and for senior leaderslistening to this.
We've all been there for thepresentations where the senior
partner comes along and he saysthis is what we're going to do
for you.
They win the business, we signthe contracts and then all of a
sudden, 12 people who all lookidentical flood the department
and they sit together and all ofa sudden you're like what are
(10:49):
these 12 people actually doing?
So quantity over quality itmisaligned interests, uh, is the
next one.
I think that often and I used Iremember saying this to my boss
once I was like we're like traintracks.
We run parallel to a point andthen all of a sudden there's a
set of points and they go off ina direction that we're not
(11:10):
going in, and partly that'saround maintaining consistency
of culture and expectationsetting and, you know, ensuring
that we stick to what it is thatwe agreed.
And I always used to say thatif we have to refer to the
contract then we failedCulturally.
We fail because, you know,actually going back to the
contract then we failedCulturally.
We failed because actuallygoing back to the contract, it's
kind of the last thing that youever want to do is say in the
(11:33):
contract it serves.
But it's a real sign thatyou've kind of misaligned
interests.
It discourages collaboration.
I think you have to work really, really hard because often in
the billable hour, when you'reworking with billable hour type
cultures, they just want to dothe thing and they don't want
you to peer over the fence.
It's like, oh, we'll come backand we'll tell you when we've
(11:56):
done it and we'll send you theinvoice and then you're like so
I think that you know there'sthere's that you know it really
kind of discouragescollaboration.
But the last thing for me is isthat it neglects the
non-billable hour activity.
So the Gen Z person that I spoketo, she said they were very
(12:16):
good at induction.
She said it's one of the bestinductions that they actually
ever she could imagine.
I think this was only hersecond job and she said that
they took her through the value.
She had lunch with her boss, Ithink you know, and they took
great care to talk about all ofthose things.
So I think that's great, shesaid.
But after that there was noinvestment.
She said it was very much awork hard, play hard.
(12:38):
You've got to bill the clientall of these hours and then we
expect you to come drinking withus on a Wednesday, thursday,
friday, whenever it was.
And she said expect you to comedrinking with us on a Wednesday
, thursday, friday, whenever itwas.
And she said you know shedidn't drink and that was
frowned upon.
So I think the non-billablehour activities, things like
culture, things like training,so there's very much a case of
listen if we're not getting paidfor it, we don't do it.
Cath (13:01):
Yeah, and I've seen that sort of again in interviews and
things saying that this modelkills community.
If we don't feel we belong to acommunity, a we're not likely
to stick around and B we're notgoing to be doing our best work.
It's an intrinsic motivator.
It's something that helps usfeel we belong to, something
that matters.
It kills psychological safetybecause you can't really
challenge it.
You can't also suggest oh Ifound a better way to do
something, because actuallywe're not looking for a better
(13:23):
way to do something, we'relooking for a longer way to do
something.
So it actually hurtsproductivity.
There's no incentive to dosomething better and quicker.
That feels quite wrong and Iwould struggle with that in
employing.
You know, if I was using theservices from a company who are
incentivized to take as long aspossible about what I ask them
to do and make it as complicatedas possible rather than the
(13:43):
opposite.
And yeah, it kills performanceimprovement really as part of
that.
So I think there is a realchallenge in if you're
performance focused at somelevel, you're constraining
yourself by having a culturelike this.
I think sometimes thepartnership models that
accompany organizations that usethis, I see a sort of
(14:04):
stagnation in development terms.
The younger, the new, juniorlawyers, junior accountants
they're developed, they gothrough training program.
Then once you become partner,that's it, you've made it and
you're no longer developing.
And yet that seems crazy.
I mean, we believe in sort oflifelong learning and
development and surely at thatpoint you have so much influence
on an organization as a partner, why wouldn't you keep
developing?
So there are often somebehaviors within these
(14:28):
organizations that are counterto performance, counter to
thriving, counter to innovation,for sure, and I think that's
another driver in the futurepotentially for doing things
differently.
These are organizations whereAI is going to have a big
influence and the things thatwe're going to be left doing
that the AI can't do are goingto be around relationship
building, innovation,collaboration.
(14:50):
So why aren't we valuing anddeveloping those skills now
rather than doing the stuff thecomputers are going to do?
So I think AI will potentiallyalso come and disrupt in some
ways this field, and that'sanother reason why I think that
people are looking externallyand thinking what does need to
change here.
I've been sort of doing somework supporting a brilliant
organization called the O-Shaped, who are looking to create more
(15:13):
rounded lawyers.
And it's actually set up byGeneral Counsel, dan Cain, who,
along with many other generalcounsels, were getting kind of
fed up of bringing in kind oflaw firms to do work but, yeah,
not incentivized to simplifystuff, not rounded people.
You can have a kind of lawfirms to do work, but, yeah, not
incentivized to simplify stuff,not rounded people.
You can have a kind of biggerpicture conversation with and
(15:33):
actually not what they wanted to, you know, not getting the
value that they wanted for thehuge amount of money they're
being charged.
So that's an interestinginitiative trying to come in at
different levels intoorganizations, also into law
schools, to start thinking abouthow do we create more rounded
people who will be able tomanage the complex challenges
(15:53):
that we face and with yourclients then be a more effective
interlocutor than some kind ofmachine that works in these
six-minute increments which whenactually there's a bunch of
machines kind of queuing upwaiting to take your place in a
few years.
So that's been interesting.
There are some initiatives likethat that are going on in this
space to think differently andthere are some leaders
interested in that but don'treally see fundamental change
(16:16):
yet.
I did want to ask are there somepros, are there advantages?
Because I feel we should bethinking in a rounded way
ourselves on this podcast,because I feel we should be
thinking in a rounded wayourselves on this podcast, from
having a billable hour, billablesix minute model, and I was
searching and sort ofchallenging and challenging my
own brain to think about this,and the only one I could come up
(16:38):
with and I did see it pointedout somewhere as well is that
maybe it creates a distinctionbetween working and not working.
It creates a distinctionbetween working and not working.
In a world where we're sort ofalways on.
There's a sense that actually,if you're not billing something,
you've finished work is over.
Now these are organizationsthat are famous for kind of
(17:01):
really, really long hours.
But anyway, I just felt, forthe sort of sake of trying to be
challenging our own thinking,is there a tiny, tiny benefit
there?
But I mean, I'm probablyoutdone by the fact that, yeah,
we're not valuing so much ofwhat's happening when we're not
billing stuff.
But there we go.
Colin (17:17):
Good for you, Cath.
One of us has got to find thebalance.
Here's me with my list ofhere's what's broken and here's
what's wrong.
Cath (17:25):
Oh, it's a poor offering, isn't it against that?
And yeah, not one that I'm thatconvinced by either.
Colin (17:31):
Well, there was a report in the Daily Telegraph newspaper
at the start of the year herein the UK and it was talking
about a growing number oflawyers of all ages are really
opening up now about theirstruggles within this kind of
culture.
So you've got some olderworkers and we'll put a link to
the action sheet in the actionsheet.
Some older workers are startingto question these kind of
(17:55):
working on Saturdays, long hourssleeping under desks.
Younger workers really thinkingtheir career choices.
You know I mentioned I spoke tothat one Gen Z workers and you
know the report in the Telegraphtalked about people quietly
crying in office toilets whichare commonplace in in the
industry.
I want a person to talk abouthazing people who speak to them
rudely and expect to take it onthe chair.
(18:16):
I I would like to call out soI've worked with a couple of
kpmg teams.
I've worked with one inmelbourne.
I worked with kpmginternational team in london and
what was great and that thelast one was at the end of last
year and there was a realcuriosity around culture and
what good looks like and I thinkyou know to put a positive
(18:38):
frame on this.
You know, in an ideal world I'dlove to, to change the concept
of the billable hour, because Ido believe that it does drive a
certain kind of behavior.
I do, and I've seen that inaction hour because I do believe
that it does drive a certainkind of behavior.
I do and I've seen that inaction.
But that's not to say that itneeds to.
I think that you know, goingforward and one of the
realizations these kinds oforganizations need to have and
there was one law firm that Idid a speech for a couple of
(18:59):
years ago definitely forwardthinking is we want to build a
culture that's attractive topeople.
We want people to work with usbecause of our culture, not
because we're cheap, not becausewe're efficient, but because of
our culture.
So I think that you know whatbillable hour cultures can do is
really start to think aboutwhat does good look like for us
(19:23):
and actually invest the time,the money, the effort, as the
teams I worked with the KPMG did, in actually defining what it
means for us.
And yes, I recognize that whileyou're there for the two days
you can't build the client, butit's a good thing.
It's a good thing to createpsychological safety.
It's a good thing to buildrelationships.
It's a good thing to createpsychological safety.
It's a good thing to buildrelationships.
(19:43):
It's a good thing to understandwhat it means to trust each
other and also to instill asense of discipline and then be
able to project that outwards ina way that's attractive to
people that may want to hire you, rather than being something
that they want to keep you atarm's length rather than being
something that they want to keepyou at arm's length.
Cath (20:02):
So can you still have that if, fundamentally, everything
is measured by the billablehours?
For me, it is about introducingsome different metrics.
You've got to value, you've gotto reward, you've got to
recognize alongside that, andthen you have a bit of a clash
of metrics coming along.
For me it becomes there's adanger, it's too superficial.
If this is still what you'rerewarding from is just the
billable stuff too superficialIf this is still what you're
(20:23):
rewarding from is just thebillable stuff.
You've got to have a broaderset of metrics now that you
really value in every way thatyour organization shows value
for its employees.
So for me, you have to startunpicking this or at least
developing a more complex set ofperformance metrics.
Colin (20:39):
Yeah, I agree, and I think we're starting to see that
a little bit Cath, in thatpeople are asking you know, how
easy are we to do business with?
How good are we to do businesswith?
I think in the past what youfound was, because culture was
such a black box, we didn'treally care too much about who
we were working with.
What we cared about was theoutputs and the cost.
(21:00):
But I think now no organizationwants to work with a toxic
culture.
If there's even the smallestchance that the culture that
you're working with can finditself in the media, people will
.
This just happened with PwC inAustralia.
People will distance themselvesfrom you immediately.
And so I, you know, like I said, I really want to believe that
(21:22):
it's possible.
But you're right, it doesrequire a different set of
metrics, you know, for them todo regular pulse checks on their
own culture, to make sure thatthese are safe spaces for people
to work, that we don't get tothe point where I think you said
it was one in 15 people hadsuicidal thoughts.
Yeah, I mean, oh, that's awful,and they're the kinds of
(21:42):
questions you want to be askinginternally and then externally
how good are we to do businesswith how trusted do we feel,
these kinds of things.
So, yes, you're going to stillbill in a particular way, but
that doesn't mean that youcompromise the culture and the
relationship you have with theclient.
Cath (21:57):
Yeah, I agree with that.
So it's changing the metrics isgoing to be an important part
of this, isn't it?
And starting to unpick that andthen create some perhaps more
qualitative metrics as well.
I do wonder, with the generalglobal downsizing of those that
remain and those that are, youknow, now there's perhaps more
(22:25):
of a buyer's market formanagement consultants.
Then people will get morechoosy about the experience, and
that's definitely anotherdriver for change.
So I think perhaps we might seesome greater change in that
part of it.
You know, for law firms,potentially.
That's the you know's the endof the spectrum where this model
is hardest to turn over.
Though the global war fortalent maybe remains a big, I
(22:49):
hope that remains a driver forchange culture.
Colin (22:52):
I think these kind of cultures are always going to be
a magnet for certain people.
Cathy and I were talking aboutthis before we started.
Cath (22:58):
Paranoid, insecure overachievers.
Colin (23:04):
Yeah, that's what you said.
Yeah, they're always going tobe a magnet for a certain kind
of people, but also think thatthere's a generation of young
adults coming into the workforcewho've heard their parents
complain about billable hourcultures and won't want any part
of that as well, and so I thinkthat, yeah, I think that
there's going to be a real shiftin the perception of these kind
(23:24):
of places to work.
Cath (23:26):
The question is what's the proportion that shift?
Is it enough that are going toshift to challenge this, or will
they still find that actuallythere are quite a lot of people
who are?
You know, I mean, the startingsalaries of lawyers are really
eye-wateringly large in London,and then in America even more so
, and this is something that isin the press now.
So it is obviously somethingpeople are going oh, what's
(23:47):
going on here, which maybe ishelpful.
Nevertheless, those startingsalaries are going up and I
don't think that there isn't alack of people who want to do it
.
So there's a sort ofinteresting question about
what's the tipping point.
How many people need to shift?
How many of the next generation?
Will it be the generation after, or will it be enlightened
partners?
(24:07):
At what point could we get thatkind of deeper shift?
Or is it something else thathappens even in, whether it's
through legislation or throughgovernment changes or something
like that, that will acceleratechange in this area?
Colin (24:23):
Yeah, I think it's going to be, you know, toxic, as we
saw with the example inAustralia.
Toxic culture in the media,loss of business culture, crises
lead into a complete rethink.
You would like to hope in theway that we do business.
It's, you know, like we said atthe start, I don't think it's
something that we can solve, butI think it's important that we
(24:45):
talk about.
So what might be the takeaways?
Cath (24:49):
Yeah.
So in terms of actions, I thinkit's about factoring in that
people and organizations want towork with companies that treat
their people the right way.
So are you leading anorganization, are you leading a
team?
Are you a colleague as part ofthe team, where your culture is
one that your clients, yourexternal stakeholders, you want
(25:12):
to work with you?
That's quite an interestingmeasure, I think, to start
thinking what's that going tolook like?
What are our ambitions?
That mean other companies aregoing to want to work with us.
Colin (25:22):
Yeah, I think something to get curious about and I
mentioned this earlier is youknow, kind of, what does vibrant
culture look like in a, youknow, in a billable hour company
?
I think that's something thatyou know, people you know, like
I mentioned with the team that Iwork with, they're really
fascinated about dynamics,actually fascinated about
external perception as well,which plays into that metric.
(25:45):
So I think you know, if youwork in that kind of environment
, well, you know what doesvibrant culture look like for
you.
Cath (25:51):
And lastly, uncover what's the impact on ethics of the
pursuit of profit.
The pursuit of the billablehour at all costs.
What happens to the ethics inthose organizations if you're
part of that?
The pursuit of the billablehour at all costs what happens
to the ethics in thoseorganisations if you're part of
that?
Or if you know other peopleyou've got friends who work in
there get curious to uncoverwhether ethics are being
compromised.
What's the impact on ethics ofthese organisations?
Colin (26:14):
I think that's a really important point actually, Cath,
because I think that that'swhere the ethics, that's the
thing that affects the bottomline, and I think that they're
the kinds of things if you workin these kind of cultures.
They're the kind of questionsto be acting internally.
What do we know that we'redoing that, if it came out,
would completely compromise ourbottom line.
(26:36):
And I think lots oforganizations talk about ethics
but often it's lip service.
Cath (26:42):
Yeah, and another fascinating topic yeah, a tricky
one, important one, and onethat maybe will feel
controversial, but hopefully aninteresting one for us to delve
into together.
Excellent Thanks, ken.
Thanks for listening to today'sInside Out Culture.
Colin (26:58):
Podcast.
Please remember to like,subscribe and, of course, share
with others who you think may beinterested.
Welcome to the Inside Out Culture Podcast, where we look
at insides of working cultureand provide ideas, insights and
actions for you to take on theoutside.
I'm Colin Ellis and I'm Cath.
Cath (00:13):
Bishop, and in each episode we'll examine a
different question or adifferent organization, and
we'll use case studies, researchand our own insights and
experiences to help you changethe way things get done in your
world.
Colin (00:27):
We hope you enjoyed today's episode.
Please like, subscribe and, ofcourse, let us know what you
think.
Cath (00:33):
Hello and welcome to another episode of the Inside
Out Culture podcast, and todayour topic is does the billable
hour model undermine culture?
So I feel this is a bit of ataboo, this is a bit of an
unspoken elephant in the room incertain organizations and we
want to, yeah, get it out, getthe elephant addressed and think
(00:56):
about what does it mean, whatare the implications?
And it's one we've had a fewdiscussions, sort of offline,
but was always going to be animportant topic for us to think
about from some different angles, to explore a bit more fully.
So how do you come to thistopic?
Neither of us are lawyers oraccountants.
I haven't worked in a billablehour organization, although I've
(01:17):
worked in a sort of if you onlydo, medals, that's what counts,
which is maybe a little bit ofthat mentality.
But what's in your mind comingto this topic?
Colin (01:25):
Well, this was a request that we had and just a reminder
that if you'd like us to cover atopic, you can drop us a note
at insideoutculture at gmailcom,from an accountant and he's a
partner and he asked me not tomention him, but you know who.
You are listening to this, sothank you for the suggestion and
(01:45):
someone who takes great pridein the culture of their
accounting firm.
And he basically said listen,is it something that you would
cover and talk about?
And there was a particular highprofile suicide in a law firm
in London earlier this year Ithink it was no, it was last
year, it was the end of lastyear and I remember it because
(02:07):
the person in question had beenworking on the sale of Everton
Football Club.
If you listen to the podcast,you know that's my football team
, so it kind of came up into mynewsfeed and they were under
lots and lots of pressure.
And then there was a great piecethat I read earlier this year
in lawcom because it was a storyI was following that basically
said and we'll share the link inthe newsletter that it reminds
(02:32):
us that law firm culture isstill toxic.
Why does it survive?
And so my accounting friend wastalking about this and said
listen, it drives a certain kindof behavior and ask the
question is it something thatwe're seeing changing
generationally?
And certainly from the researchthat I've done and I did some
(02:54):
research for my next book, detoxyour Culture, and there was a
particular story about Clevelandlaw firms and how the billable
hour was creating toxicity there, and so I think it's definitely
worth covering.
Cath, I'm not sure that we'vegot the answer to solve the
problem, but you're absolutelyright.
Let's talk about the elephantin the room.
I've never worked in a billablehour culture myself, although I
(03:16):
, as a former senior director,particularly in the public
service, I worked with a lot ofbillable hours cultures and
often they left a lot to bedesired.
Cath (03:28):
So billable hours, actually often a billable six
minute increment, so even thatis probably worth thinking about
.
We want to deepen ourunderstanding of what the costs
are of these environments.
Are there some benefits andwhat is likely to perhaps happen
over the next period?
I certainly see increasedinterest in culture coming from
(03:50):
senior leaders in professionalservices firms, in the work that
I do at business schools andsome of my own coaching work,
and so I think there isdefinitely a sense of we need to
be alert to the importance ofculture to performance and, in
particular, to attracting talentand retaining talent.
So I think there's then oftenthat dilemma of being stuck in
(04:10):
this very finite, constraining,dehumanizing model and yet
wanting really good people whowill help, in an increasingly
competitive world, take theorganization to the next level.
So I think there is definiteinterest, but also to some
extent, a dilemma, because itfeels like there aren't really
many organizations who are sortof willing to kind of step out
(04:32):
of the model.
It's almost how do we still dothis without completely damaging
people?
It's a little bit like that howdo we still control our
athletes and we'll still go formedals, but just let's have a
little bit less maltreatment ofthe athletes rather than do you
know what.
The way to change the highperformance culture in sport is
actually to have a differentvision of why you do sport, to
(04:53):
help athletes feel a sense ofpurpose in what they do and to
connect to a greater community,to find a deeper meaning that
then means that medal is oflasting value and that then
helps them both to perform andto thrive in the process of
performing.
And so I think some of theprofessional services world,
where they're having these sortof daring to begin lightly to
(05:15):
question their models, are atthe moment quite a long way from
going.
Do you know what?
We have to rethink our purpose.
But ultimately, I think if yougenuinely want culture change,
that is the route you'd have togo, but that would feel probably
too revolutionary for many inthis space.
Colin (05:30):
But make no mistake, expectations of these
organisations have changed.
The most high profile story wasactually in Australia for PwC,
who were subject to a governmentinquiry over a couple of
scandals.
They buried a report.
But also the big one was wherecertain PwC partners were
(05:53):
involved in marketingconfidential government plans to
combat tax avoidance schemes.
Basically, it was found thatthey compromised ethics.
We'll share the links to thereviews and the news stories in
it and ironically, they had avalue of act with integrity, and
so you know.
Here was an example of aprofessional services company
(06:17):
that said we're a values-basedorganization and the irony is
Peter and UC actually producedsome really great research on
culture, which I use all thetime and call out all the time.
But here's a place where theygot it wrong and it actually led
to almost to the closure of thebusiness.
They had to sell the businessoff, particularly in Canberra,
which is the capital ofAustralia, because people didn't
want to work with them anymoreIn the past.
(06:39):
I'm not sure, Cath, that thatwould have happened In the past.
I think the excuses would havebeen made for them, maybe 10,
even as soon as 10 years ago, Ithink.
Certainly, in my experience, itreally started to change.
Post-global financial crisis,where, all of a sudden, we were
bringing our children updifferently Greed for want of a
(07:00):
better word was not good anymore, even though it had been
beforehand, and so I still findthere's some really
old-fashioned approaches andthought processes that that come
with culture, and I think thatwas a great example of hey as a,
as a world, we're not preparedto accept.
It's like turning a tank around, though.
Right, it's going to take along time, but I think you know,
(07:21):
and the point that I made onlinkedin at the time, I think,
was, maybe the threat to thebottom line is when these guys
actually start to take cultureseriously, maybe yeah,
undoubtedly, and so, yes, thosedrivers then are around bottom
line profit, performance and, aspart of that, talent retention
and the capacity for individualsto sustain performance through
(07:44):
a career.
Cath (07:45):
Because the mental health issues, I think, are coming much
more to the fore.
I saw a survey from 2019 whereit said that sort of one in 15
junior lawyers had suicidalthoughts.
There are quite a few of thesemental health surveys now that
various organizations are acrossthe law sector where I've been
doing some research, you knoware showing really worrying
(08:08):
trends that are not going to begood either for individual
thriving or for performance.
So that's again what creates aninterest in change.
But I think the dilemma is canyou sort of put a, can you treat
the symptoms you know we'reback to the sort of yoga on
Thursday lunchtimes or do youaddress the root cause, which
might be then, sort of yoga onThursday lunchtimes, or do you
(08:28):
address the root cause, whichmight be then, yeah, this kind
of billable hour model where youare commodifying time, where
you know, as Oliver Berkman andhis brilliant book 4,000 Weeks,
which I hugely recommend becauseit really makes you stop and
think about how you spend timewhere he says the logical
conclusion is that an hour notsold is automatically an hour
wasted, which is perhaps notgoing to be a healthy or
(08:50):
fulfilling approach to life, butthat is the conclusion.
That's the trap we get in whenwe're in a model that is defined
in this way.
Colin (09:00):
I haven't read that book, oliver Bergman, so I'll
definitely look out for that andwe'll pop a link to that in the
action sheet as well.
Definitely look out for thatand we'll.
We'll.
We'll pop a link to that in theaction sheet as well.
So I I captured the key issuesas I see them and and for me,
some of these are based on myown experience, uh two, of
working with organizations inbillable and what.
What was interesting to me is.
(09:21):
What's interesting to me isthat whenever we started working
with a consulting company itwas largely consulting companies
, one or two accountants is wetook care to actually define the
culture of working togetherfirst, and you could see that
that was alien to them.
And this was the early kind of2009, 8, 9, 10, 11.
Every time I worked with aconsultant, we built a team with
(09:43):
them.
So these are the five keyissues that we see Now.
Cath just mentioned the firstone, which is increased stress
and burnout of employees.
I think the expectation onpeople in billable hour is more
and more and more, and I spoketo a Gen Z employee who just
resigned from a consultingcompany.
She said it was just too much.
She said it had been sold toher by her parents as this
(10:06):
really great career opportunity.
You meet these people, you playyour cards right, you become a
partner, and she said it wasjust too much, the expectation
was too great, and so I'veincreased.
Stress and burnout is the firstone, and quantity over quality.
One of my favorite quotes isfrom Charles Dickens, who said
that the one great principle ofthe English law is to make
(10:27):
business for itself, which is agreat example of the billable
hour and for senior leaderslistening to this.
We've all been there for thepresentations where the senior
partner comes along and he saysthis is what we're going to do
for you.
They win the business, we signthe contracts and then all of a
sudden, 12 people who all lookidentical flood the department
and they sit together and all ofa sudden you're like what are
(10:49):
these 12 people actually doing?
So quantity over quality itmisaligned interests, uh, is the
next one.
I think that often and I used Iremember saying this to my boss
once I was like we're like traintracks.
We run parallel to a point andthen all of a sudden there's a
set of points and they go off ina direction that we're not
(11:10):
going in, and partly that'saround maintaining consistency
of culture and expectationsetting and, you know, ensuring
that we stick to what it is thatwe agreed.
And I always used to say thatif we have to refer to the
contract then we failedCulturally.
We fail because, you know,actually going back to the
contract then we failedCulturally.
We failed because actuallygoing back to the contract, it's
kind of the last thing that youever want to do is say in the
(11:33):
contract it serves.
But it's a real sign thatyou've kind of misaligned
interests.
It discourages collaboration.
I think you have to work really, really hard because often in
the billable hour, when you'reworking with billable hour type
cultures, they just want to dothe thing and they don't want
you to peer over the fence.
It's like, oh, we'll come backand we'll tell you when we've
(11:56):
done it and we'll send you theinvoice and then you're like so
I think that you know there'sthere's that you know it really
kind of discouragescollaboration.
But the last thing for me is isthat it neglects the
non-billable hour activity.
So the Gen Z person that I spoketo, she said they were very
(12:16):
good at induction.
She said it's one of the bestinductions that they actually
ever she could imagine.
I think this was only hersecond job and she said that
they took her through the value.
She had lunch with her boss, Ithink you know, and they took
great care to talk about all ofthose things.
So I think that's great, shesaid.
But after that there was noinvestment.
She said it was very much awork hard, play hard.
(12:38):
You've got to bill the clientall of these hours and then we
expect you to come drinking withus on a Wednesday, thursday,
friday, whenever it was.
And she said expect you to comedrinking with us on a Wednesday
, thursday, friday, whenever itwas.
And she said you know shedidn't drink and that was
frowned upon.
So I think the non-billablehour activities, things like
culture, things like training,so there's very much a case of
listen if we're not getting paidfor it, we don't do it.
Cath (13:01):
Yeah, and I've seen that sort of again in interviews and
things saying that this modelkills community.
If we don't feel we belong to acommunity, a we're not likely
to stick around and B we're notgoing to be doing our best work.
It's an intrinsic motivator.
It's something that helps usfeel we belong to, something
that matters.
It kills psychological safetybecause you can't really
challenge it.
You can't also suggest oh Ifound a better way to do
something, because actuallywe're not looking for a better
(13:23):
way to do something, we'relooking for a longer way to do
something.
So it actually hurtsproductivity.
There's no incentive to dosomething better and quicker.
That feels quite wrong and Iwould struggle with that in
employing.
You know, if I was using theservices from a company who are
incentivized to take as long aspossible about what I ask them
to do and make it as complicatedas possible rather than the
(13:43):
opposite.
And yeah, it kills performanceimprovement really as part of
that.
So I think there is a realchallenge in if you're
performance focused at somelevel, you're constraining
yourself by having a culturelike this.
I think sometimes thepartnership models that
accompany organizations that usethis, I see a sort of
(14:04):
stagnation in development terms.
The younger, the new, juniorlawyers, junior accountants
they're developed, they gothrough training program.
Then once you become partner,that's it, you've made it and
you're no longer developing.
And yet that seems crazy.
I mean, we believe in sort oflifelong learning and
development and surely at thatpoint you have so much influence
on an organization as a partner, why wouldn't you keep
developing?
So there are often somebehaviors within these
(14:28):
organizations that are counterto performance, counter to
thriving, counter to innovation,for sure, and I think that's
another driver in the futurepotentially for doing things
differently.
These are organizations whereAI is going to have a big
influence and the things thatwe're going to be left doing
that the AI can't do are goingto be around relationship
building, innovation,collaboration.
(14:50):
So why aren't we valuing anddeveloping those skills now
rather than doing the stuff thecomputers are going to do?
So I think AI will potentiallyalso come and disrupt in some
ways this field, and that'sanother reason why I think that
people are looking externallyand thinking what does need to
change here.
I've been sort of doing somework supporting a brilliant
organization called the O-Shaped, who are looking to create more
(15:13):
rounded lawyers.
And it's actually set up byGeneral Counsel, dan Cain, who,
along with many other generalcounsels, were getting kind of
fed up of bringing in kind oflaw firms to do work but, yeah,
not incentivized to simplifystuff, not rounded people.
You can have a kind of lawfirms to do work, but, yeah, not
incentivized to simplify stuff,not rounded people.
You can have a kind of biggerpicture conversation with and
(15:33):
actually not what they wanted to, you know, not getting the
value that they wanted for thehuge amount of money they're
being charged.
So that's an interestinginitiative trying to come in at
different levels intoorganizations, also into law
schools, to start thinking abouthow do we create more rounded
people who will be able tomanage the complex challenges
(15:53):
that we face and with yourclients then be a more effective
interlocutor than some kind ofmachine that works in these
six-minute increments which whenactually there's a bunch of
machines kind of queuing upwaiting to take your place in a
few years.
So that's been interesting.
There are some initiatives likethat that are going on in this
space to think differently andthere are some leaders
interested in that but don'treally see fundamental change
(16:16):
yet.
I did want to ask are there somepros, are there advantages?
Because I feel we should bethinking in a rounded way
ourselves on this podcast,because I feel we should be
thinking in a rounded wayourselves on this podcast, from
having a billable hour, billablesix minute model, and I was
searching and sort ofchallenging and challenging my
own brain to think about this,and the only one I could come up
(16:38):
with and I did see it pointedout somewhere as well is that
maybe it creates a distinctionbetween working and not working.
It creates a distinctionbetween working and not working.
In a world where we're sort ofalways on.
There's a sense that actually,if you're not billing something,
you've finished work is over.
Now these are organizationsthat are famous for kind of
(17:01):
really, really long hours.
But anyway, I just felt, forthe sort of sake of trying to be
challenging our own thinking,is there a tiny, tiny benefit
there?
But I mean, I'm probablyoutdone by the fact that, yeah,
we're not valuing so much ofwhat's happening when we're not
billing stuff.
But there we go.
Colin (17:17):
Good for you, Cath.
One of us has got to find thebalance.
Here's me with my list ofhere's what's broken and here's
what's wrong.
Cath (17:25):
Oh, it's a poor offering, isn't it against that?
And yeah, not one that I'm thatconvinced by either.
Colin (17:31):
Well, there was a report in the Daily Telegraph newspaper
at the start of the year herein the UK and it was talking
about a growing number oflawyers of all ages are really
opening up now about theirstruggles within this kind of
culture.
So you've got some olderworkers and we'll put a link to
the action sheet in the actionsheet.
Some older workers are startingto question these kind of
(17:55):
working on Saturdays, long hourssleeping under desks.
Younger workers really thinkingtheir career choices.
You know I mentioned I spoke tothat one Gen Z workers and you
know the report in the Telegraphtalked about people quietly
crying in office toilets whichare commonplace in in the
industry.
I want a person to talk abouthazing people who speak to them
rudely and expect to take it onthe chair.
(18:16):
I I would like to call out soI've worked with a couple of
kpmg teams.
I've worked with one inmelbourne.
I worked with kpmginternational team in london and
what was great and that thelast one was at the end of last
year and there was a realcuriosity around culture and
what good looks like and I thinkyou know to put a positive
(18:38):
frame on this.
You know, in an ideal world I'dlove to, to change the concept
of the billable hour, because Ido believe that it does drive a
certain kind of behavior.
I do, and I've seen that inaction hour because I do believe
that it does drive a certainkind of behavior.
I do and I've seen that inaction.
But that's not to say that itneeds to.
I think that you know, goingforward and one of the
realizations these kinds oforganizations need to have and
there was one law firm that Idid a speech for a couple of
(18:59):
years ago definitely forwardthinking is we want to build a
culture that's attractive topeople.
We want people to work with usbecause of our culture, not
because we're cheap, not becausewe're efficient, but because of
our culture.
So I think that you know whatbillable hour cultures can do is
really start to think aboutwhat does good look like for us
(19:23):
and actually invest the time,the money, the effort, as the
teams I worked with the KPMG did, in actually defining what it
means for us.
And yes, I recognize that whileyou're there for the two days
you can't build the client, butit's a good thing.
It's a good thing to createpsychological safety.
It's a good thing to buildrelationships.
It's a good thing to createpsychological safety.
It's a good thing to buildrelationships.
(19:43):
It's a good thing to understandwhat it means to trust each
other and also to instill asense of discipline and then be
able to project that outwards ina way that's attractive to
people that may want to hire you, rather than being something
that they want to keep you atarm's length rather than being
something that they want to keepyou at arm's length.
Cath (20:02):
So can you still have that if, fundamentally, everything
is measured by the billablehours?
For me, it is about introducingsome different metrics.
You've got to value, you've gotto reward, you've got to
recognize alongside that, andthen you have a bit of a clash
of metrics coming along.
For me it becomes there's adanger, it's too superficial.
If this is still what you'rerewarding from is just the
billable stuff too superficialIf this is still what you're
(20:23):
rewarding from is just thebillable stuff.
You've got to have a broaderset of metrics now that you
really value in every way thatyour organization shows value
for its employees.
So for me, you have to startunpicking this or at least
developing a more complex set ofperformance metrics.
Colin (20:39):
Yeah, I agree, and I think we're starting to see that
a little bit Cath, in thatpeople are asking you know, how
easy are we to do business with?
How good are we to do businesswith?
I think in the past what youfound was, because culture was
such a black box, we didn'treally care too much about who
we were working with.
What we cared about was theoutputs and the cost.
(21:00):
But I think now no organizationwants to work with a toxic
culture.
If there's even the smallestchance that the culture that
you're working with can finditself in the media, people will
.
This just happened with PwC inAustralia.
People will distance themselvesfrom you immediately.
And so I, you know, like I said, I really want to believe that
(21:22):
it's possible.
But you're right, it doesrequire a different set of
metrics, you know, for them todo regular pulse checks on their
own culture, to make sure thatthese are safe spaces for people
to work, that we don't get tothe point where I think you said
it was one in 15 people hadsuicidal thoughts.
Yeah, I mean, oh, that's awful,and they're the kinds of
(21:42):
questions you want to be askinginternally and then externally
how good are we to do businesswith how trusted do we feel,
these kinds of things.
So, yes, you're going to stillbill in a particular way, but
that doesn't mean that youcompromise the culture and the
relationship you have with theclient.
Cath (21:57):
Yeah, I agree with that.
So it's changing the metrics isgoing to be an important part
of this, isn't it?
And starting to unpick that andthen create some perhaps more
qualitative metrics as well.
I do wonder, with the generalglobal downsizing of those that
remain and those that are, youknow, now there's perhaps more
(22:25):
of a buyer's market formanagement consultants.
Then people will get morechoosy about the experience, and
that's definitely anotherdriver for change.
So I think perhaps we might seesome greater change in that
part of it.
You know, for law firms,potentially.
That's the you know's the endof the spectrum where this model
is hardest to turn over.
Though the global war fortalent maybe remains a big, I
(22:49):
hope that remains a driver forchange culture.
Colin (22:52):
I think these kind of cultures are always going to be
a magnet for certain people.
Cathy and I were talking aboutthis before we started.
Cath (22:58):
Paranoid, insecure overachievers.
Colin (23:04):
Yeah, that's what you said.
Yeah, they're always going tobe a magnet for a certain kind
of people, but also think thatthere's a generation of young
adults coming into the workforcewho've heard their parents
complain about billable hourcultures and won't want any part
of that as well, and so I thinkthat, yeah, I think that
there's going to be a real shiftin the perception of these kind
(23:24):
of places to work.
Cath (23:26):
The question is what's the proportion that shift?
Is it enough that are going toshift to challenge this, or will
they still find that actuallythere are quite a lot of people
who are?
You know, I mean, the startingsalaries of lawyers are really
eye-wateringly large in London,and then in America even more so
, and this is something that isin the press now.
So it is obviously somethingpeople are going oh, what's
(23:47):
going on here, which maybe ishelpful.
Nevertheless, those startingsalaries are going up and I
don't think that there isn't alack of people who want to do it
.
So there's a sort ofinteresting question about
what's the tipping point.
How many people need to shift?
How many of the next generation?
Will it be the generation after, or will it be enlightened
partners?
(24:07):
At what point could we get thatkind of deeper shift?
Or is it something else thathappens even in, whether it's
through legislation or throughgovernment changes or something
like that, that will acceleratechange in this area?
Colin (24:23):
Yeah, I think it's going to be, you know, toxic, as we
saw with the example inAustralia.
Toxic culture in the media,loss of business culture, crises
lead into a complete rethink.
You would like to hope in theway that we do business.
It's, you know, like we said atthe start, I don't think it's
something that we can solve, butI think it's important that we
(24:45):
talk about.
So what might be the takeaways?
Cath (24:49):
Yeah.
So in terms of actions, I thinkit's about factoring in that
people and organizations want towork with companies that treat
their people the right way.
So are you leading anorganization, are you leading a
team?
Are you a colleague as part ofthe team, where your culture is
one that your clients, yourexternal stakeholders, you want
(25:12):
to work with you?
That's quite an interestingmeasure, I think, to start
thinking what's that going tolook like?
What are our ambitions?
That mean other companies aregoing to want to work with us.
Colin (25:22):
Yeah, I think something to get curious about and I
mentioned this earlier is youknow, kind of, what does vibrant
culture look like in a, youknow, in a billable hour company
?
I think that's something thatyou know, people you know, like
I mentioned with the team that Iwork with, they're really
fascinated about dynamics,actually fascinated about
external perception as well,which plays into that metric.
(25:45):
So I think you know, if youwork in that kind of environment
, well, you know what doesvibrant culture look like for
you.
Cath (25:51):
And lastly, uncover what's the impact on ethics of the
pursuit of profit.
The pursuit of the billablehour at all costs.
What happens to the ethics inthose organizations if you're
part of that?
The pursuit of the billablehour at all costs what happens
to the ethics in thoseorganisations if you're part of
that?
Or if you know other peopleyou've got friends who work in
there get curious to uncoverwhether ethics are being
compromised.
What's the impact on ethics ofthese organisations?
Colin (26:14):
I think that's a really important point actually, Cath,
because I think that that'swhere the ethics, that's the
thing that affects the bottomline, and I think that they're
the kinds of things if you workin these kind of cultures.
They're the kind of questionsto be acting internally.
What do we know that we'redoing that, if it came out,
would completely compromise ourbottom line.
(26:36):
And I think lots oforganizations talk about ethics
but often it's lip service.
Cath (26:42):
Yeah, and another fascinating topic yeah, a tricky
one, important one, and onethat maybe will feel
controversial, but hopefully aninteresting one for us to delve
into together.
Excellent Thanks, ken.
Thanks for listening to today'sInside Out Culture.
Colin (26:58):
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