Billable hours & bonus structure

It has been a while since I was an employee of a consultant and I’m trying to remember expectations for billables. What are the practices that you folks know/remember?

This is what I recall from my last job, 19(?) years ago. Obviously, any billables reported must match the PO. If a job was 100 hours and I did 105 hours on it, the 5 hours didn’t count. If I spent only 95 hours, I was credited for 100. The expectation was I was within 5% within the PO. The overall expectation was 1,500 hours annually. Bonuses over the 1500 were structured like this (I think).

1500-1750 hours = number of hoursbillable rate20% = bonus amount So if I did 1600 hours, 100 hours*$125/hour20% = $2,500
1750-2000 hours = number of hours
billable rate*30%

2000 hours = number of hoursbillable rate40%

I am fuzzy on the minimum number of expected hours, also depended on your position with more senior you got, the more hours expected. And I am fuzzy on on the levels and exact percentage of payout. Nobody was dinged on less than the 1500, but it was a discussion in your performance review.

Iab, I’ve never worked at a consultancy that was this transparent.

No bonus structure on on billables? Seemed pretty straightforward to me at the time and assumed it was normal.

My reason for asking is there is a bit of need for tracking hours in the current corporate gig. It is certainly not the norm here to do so and if we do implement a tracking system, I’m pushing a wifm for the employees. What’s in it for them if they exceed expectations. The only pushback I have gotten from HR is that for exempt employees, is this considered OT? At a small firm, that was an acceptable risk, in the corporate world, maybe not.

No bonus on billables. I have never heard of it. In my office of 30 years, some projects were moneymakers some weren’t. It all depended on how good I was at estimating the amount of work that a project would require. My employees were expected to be efficient if they weren’t they were soon gone. The only exception was that there was a commission if they brought in new work. No office, with the ups and downs of business, can keep designers busy 80% of the time. I don’t think you can expect an efficiency bonus when you expect to also be paid when you’re not or when the office has nothing for you to do.

Exactly.

Iab, the closest I’ve ever come to the kind of situation you are referring to is at one firm is that they had a comp time policy. So if the studio was really busy and you had to pull late nights that were approved at a partner’s discretion (IE not because you were not working efficiently, the studio was just over booked and the work needed to get done) it was tracked and hour for hour added to your vacation time. So one year I ended up with 6 weeks of vacation time at the end of the year. I took 2 weeks off and the company cut me a check for the unused vacation time (again, had to be approved and at their discretion) so I ended up with a month of pay bonus. If well monitored this system can be great because employees feel like they get something when the studio is busy, and when the studio is not busy they can take that extra vacation time, or if the studio just has a really busy year they get a nice pay out.

My understanding is that this kind of policy is exceedingly rare. And to be frank, in consulting roles, the pay is generally less (unless you are a partner). For a corporate designer who typically has higher pay and lower annual project workload I’ve never heard of something like this.

Not saying it wouldn’t work, just that you might be pioneering something here. using vacation time is a possible avenue around the exempt employee status.

Sounds like my old firm was an exception. Billables were closely tracked, daily inputs were expected. I have since talked to a couple lawyer friends and it sounds like what I described is typical in their world. There are of course variations on the theme, but an expectation is set, anything beyond that is eligible for a bonus.

Thanks for the input, it is appreciated. I do remember hating the process of tracking myself. I was thinking that maybe the process has gotten more automated/easier in the last 20 years. For me, if it isn’t simple, it will likely kill the project.

I’ve worked under many hours reporting schemes employed by a variety of employers from small 5 man firms to large scale government, corporate and university divisions over the years. Law firm methods have their flaws as well I have found working with patent attorneys.

In today’s corporate climate, I would want to be sure it is just hours tracking for bonus calculating that HR is asking for and nothing beyond. Many HR depts. have been pushing employee monitoring software that is highly customizable for some time time now and it is no way to build trust among your design team IMO. As you may be aware, it started with the tracking of just hours for specific tasks back in the 80s and now in 2021 HR depts are deploying software packages like Terramind, Activtrak, Veriato360 etc. to record everything from keystrokes, video camera content, time spent away from workstation etc. to make evaluations and bonus decisions. The data collected is more useful beyond traditional things like bonus calculations, as the APIs do not show all of the other data being collected in the back ground which is highly valuable on the open market.

If you want to employ WIIFM methods with HR as they try to get you to install a new tracking software platform, I would get them to fully explain to your team how they will be using the data they collect. If I had my druthers, I would negotiate a price tag for my department’s data and sell it to HR in some form of inter company exchange of resources.

The long arduous mission to make everyone a non-exempt employee continues on…

Good luck…