Efficiency and effectiveness always trump hourly rates
For semi-retired practitioners like me, the days of building empires are in the past. I’ve climbed to the top of the marketing communications corporate ladder, I’ve run my own consultancy, employed people and have done some board work as a non-executive director.
These days, I choose to work on things I am interested and/or experienced in, commit to as many days as I wish to and can provide objective and fearless advice knowing that next month’s mortgage payment is not in jeopardy. But when I do choose to take on work, I charge an hourly rate that strikes a balance between respecting my experience and knowhow, being competitive and acknowledging I am no longer running a full-service agency. It’s more about staying engaged and connected than it is about needing to pay the bills.
As a senior practitioner though, I had not been involved in discussions of hourly rates for a while and had forgotten just how frustrating these conversations are. I believe that for clients, it is a pretty meaningless metric in the procurement process. It is much better to focus on hourly efficiency and effectiveness. The hourly rate is the commodity, the value derives from the other.
I can understand that there is a perception and some truth in the natural alignment of seniority with hourly charge-out due to the greater experience you bring to the task, but there is poor comprehension of how this can translate to a reduced overall project cost.
I have known this for years, but never thought to articulate it until prompted by a recent assignment, to which I was sub-contracted by an overstretched consultant looking for someone to assist with overflow. It was a series of straightforward copy writing projects - media releases, thought leadership pieces supported by some desktop and proprietary research - the bread and butter of the communications practitioner. The pieces met the client briefs with virtually no amendments and were turned around to tight deadlines. The primary consultant had no additional work to do before presenting the copy to his client.
The client’s question, based solely on my seniority and hourly rate, is whether it would be better, that is cheaper to hire someone more junior. I am willing to bet that based on the efficiency and effectiveness with which the first tasks were done, the answer will be no. This is not my judgement, but the opinion of the consultant to whom I am sub-contracting. In his words in response to my email on client pushback on hourly rates:
“I totally agree. That was so fast. Would have taken a junior twice as long and been half as good. And it meant I had to spend no time on it too so it’s a win-win. Working with clients who don't get this is frustrating.”
He wrote this after receiving my invoice for these first three assignments and hopefully the very reasonable costs will go some way to demonstrating value as the basis for forging a longer term relationship.
It’s only a small case study on what is a typical conversation in the early days of building client relationships. Fortunately, in this instance, the circumstances dictated getting a couple of professionals together to deal with a short-term crisis. A less acute situation would likely have meant never being signed up.
The only metrics that should count are quality and effectiveness of business services. I appreciate that this is hard to assess until work is commissioned and delivered. How long it takes for a provider to undertake the task on time and to budget is quite immaterial to the relationship. Hourly rates are mainly the concern of the provider as a determinant of productivity and profitability, but few procurers view professional fees through this prism.
I guess nothing will change, so this rant will be prove timeless. Perhaps I’ll republish on an annual cycle.
Photo: Milad Fakurian on Unsplash