Trylon Communications  - November 2004
       

Hazards of Hourly Billing

While many PR firms accept hourly billing as an acceptable (and even preferable) practice, the dangers inherent in such a compensation system outweigh its potential benefits – to both clients and PR providers. This billing practice can undermine the perception of a PR firm’s ethics, as illustrated by recent investigations into charges of over-billing of the Los Angeles Department of Water and Power by Fleishman-Hillard. (See news story) When one of the most respected companies in the PR industry comes under fire, this becomes a serious issue that needs to be addressed.

Hourly billing poses even larger problems than potential abuse. In such a system, PR firms are rewarded more for the amount of work they do than for the quality of that work. No financial incentive exists for quick and creative solutions. In fact it’s the opposite situation – a longer and more circuitous route to a solution is the more “successful” one from a billing standpoint.

Hourly billing was originally used as a baseline- model – figure out how much effort goes into a project, then weigh it against the project’s successful completion. However, many firms began to see hourly billing as the “pot of gold” – asking junior employees to bill increasingly higher amounts until the standard became almost ludicrous.

When clock-watching becomes more important than achieving goals, the system has a fundamental flaw. Under hourly billing, PR firms believe a phone call is worth 15 minutes of billing, clients are afraid to embark on a new PR initiative because of anticipated costs, and accountants believe that minutes are more important than achievements. They’re all missing the boat.

In reality, PR is about creativity. If it takes only an hour for a message to be defined and delivered in an efficient and creative way, the PR team should be highly rewarded. If it takes two weeks to deliver a weak message ineffectively, the firm should be penalized (if not fired). When you throw the clock out the window and focus on the project alone, great things can happen.

Trylon Communications’ results-based billing system has served our clients extremely well for nearly 15 years. Trylon is rewarded for its performance, and compensation is determined by the amount of superior service provided. Hourly billing is an idea whose time has come – and gone.