27 Oct Is Hourly Billing Unethical?
Recently I have been part of a discussion about hourly billing being unethical. (In fairness, this is a frequent occurrence).
Let’s consider the meaning of “ethical”…
“ethical” = morally good or correct, in accordance with the rules or standards for right conduct or practice.
The ethical justification for the billable hour seems to be connected to the fact that the billable hour has been in place for the last 40 years or so that the accounting and bookkeeping industry has come to believe that it must be ethical.
But just because the industry has been doing it for some period of time does not make it ethical.
Remember the Golden Rule – treat others as you yourself would want to be treated. Immanuel Kant (one of the great thinkers) proposed that in making moral decisions:- Act only on that maxim by which you can at the same time will that it should become a universal law.
So putting these together if you believe that the billable hour is ethical then you will like it to be the universal way we do business. Would you be happy if the billable hour was how restaurants price their food, or the grocery store or your favourite airline? If the billable hour is ethical – if it abides by the golden rule – then you would be accepting if it was the pricing approach of your local restaurant, grocery store or airline.
The hourly billing model misaligns the interest of the professional and the client. It creates a bad culture. The billable hour is purely convenient for the seller and is no way focused on the customer.
The next question following on the ethical question is, – is hourly billing unprofessional?
A professional is someone who is responsible for achieving a result rather than performing a task. The billable hour though of course (and its evil cousin the timesheet) keeps the professional focused on tasks, not the result.
The tide has turned against the billable hour and I find it hard to believe that there are people still claiming it is ethical and professional. Most of the people who are stating this usually have their own vested interests in promoting the billable hour.
In short, the billable hour is both unethical and unprofessional.