When you don't bill clients by the hour something transformational happens. You no longer have to track every minute of time spent at your company, which translates into huge time-savings for everyone.

Take for example, ten employees tracking time and, if you're lucky, takes each person 1 hour a week (at lest say $50/hour) this amounts to $500/week, $2000/month and so on. Its a no-brainer that is wastes time and money.

In addition to the financial loss of time-tracking, it creates an environment of distrust between employees and managers. Employees add billable hours in a way they think the boss wants, whether or not it really applies. Who really remembers how every minute of the day was spent? And, how do you clock bathroom breaks? Consequently, time tracking creates far more issues than in solves.

So how do you know if people are working hard or just looking busy? Lets be honest, don't we all know when someone is slacking off? Having that person track time isn't going to shed new light for managers (unless they are totally uninvolved, in which case they should be fired anyway).

The first step is get the right people and these other problems will disappear. In the classic business book Good to Great, Jim Collins writes "...get the right people on the bus, the wrong people off the bus and the right people in the right seats".

When you have the right people, you don't have to watch their every move. And when you aren't accountable to clients for every minute spent, time-tracking can disappear. Then the team can refocus energy on what matters -- the work people enjoy and the work that inspires.

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Now I know there are a lot of people out there who say hourly billing is the standard but to understand why it doesn't work read our earlier post about the Hourly Billing Paradox. In a future post I will explain how to shift your business from commodity to value, and when done right, how this model makes more money than hourly billing.