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Rising Star
Who still working lmao
Chief
Anyone take SHRM? How many hours did you study?
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Oh man
Just to be clear. Whether or not and how your hours relate to your bonus is different for every firm and role. Could mean nothing. Could mean everything.
You need to worry about billable hours and generally billable hours can impact your bonus. A billable hour is an hour of your labor on client work. That hour of labor is charged to the client
In theory billable hours should reflect the amount of time spent on client work. In reality most just charge a standard 40 or 45 hours per week regardless of how much they actually worked. In most cases I’ve seen at Deloitte people eat hours and work more than they charge the client
Utilization is the most important metric at the staff level. It’s how the firm makes money off of you. There’s a billable target each year that you must meet. After meeting that target, the number of billable hours means less. Someone with a 103% utilization may not get a better evaluation than a person with 96%, but that 96% will certainly be better than a 75%
Rising Star
You need to be aware of your utilization rate which is the percentage of working hours that are billable (client pays). Example: I billed four of five days last week so my utilization is 32/40 = 80%
Rising Star
You record all of the hours you work, whether that’s for a client, internal sales efforts, or general internal team meetings. Of the hours you record, those that are for client work are considered “billable”. Your billable (client) hours vs non billable hours simplistically equates to your utilization. Your utilization and your impact at the client (indirectly billable hours) impact your bonus.
Rising Star
Yes. But we don’t know where OP is at.
Honestly you should ask someone at your firm, the answers to your questions will vary widely! We, for example, don’t track billable hours at all and it’s not until AP that there’s any consideration of utilization
Chief
Nope. There’s no agreeing to disagree here. The question asked was “what is a billable hour” — those words have actual legal meanings and you’re simply incorrect.
Billable hours and hours worked are not the same thing. Billable hours are the hours you bill, which may or may not track to hours worked. Whether and how closely the two match up is a matter of firm policy. How billable hours or utilization factor into your performance evaluation is a matter of firm policy.
But billable hours in and of themselves are an accounting construct. They work the same at any US consulting firm. Trust me, I have been a partner at several, including MBB.
(Also, B4 firms don’t bill by the hour any more frequently than MBB does — the majority of engagements are fixed fee.)
Billable hours are how the company you work for as a consultant gets paid usually (on most projects). The company would like to pay you a fixed salary and give you a sense of safety, but make money off of your hours which they bill the client. However, sometimes projects are fixed cost, which means hours don’t really matter for anything besides budget and performance measurement, to measure how much effort has been put into the project and try and gauge profitability.
Example 1 (time and materials project where hours matter a lot): you get $75k a year which is $25/hr after tax give or take assuming a 40 hours work week, and the company you work for bills the client $200/hr you work so they just made $7k a week off of you. However, you will usually end up working more than 40 hours in consulting firms to try and keep up with the rat race and the false promises of you being rewarded for your hard work, which will end up reducing your hourly rate significantly since you’re fixed salary (say $20/hr) and the company gets more revenue for the additional hours + higher profit margin.
Example 2 (hours don’t really matter but matters internally for performance measurement): A big project came by which will pay your company $500k for 6 months, you end up working 50 hours a week for 6 months alongside 2 other consultants with the same rate at $200/hr, hypothetically the company would’ve made $720k if it was a time and materials project, therefore managers gets hit because they went over budget and company technically lost money on this project.
Leave consulting after 2-4 years max. At least that’s my plan.
Everything comes down to your performance. High utilization looks good on your performance and ultimately reflects your chances with promotion
Chief
Wow