Our service delivery managers are hitting their weekly target for billable hours, but our clients are complaining about bloated invoices and slow project completion. How do we stop our team from gaming the billable hours metric on our weekly scorecard?

Question

Tyler Smith · Accepted Answer

When you reward people solely for billable hours, you incentivize slow, inefficient work. This is a classic case of a metric being gamed because it is a lagging indicator of activity rather than a leading indicator of value. To stop this behavior, you must pair your billable hours metric with a quality or efficiency counterbalance on your weekly scorecard.

Instead of letting your managers focus entirely on total hours billed, introduce counterbalancing metrics that make gaming the system impossible:

- Project budget consumption vs timeline progress: Track the percentage of the budget spent compared to the percentage of the project actually completed. If a manager has billed eighty percent of the hours but only completed forty percent of the milestones, the metric is red.

- Write-offs and write-downs: Track the dollar amount of billable hours that your leadership team has to write off or discount before invoicing because the client complained about bloated hours.

- Direct labor margin: Track the profitability of your service delivery on a weekly basis, which prevents managers from throwing cheap, inefficient hours at a fixed-fee project.

By looking at these numbers together during your Level 10 Meeting™, you will quickly see who is actually driving profitable delivery and who is simply running up the clock to hit an arbitrary target. This shifts the focus from inputs to outputs.