control

What a surprise! Just as he was ready to pay, the customer took a final glance at the bill and noticed the prices had changed: not 21 euros for the main dish, but 32,50; not 9,50 for the dessert, but 15,80… When he asked why, he got a straight answer – “The kitchen crew needed more time than planned, and that’s why the costs have increased!“

Such a surprise, which we all hate when paying our car-repair bill, is an absolute no-go in a restaurant: fixed prices, also for services, are not subject to change, even if the service took longer than expected. That’s why good service providers take great care to plan the rendering of a service in such a way that the price charged covers the accumulated costs, plus a justifiable margin. When people are providing a service, the time spent is directly translated into cost. All well-running restaurants are aware of this logic: those who don’t are broke.

This logic also applies to the design industry. Here as well, efforts to render services are carefully planned so that a final price can be established. Clients simply insist on knowing upfront what they are expected to pay for their assignment.  Design, like a five-course menu, is created by specialists who know what they are doing. As a client, you can rely on that and are therefore willing to pay the appropriate price.

Of course, you have these penny-pinchers who want to skip out on the bill or who always argue that they didn’t get what was promised. Way more difficult are situations where a client changes the assignment during the project: then the service provider risks losing out if he forgets to translate these changes into the price.
When I once took over the management of an agency, my boss told me that „a design business, like any restaurant, is financially viable only then, when the income (from the delivered services) can cover the costs (of all involved in the rendering)“: you can’t explain it more simply.

And this logic is valid – only as long as managing the business is also simple!  Because as soon as financial management is unleashed, this simple logic can turn pear-shaped. As it happened, controllers figured that the cost for a single project should also be recorded separately. No, not the estimated cost related to a service delivery (which determines the price), but the actual costs that went into the rendering thereof, which – according to the controller – were the ‚real‘ costs of a project: this marked the birth of the ‚hour-writing‘!
This control system is installed in most agencies: designers and employees record their working hours in financial systems (SAP!!) so that a controller can monitor costs.

Actually, this is not really needed: a project assignment always contains a delivery date and specified deliverables that determine the estimated cost and, with that, the resulting price. This price (if paid) determines the turnover; the accumulated turnover determines if one can accommodate the cost that you have any way (salaries, material, depreciation, etc.). To run a good business, you don’t need time sheets but good planning. And of course a good sense for customer and market demands – next to the best employees you can get hold of!

And here is where the controlling craze can backfire: the best employees are those who feel at ease and therefore can fully concentrate on their jobs. Who would really demand from a cook that he records the time spent on preparing a meal – you would rather have the meal warm and tasty on the customer’s table!

If you insist on controlling the past, do it to reflect what happened! But if you reflect on numbers, rather than on achievements, you can only motivate your employees extrinsically and never get the best out of them. Because the true problem behind the control-obsession is that what it radiates to the time-writers: that they are not trusted!
The good intention to get a grip on costs can turn into a meltdown of a well-run organization: it undermines employees’ intrinsic motivation, discourages entrepreneurial behavior, encourages fraud, fosters mistrust, adds even more costs, and reduces effectiveness.

Who really wants such an organization? Which CEO and which employee want to work under such conditions?
You can administer your past, but your future you have to design. If you walk into the future facing backward because you are filling out stupid time sheets, you cannot look ahead and enjoy what lies in front of you!