If you pay people by the hour to sit in a meeting, there is no possibility of anything useful happening in the meeting. People may nod their heads and say “good meeting.” They’re saying what they were paid to say. We’ve all sat through one of those infamous meetings; afterward, one or more people muttered under their breath (or in an IM window): “That meeting could have been an email.” But time-suck meetings are not due to superficial factors like a need for a better agenda, and their impact runs much deeper than mildly annoyed attendees.
Poorly run meetings are a symptom of a much uglier problem in an organization: a culture of disrespect. When people don’t respect each other’s time, everything goes downhill. Trust evaporates, passive-aggressive behavior ensues, and burnout sets in. Combine the ingredients of dysfunction and you have a disaster waiting to happen. You can tell a lot about a company by the manner in which meetings run. Sometimes, there aren’t any meetings and everyone hides behind email. Other times, you have meetings that are “just for show” where no one speaks the truth. In healthy organizations, meetings are characterized by what authors Larry Bossidy and Ram Charan call “robust dialogue” (from Execution: The Discipline Of Getting Things Done). People disagree fiercely and problems get solved. But sadly, in today’s world, hearty conversations rarely happen. Instead, we have the more typical company climate of finger-pointing, ass-covering and throwing people under the bus…all masked by polite, professional smiles and couched in politically correct corporate buzzwords.
A Culture Of Dysfunction
Let’s take a look at what really happens when a business stops paying its employees strictly based on their time and starts paying based on results. People treat time differently, because they own their own time. Unlike hourly employees who only need to maintain a baseline level of productivity, results-compensated employees have an incentive to make their time as productive as possible. The more they get done, the more they get paid. Hourly employees, on the other hand, are motivated only by fear. If they do not produce enough, they will lose their jobs. The hourly employee is motivated to produce only as much as required to avoid negative consequences, and no more. In fact, the hourly employee is penalized for excessive productivity. If an hourly employee figures out how to finish all of their work in 40 hours, when they used to collect overtime pay, their overtime is taken away. If they figure out how to get 40 hours of work done in 35, they are rewarded with additional work (at no additional pay).
Let’s look at the implications from a standpoint of work culture. Employee A is hard-working and honest. Employee B is lazy and selfish. Both employees are paid by the hour. Both employees have workloads that can be completed in 35 hours per week. Employee A completes the work in 35 hours, letting the boss know that some additional time is available. Employee B stretches out the work to make sure the full week is used up. The boss isn’t as close to the tasks as the employees who physically handle the work, so doesn’t have as clear a picture of how long the work should take. But Employee B doesn’t want to look bad.
In theory, one might expect Employee B to step up the pace to compete with Employee A. But in my experience, that usually does not happen. More often than not, the less productive employees will conspire or band together, whether out loud or silently. They will engage in a campaign to either bring the more productive employees in line and get them to stop spoiling the party for everyone, or drive them out of the company altogether. Bs have no tolerance for being held accountable, and they may engage in a smear campaign to diminish the credibility of the As. Over time, the Bs make life unpleasant for the As, so that the As leave the company (usually from burnout) and the Bs dominate the work culture. The bullies take over the schoolyard.
Team meetings show a glimpse into the culture. The Bs are happy to have another team meeting, because they don’t particularly care about productivity. They get paid for their hour no matter what. The As, on the other hand, are preoccupied with the amount of work that’s not getting done while they’re wasting time in a pointless meeting. Thus, the As are more likely to push to get the meeting done and get back to work, possibly coming across as short or irritated. The Bs, on the other hand, are more likely to just stay quiet. The As are more likely to vocally express frustration. The As are more likely to protest having the meeting in the first place. The As, therefore, will come across as having a bad attitude and may be publicly chastised. The Bs, all the while, don’t really care. Over time, the As will stop caring, too…because they will be looking for new jobs. If you think you can call a team meeting to “address” this kind of issue, who do you think you’re kidding?
How did we get here, and what can we do about the problem?
Pay Shapes Culture
If I have to sound like a broken record to get my point across, so be it. We need to abolish the institution of the hourly wage. When people are paid by the result instead of the hour, the productivity penalty is removed and income caps are lifted. The A employees are free to soar, and the B employees lose their economic stranglehold on the workplace, as they are no longer guaranteed pay for every hour. There’s no room for BS when people only get paid for results. The ones who coast on minimal effort do so at their own risk. The B employees look bad, and they find themselves with no allies to gang up on the As. The A employees have no need (or time) to gang up on anyone, because they are too busy producing and making money.
Will my solution fix broken company cultures overnight? No. There’s no single-stroke solution to the problem of creating a performance culture. In most companies, some people will simply need to be fired. Other people will need to be reassigned to different jobs. Some companies may need to sell off or spin off a division, or undergo a merger or an acquisition. Other companies should just go out of business. From the ashes will arise newer, more dynamic and more competitive entities. The sad truth is that some businesses would not survive if they had to pay their people based on performance, because they are so deeply entrenched in antiquated practices that their cultures simply cannot adapt. The larger a company, the harder it is to change the culture.
The good news is, there’s plenty of opportunity for companies that are willing to embrace the model of pay for performance. My personal mission is to wipe out the broken and antiquated idea of trading time for money. Is it easy to pay the team for their results? No. You have to get solid accounting systems in place and do the hard work of figuring out who’s adding to the bottom line and who’s leeching money from the company. For many companies, the process may look like a complete overhaul of their service delivery model. But we need to think globally in a world of lightning-fast competition where business is constantly evolving. We need to think two moves ahead. And I believe that companies who are still paying by the hour ten years from now are going to get taken to the cleaners. Twenty years from now, all but a few will be out of business.
If you want to explore what it might look like to abolish the hourly wage for your company, grab a time on my calendar and let’s talk.
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