I’ve seen this problem in so many IT companies, and sadly they don’t even realise how they confuse their people.Look at most career ads looking for IT people in various positions.
Almost all of those ads say…
“We offer competitive hourly wages.”
But do we want to attract competitive people who are not really great but merely competitive, so they have to compete with the crowd?
Do we want to build a company that is forced to compete with all the other companies in the industry or do we want to build a company that stands out in the industry like a trombonist in a heavy metal band?
This is the question here.
And then when these poor bastards are hired for competitive hourly wages, they get told how their performance will be evaluated.
Now hang on a moment.
You get hired and get paid for dispensing time chunks based on a schedule defined by the employer and then the employer wants to evaluate you based upon totally different criteria.
You get evaluated based on performance, which has never been part of your contract.
Remember, the contract specifies that you show up at a specific location and spend 40 hours a week there between Monday and Friday. There is nothing specified about what you put into those hours. You get paid for physically being on that location. And you must be paid even if you spend your 40 hours sleeping.
And here comes the unethical side of hourly payment
You get reprimanded if you don’t spend enough time on that location.
You get reprimanded, or even fired, if you sleep on that location.
You get reprimanded, or even fired, if you smoke pot or get drunk as a skunk on that location.
You get reprimanded, or even fired, if you don’t do real work.
But look at the contract.
It stipulates that you get paid X dollars per hour. It doesn’t say what you have to do because most IT companies are bogged down with number of hours. The work is really physical presence. That’s all.
It amazes me when a whole industry collectively denies its nature as knowledge workers and tries to operate as manual labourers.
And maybe this is the exact reason why the market treats information technology as manual labour, and defines fees and prices by the amount manual of labour sellers perform not by the value buyers derive from better IT systems.
So, here comes the first annual evaluation of the employee.
Boss: On a scale of 1 (disaster) to 10 (perfect), how do you rate yourself in your first year?
Employee: 10. I fulfilled my payment condition 100%.
Boss: But what about your overall performance?
Employee: What performance? I get paid for spending 40 hours a week in this building. I’ve fulfilled that. My performance is about showing up for 40 hours a week. That’s all. That’s what I get paid for.
Boss: But what about work?
Employee: What work? My work is physically being in this building 40 hours a week. That’s all.
Boss: But you can get fired for that?
Employee: And I’ll sue the shit out of your company for unfair dismissal.
Boss: But we expect you to work?
Employee: No, you expect me to do what I you pay me for: Dispensing 40 hours of my life and being physically present in your building from Monday to Friday. And I’ve fulfilled that without a hitch. I’ve never even been late. So, where is the problem?
And it goes on and on…
The reality is that your people do what they get paid for. If you pay them for their physical presence, then don’t expect them to do anything else.
Business development is knowledge work, not manual labour that can be correlated to the passage of time.
Authors Margaret J. Wheatley and Myron Kellner-Rogers express it rather nicely in their book “A Simpler Way”…
“Playful and creative enterprises are messy and redundant. Human thinking is accomplished by processes that are messy and redundant. When computer scientists first tried to mimic the lavish parallelism found in human thinking and all of nature, they had to link together more than 64,000 computers working on the same problem at the same time. Parallel systems are dedicated to finding what works, not by careful stepwise analysis in the hands of a few experts, but by large numbers of a population messing about in the task of solution-creation. They come up with better solutions, but they are based on a different kind of logic: trying thousands of things simultaneously to find what works.”
This is also the essence of knowledge work, and it can’t be compared to working on an assembly line.
So, how do you pay your business development people?
I believe salaries should be split into three parts…
1. Base salary: The base salary demonstrates whether or not we have a serious employer. Winners don’t piss around with minimum wage and straight commission. That’s what losers do. So, I’m a bit surprised by ads where companies call themselves world-class but want to pay minimum wage or expect people to work on full commission.
I believe in that investment creates commitment and commitment leads to improvement. And whoever is the main beneficiary of the improvement must have a skin in the deal.
2. Revenue bonus: This bonus is based on a pre-established percentage of company-wide revenue.
3. Professional development: This is a multiplier on the bonus. For every fiscal quarter or year, every business development associate has specific professional development objectives. At the end of the fiscal quarter or year, the associate’s achievement on her professional development goals is assessed, and evaluated on a percentage basis. And this percentage of her full bonus gets paid to her.
And this requires some explanation.
Yes, people can maximise their bonuses by increasing company-wide revenue, but they if neglect planting the intellectual seeds for the future, they fall behind on expertise. This in turn leads to declining intellectual capital and intellectual property (i. e. documented intellectual capital) in the company, which can lead to lost market positioning in the future.
So what about hourly wages?
I’ve read about a survey that was done in 2005, where hourly workers were told they could go home as soon as they do their normal amount (8 hours’ worth) of work in high quality. On average, people completed 8 hours’ of work in 3 hours and 19 minutes. This shows that under hourly wages, these people were working at a mere 41% of their full capacity.
So what do you prefer your people to do? To show up and fill face time in your building or to do real work?
But the hourly wage is a comfortable alternative in companies where even management is confused about what needs to be done.
Verasage fellow, Ed Kless is fond of saying…
“If you suck at what you do, charge hourly fees.”
“If you suck at managing your people to achieve results, then hire hourly employees and micromanage their time.”
For a moment, Spanish philosopher, essayist, poet, and novelist, George Santayana comes to mind…
“Fanatics are who lose sight of their goals and redouble their efforts.”
And this is exactly what hourly wages achieve. Working harder and longer than ever before and achieving… precisely dick.
But creating results in business development is not about working harder and longer, but working shorter and drastically differently.
What do you think?