Reimagine Compensation


Photo by Oleg Magni from Pexels 

The United States Internal Revenue Service defines full-time employment in terms of hours. Their standard is an average of 30 hours per week or 130 hours per month. You can sit at a desk for those hours and wait for the email notification to ding, but is that productive? If you secure a new customer over a lunch hour, do you have to work another 39 hours that week?

Tradition

Rooted in the labor movements of the 19th and early 20th centuries, the 40-hour work week was established to protect workers from exploitation, ensure work-life balance, and promote economic stability. Technology, remote and hybrid work arrangements, and a shift in how we measure productivity, makes this rigid structure unsuitable for a wide range of jobs and industries.

Transformation

Employees are increasingly prioritizing autonomy while employers are increasingly recognizing the value of results over hours logged. The result is transforming the way employees are compensated. Instead of being paid solely for the number of hours worked, employees can be compensated based on their skills, the networks they bring to the organization, and the outcomes they deliver. For example, freelancers, gig workers, and project-based contractors are compensated for completing tasks, the quality of their output, delivering specific results, and the impact on the organization’s success, rather than for a set number of hours worked. This approach aligns more closely with the idea that the value an employee provides to the organization is not solely a function of their time, but the quality and impact of their work. We talked a couple of months ago about how being busy is not a reflection of productivity. With the aid of technology, it is now easier to track and assess work progress and results, no matter where, when, or how an employee chooses to work. Key performance indicators (KPIs), project milestones, and deliverables are more significant in assessing an employee’s productivity rather than the mere number of hours spent at a desk.

Transition

In a traditional office setting, it’s easier to monitor and manage employee performance, but in the age of remote work, new methods and tools are required to maintain accountability. Here are some basics.

  • Trust and Flexibility: While accountability is essential, micromanaging erodes trust and hinders productivity. A results-oriented approach, where employees are given the autonomy to manage their own work, can be highly effective.
  • Clear Expectations: Work together to define realistic goals, deadlines, and deliverables. Then evaluate employees based on objective performance metrics like goal achievement, quality of work, and impact on the organization.
  • Technology and Tools: Time-tracking software, project management platforms, and communication tools are invaluable for keeping remote workers on track. Frequent check-ins, whether through video calls, phone conversations, or written updates, can help maintain both connection and accountability. These interactions allow employees to discuss progress and challenges, and receive feedback and guidance.

The demise of the 40-hour work week is not the end of structured work but a transformation that better aligns with the demands and opportunities of the modern workplace. As remote and hybrid work arrangements become more prevalent, a new model of compensation and productivity measurement emphasizing flexibility, autonomy, and results ultimately benefits both employees and employers.

If you are not paid for your time, then by what measure do you get paid? Please share in the comments.