Chief Executive Officer at Safeguard Global.
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It wasn't until the mass production of clocks and watches during the Industrial Revolution that it became possible to pay workers for their time rather than their productivity. As a result, jobs are increasingly being separated into two categories: ones that require coverage over time and ones that are rooted in the idea of outcomes.
But the practice of paying knowledge workers—people whose jobs involve handling or using information—for only hours worked is becoming hard to defend. Presumably, employers want knowledge workers to create value by applying uncommon skills, original ideas and deep analysis to thorny problems. But by paying for time or culturally pressuring employees to maintain certain hours, employers incentivize busyness, presenteeism and performative work.
I won’t be the first or last CEO to suggest businesses should pay these employees for results, but how to construct this concept into the work environment remains a challenge. Many leaders—and employees—still feel more comfortable with the ability to “see” the work being done. So this requires a rethinking of how we define work, how it’s measured and who manages it.
Discard old notions of what it means to work.
A knowledge worker in an office, at a computer, was presumed to be working, but U.K. office workers estimated they were only productive for less than three hours during an eight-hour workday. When work went remote after the spread of Covid-19, employees still felt pressure to appear as if they were in the office. In 2022, knowledge workers said they added an average of 67 minutes to their normal workday just to be visibly online. They answered emails and messages, set their status on communication apps to “active” and did busywork.
Doing mundane tasks, however, drains focus and energy, eats into rest and demoralizes people who know these hours are a waste of their talent. When employees feel the need to engage in presenteeism, it minimizes their true value and results in disengagement, not quality output. It's no wonder, then, that most companies have either maintained or boosted productivity in trials where they switch from working five days a week to four days.
Detach pay from time.
For years, companies have used key performance indicators or objectives and key results to measure performance. But they still pay and talk about work in a way that appeases an outdated social construct of a 40-hour work week—primarily to remain in compliance with legal requirements and avoid complicating their payroll systems. This creates misaligned incentives.
Consider this example: An engineering team is asked to reduce the time it takes to run a payroll by 30%. A contracted coder who costs $200 per hour wrestles with the problem for four hours before leaving the project half done to move on to another one. That means the employer paid $800 for four hours of work with minimal output.
Meanwhile, a full-time coder has a “Eureka!” moment just 30 minutes into the job and produces a timely solution. Despite this efficiency, they're still expected to finish their eight-hour workday, so they have to find something to do. That is punishment, rather than reward, for productivity.
For the contracted workers, a project fee or schedule of fees based on the value of the objective could reward quality work versus time on the job. For the full-time employee, a salary without time expectations would give them more space for strategic projects, testing different approaches or creating innovative ideas.
Let people manage themselves.
Here’s a theory: When people manage themselves, they naturally create conditions in which they thrive. For example, if employees don’t feel like their value or productivity is determined by screen time or having a green dot on a messaging app, they won’t feel pressured to fill hours with busy work. Giving employees the autonomy to choose where, when and how to work allows them to focus on quality.
For example, here at Safeguard Global, we implemented a "Work in Any Way" model. Employees determine whether they want to work from an office, a co-working space, an Airbnb or even a bathtub! They build their work schedule around personal activities, like a midday workout or attending their child’s basketball game. Teams can choose which tools, software and methods work best for them. Since giving our employees this level of ownership over how they work, we've substantially grown our development team, increased monthly product releases and accelerated our average time to market.
Embrace the reorientation.
Before Covid-19, knowledge workers underestimated the extent to which work controlled their experience. Working from the office limited how you could spend your time. Now, the pandemic has given us an opportunity to detach from the idea that time spent is the measure of work and trust employees' ability to manage their performance. Employers who get on board with this reorientation will benefit from greater innovation, productivity, and employee engagement and retention. After all, that's what organizations really want.
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