The death of the employee: on digital disruption and changing attitudes in the workplace.

The end of the full time job

The backlash against excessive consumerism, captured by books such as Oliver James’ bestseller Affluenza, has seen workers in developed countries come to increasingly examine and question their work life balance. There is a burgeoning realisation that full time work is maybe not the only option.

Tim Ferriss’ New York Times bestseller The 4-Hour Work Week has developed what is almost a cult following for its “new way of living”, which consists of applying the Pareto principle (the 80/20 rule) to eliminating wasteful activities to free up time and improve quality of life. While Ferriss has taken these principles to the mainstream, they are not new, only the techniques have become more accessible as a result of the digital revolution and a shift in attitudes to work.

Ferriss rejects the traditional lifestyle model of working as long and as hard as you can for 40 years so that you can retire and at last live the life you always wanted, and instead encourages us to incorporate mini retirements throughout our careers.

What is perhaps most compelling in Ferriss’ lifestyle design philosophy is that he provides practical tips on how to use existing digital technology to achieve the work-life balance we want. Unwanted but necessary tasks can be outsourced at low cost using crowd-sourcing tools, thereby freeing up valuable time to leisure. Work (whether as an employee or business owner) can be carried out remotely, thereby opening up travel and geo-arbitrage opportunities.

But how can this work with many employers still guided by an outdated view of the workforce?

Rewarding output rather than hours

The coupling of wages with hours is an industrial revolution artefact. By removing all task autonomy from the individual worker, the assembly lines introduced by Henry Ford around a century ago effectively broke the link between the effort of the worker and the output of the production unit. As accurately predicted by Adam Smith, increasing industrialisation led to every worker’s business being reduced to “some one simple operation.” As such, a worker repeatedly completing a prescribed task was best remunerated on a hourly basis, rather than in relation to his contribution to the final output of the factory.

In today’s information-based economy however, knowledge workers are growing more autonomous and the tasks they perform are ever-variable in their form, intensity and most importantly, productivity. For evidence of this, think back to what you have achieved in the last 60 minutes at work, and compare that to what you did in the previous hour (if you can still remember what you were working on back then).

The output is what should matter, not how long it took to get there. The premise that a worker’s output is best measured by time spent, rather than the work’s actual contribution to strategic goals, is therefore not only outdated but worse counterproductive. Not only do such systems allow poor managers to set unnecessary tasks, they also remove any incentive for workers to act efficiently in the completion of those tasks. All things being equal, are we not rewarding the least efficient worker, by implying that the more hours you work the more you should get paid?

The efficiency dividend and the efficiency disincentive

Imagine two full time co-workers, both with similar jobs. One returns to work four days a week, after a period of parental leave. Invariably what will happen is that the output expectations of that newly-created part time role haven’t changed much from what they were previously, only the associated pay has been reduced by 20%, leaving the part-time worker under more pressure to work more efficiently. In other words, the less efficient, full-time worker is now being paid a 25% premium for being less efficient.

When we engage any other supplier in the provision of services, do we stipulate whether they must work full time or part time, whether they are allowed to take on other clients, what times of day they must be working and where they should be working from? No, instead we focus on results and deliverables, and allow them the benefit of the doubt in how they complete the work.

Higher-performing workers typically get given more work than their less competent counterparts, and feel stressed as a result. In a context that rewards all staff the same on the basis that they are all working full time, this can lead to feelings of injustice and cause top performing staff to quit. Shifting to a remuneration system that rewards staff for their results will help retain top performers, while incentivising unproductive workers to raise their game and earn a fair wage.

Note from Huiyi, TIA’s community manager:
This is the first in a five-part series of articles examining the changing nature of work. The next article in this series takes a closer look at the results-only work environment and other workplace flexibility initiatives. 🙂