In most organizations today, jobs and the corresponding compensation are based on units of time — for example, a salary that assumes a 40-hour work week, or pay for hourly work.
But there are many types of work, some of which make sense to define by time, but others may be better reflected using other approaches. It’s time to develop a diverse array of job classifications, each with its own appropriate approach to remuneration.
Defining and compensating a job by the time spent makes sense when the fundamental nature of the work is to provide a service for a specified set of hours — staffing the front desk in a hotel or attending a gas station. The concept of jobs defined by time also makes sense for many manufacturing-related jobs. In complex, integrated processes, the most sensible way to think of and compensate an individual’s job is in terms of being an active participant in the process for a specified period of time.
However, a growing proportion of people in the Western world are now employed as knowledge workers, paid for writing, analyzing, advising, counting, designing, researching and countless related functions, including capturing, organizing and providing access to knowledge that others use. Time-based definitions make little sense for these workers. Who can say how long it will take an individual to write a report, conduct an analysis or produce a piece of software? Why not specify the outcomes each individual is responsible for producing, and let each knowledge worker determine how much time is required to do the job well?
Interestingly, a switch from time to task would take us back to the way most workers were compensated for centuries. In agricultural and craft-based economies, rewards were directly related to output created — the amount of farm produce, the number and quality of pottery pieces and so on. Even in the early days of the industrial revolution, workers were paid by individual piece rates, in most cases with no guaranteed base pay. As late as 1920, 80 percent of all workers in the U.S. were paid on a piecemeal basis or in some other way that linked pay directly to the quantity of results.
It was only as the industrial economy gained pace that concern about piecemeal pay approaches grew. The standards and rates being used were haphazard and prone to manipulation by unscrupulous owners or supervisors — standards were poorly set, employers cut rates when workers earned too much and workers would conceal their real capacity for production to keep standards low. Scientific management approaches, such as those introduced by mechanical engineer Frederick Taylor, attempted to make the system fair, engineering differential piece rates by dividing work into discrete tasks and determining minimum times required to complete them, but the challenge of defining the individual task and matching it fairly to compensation proved increasingly difficult. As industrial production shifted from the discrete output of individual workers — for example, a textile worker sewing on buttons — and became a complex, integrated process, the feasibility of task-based jobs declined.
Today’s economy is composed of many diverse types of work, and a more diverse approach to defining each job and developing appropriate approaches to compensation is overdue. Going forward, many jobs in our economy will be better defined by and compensated for according to the task performed — regardless of the time spent achieving the desired outcome.
Most companies already have significant experience hiring on a task basis. The growing trend toward the use of contract labor and outsourcing provides experience in this way of thinking. The move to telecommuting is essentially trusting that a task will be accomplished, although in most cases the job is still stated in terms of an expectation to work a specified number of hours from home. As virtual work continues to spread, the logic of confronting this sleight-of-hand, of making the stated expectation fit the operational reality, will grow.