I ran a very large health care organization in my career with around 42,000 people employed full or part time in it in the early 2000s. Our goal was to be able to offer people jobs. In addition, we did not want to spend a great deal of money on supervision and would rather see that money spent on training. So how do you accomplish that goal? First, we were trying to move away from hourly based compensation to work output based compensation.
By doing this we could employ people in almost any setting. At our office, at their home, or in the field and yes, even on “vacation”. We identified one of the most underutilized labor resources in America are highly educated stay at home moms, who would love to work and earn extra income for their families, but needed extreme flexibility. So the challenge became how do you put “the office” in a PC. What is today obvious, was innovative back then… you move your applications to the cloud.
By setting base pay at a very low level, while indexing average pay to average work productivity, stay at home moms could “work” between interruptions and at any time of the day. The computer became a “work manager” as well as a “work tool”. It presented employees “work” to do based on the person’s approved skills and kept track of “work output”.
The idea of paying based on “work output” is fundamental to how Medicare uses RVUs to pay doctors (Relative Value Units). In Medicare, every “billing code” has a work output value assigned to it. So all we did was work towards a similar system that would do the same for other jobs.
The computer system we developed had many other innovative features and became one of the leading edge systems in the market, but never fully achieved the goal I outlined above. It was simply to far ahead of its time and after several key people behind the project including myself left, the remaining executives wanted to go back to the old and familiar. But I think their are two ways to look at systems that manage productivity.
If you pay a fixed wage, the systems are often used to identify and address performance issues among low productivity employees. I think that is a mistake.
I would prefer to see the systems used to adjust compensation based on output, help employees improve their productivity and thereby their wages, provide employees unbiased feedback, and allow for increased job flexibility. As an employer if I pay the same amount per unit of output to high productivity employees and low ones, then I do not need to “churn” my workforce to meet some standard of productivity instead I can simply hire up to the point where my workforce produces the daily amount of output I need. Whether that consists of three highly productive employees or six low productivity employees, the cost of output to the company is roughly the same. In addition, the whole management environment has changed from trying to “push” employees to produce more towards helping employees earn more…
