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Business Landscape

Pay People for Commitment, Not for Time or Results

It is mostly irrelevant when or where I work, as long as I get things done.

Jurgen Appelo




Sixty hours per week. That’s how much I work, on average, which seems like a lot to some people. However, my job is my greatest hobby and my projects are like my children. Therefore, 60 hours per week is perfectly fine for me. Besides, my number of work hours doesn’t matter because I am self-employed.

Because my work contributes to my self-actualisation, I think work-life balance is an outdated paradigm. I prefer to live when I work, thank you very much!

Related: Are Your Idea ‘Improvements’ Impacting Negatively On Staff?

A similar attitude toward work and life is emerging among many other creative knowledge workers. Work-life integration is all the rage these days. Results-only work environments are steadily replacing old-fashioned flexi-time policies.

Unlimited vacation days are granted to professionals who are treated more like entrepreneurs than employees. And remote work is so fast becoming the norm that we should consider using the term office work as its antonym, for any type of job that still chains a person to a desk in an office building.

These trends have led me to believe that we should bury the concept of the 40-hour work week.

Don’t pay for results

The question is, does time really matter? When Jack can do in 24 hours what Jill does in 40 hours, should Jack still be considered “part time” and Jill “full time”? Is it fair to pay Jack less than Jill, only because his contract refers to 24 imaginary hours instead of 40?

When people can work anytime and anywhere, shouldn’t we be paying them for results instead of time? Shouldn’t we be treating them like entrepreneurs or freelancers, who only get paid for actual value delivered?

I think not.

Indeed, some organisations pay employees for “performance,” which seems to make sense in a results-only work environment. However, history shows that pay for performance opens up a whole new dimension of dysfunctional behaviours. When pay depends on measured outcomes, it is virtually guaranteed that people will game the system, aiming for the shortest path to the optimal results.

As social researcher Alfie Kohn once said, “Of course rewards motivate people. They motivate people to get the rewards!”

The fact that pay-for-performance schemes have led to company-destroying bonuses among CEOs, and service-destroying competition among sales people, isn’t the only problem.

Even worse, when people only get paid for outcomes, they usually avoid experimental learning because experiments can lead to failure, and failure means no income. Such behaviours are the opposite of what businesses need in the 21st century. After all, learning and innovation can only happen through experiments.

Related: Your Staff Are Your Brand

Pay for commitment

I believe there is a better way. Instead of using meaningless 40-hour or 36-hour time constraints, and instead of using dangerous performance metrics, in the 21st century we should simply agree on commitment levels. This is how I have defined it for my virtual team:

  • Commitment level 5 (or 100 percent): The money we pay you is your only source of income. You’re not financially supported by anyone else (for example, your spouse or another employer) and you’re not trying to develop any other business on the side. What we expect from you is total commitment to our organization.
  • Commitment level 4 (or 80 percent): The money we pay you is most of your income. You either have some minor support from someone else (but not more than 20 percent of your income), or you intentionally reserve some time and effort to develop your own business on the side. What we expect from you is high commitment to our organization.
  • Commitment level 3 (or 60 percent): What we pay you is more than half of your income. You either have support from someone else (but less than 40 percent of your income), or you run your own business on the side which generates some minor income. What we expect from you is that you usually give priority to our organisation in your commitment.
  • Commitment level 2 (or 40 percent): What we pay you is less than half of your income. You either have significant support from someone else (60 percent or more), or you run your own business on the side that generates a good income. What we expect from you is that you usually give priority to your other employer or your other commitments.
  • Commitment level 1 (or 20 percent): What we pay you is a minor part of your income. You either have almost full support from someone else (80 percent or more), or you run your own successful business that generates a significant income. What we expect from you is that you always give priority to your other employer or your other commitments.

So, how does this work? Easy! Instead of defining hours per week in contracts with employees, freelancers or virtual workers, you define a commitment level. You don’t care how many hours they work, when and where, or how they mix their private and professional lives. The only thing you care about is how much you can count on the contributions, effort and collaboration of your workers, in the projects to which they have been assigned.

This is easier to observe than you might think. How fast do they reply to their emails? How often do they show up in Hangouts? How active are they on the organization’s social channels? How often are they credited or complimented by their peers? How often are they asked for help? How fast do they offer it? How many ideas for improvement have they generated? And how committed are they to attend company events and gatherings?

There’s no need to actually measure any of this. Among co-workers it should be easy enough to identify what commitment level someone behaves at.

Commitment levels can be part of a salary formula, or they can be considered during traditional negotiations over monthly fees or wages. Either way, what you agree on with your professional workers is a level of dependency and collaboration.

You should get what you pay for. In the 21st century, with people working anytime and anywhere, continuously mixing professional and private activities, what you should pay for is neither time (which means nothing anymore) nor results (which can be dangerous). What you should pay for is people’s commitment to your business.

So yes, I work 60 hours per week, and I feel proud of my results. But in our business I can only commit to level 4, because in between my Skype calls and cappuccinos I’m writing a new book.

Related: 4 Steps to Hiring Killer Sales Staff

This article was originally posted here on

Jurgen Appelo is CEO of the business network Happy Melly. He is an entrepreneur, speaker, trainer, illustrator and blogger and the author of Management 3.0 Workout.

Business Landscape

Doing Business From Your Home, What Are The Insurance Implications?

Whether you run a small business from home or have a secondary home industry to supplement your income, it is critical to consider all the risks that your home business is exposed to in order to ensure that it is sufficiently covered.

Tarina Vlok




Besides the standard damage risks of fire, water, and theft, that all policies should cover, people who run commercial operations from their home need to consider a number of other risks that may not be covered by their personal lines policy. These typically include:

1. Business contents

While most home policies will cover basic computer equipment and home office furniture, these policies will usually not cover stock, tools of the trade or machinery. People running business operations from home also need to consider risks relating to their computer equipment (especially if they remove portable equipment away from the premises), and the software related to their business.

2. Manufacturing risks

Any business that involves manufacturing or requires the use of flammable or dangerous materials, must be specifically insured under a commercial policy.

3. Employee theft

While “theft” is likely covered by a personal lines policy, it is important for home business owners to be aware that any theft or fraud committed by their employees will likely not be covered by a home policy.

4. Liability risks

Liability risks that are not insured against, such as a visiting client tripping and falling at the private home from where you operate your business, can have a massive negative impact on your financial health.

Related: Insurance For Small Businesses: What Should Be Covered?

5. Professional indemnity risk

Anyone who offers professional services or advice could be held legally accountable and it is therefore important to be covered for this risk under specialist commercial liability policies.

6. Products liability

If you make foodstuffs or manufacture cosmetic treatments from your home, you will likely require a commercial policy which is structured correctly to ensure that you have products liability cover.

7. Load shedding

Many home businesses need to consider the risk of business interruption due to interrupted power supply, as well as the potential power surges which can cause serious damage to any electronic equipment once the electricity supply is turned back on. Typically, these risks are limited under most home insurance policies.

8. Vehicle use

It is also important to read the terms, conditions and exclusions of your personal lines motor policy carefully to determine whether any vehicle you use for your business operations (to make deliveries or visit clients, for example) will be covered under the terms of your policy. It is extremely important to disclose to your insurer whether your vehicle is used for private purposes, or whether it is used for commercial purposes.

At the end of the day, when running any type of commercial operation from your home – regardless of the business’ size or nature – it is best to talk to a broker or your insurer to ensure that your policy (whether it is personal or commercial) covers the risks that you do not have the resources or appetite to  cover yourself.

Home business owners that are looking to upgrade their level of cover should do their research and find a suitable product that can grow with their business. The Old Mutual Insure product provides a comprehensive package that can be tailored to the insured’s specific needs. The insured can decide how much they can afford and add cover as the business grows. While the product is not specific to small home businesses, the advantage is that the policy will remain appropriate as the business grows and the needs of the insured changes.

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Business Landscape

How Black Umbrellas Is Thriving Through The Challenging Business Landscape

Even against the challenging economic climate, it is very encouraging and impressive to see growth by our clients and their businesses growing to being sustainable businesses of the future, explains COO Emmanuel Mdhluli.

Black Umbrellas




Vital Stats

As an enterprise and supplier development incubation organisation, Black Umbrellas partners with the private sector, government and civil society to address the low levels of entrepreneurship in South Africa.

“The programme focuses on promoting entrepreneurship as a desirable economic path and nurturing 100% black owned businesses in the critical first three years of their existence through the provision of our nationwide incubators,” explains Emmanuel Mdhluli, Chief Operating Officer at Black Umbrellas.

“Our model is aimed at supporting emerging and existing black businesses through a three-year incubation programme, so that they are able to emerge as independent, viable businesses. By providing a structured and highly subsidised programme, using a national footprint of business incubation offices, clients are afforded the expertise, office infrastructure and resources to create the necessary foundations to achieve sustainable businesses.”

Currently, BU has eight incubators in Cape Town, Johannesburg, Pretoria, Mooinooi, Lephalale, Port Elizabeth, Durban and Richards Bay.

Client insights on Black Umbrellas’ tangible impact

Here are four examples of the direct impact BU has made to each of its selected clients including their turnover, net profit/loss, net asset value and number of jobs created:


Related: How The Black Umbrellas Programme Can Boost Your Local Black Business

Black Umbrellas currently has clients in various sectors, including:

  • Construction
  • Industrial engineering
  • Pharmaceuticals
  • Oil equipment
  • Services and distribution
  • Consulting and advisory
  • Electricity
  • Telecommunications
  • Healthcare.

“Even against the challenging economic climate, it is very encouraging and impressive to see growth by our clients and their businesses growing to being sustainable businesses of the future,” says Emmanuel. 

Black Umbrellas’ Collective Impact

The collective SME turnover grew by 33% year on year from R2bn to R2.66bn. Job creation and preservation also saw solid growth of 15% on a year on year basis from 10 137 to 11 687 total jobs created since inception. For the year under, BU was able to remain operationally efficient with the average cost per job figure deteriorating by only 12% on a year on year basis from R32 286 to R36 262 at the end of the financial year. Despite the drop, this figure is still extremely competitive and is testament to the continued operational prudence employed within BU to ensure that capital and resources are optimised for greater impact.

“Most enterprise development service providers focus a lot more on financing mechanisms, whereas Black Umbrellas focuses on all aspects of enterprise development that are inclusive of business management training.” – Client Testimonial

What’s next for Black Umbrellas?

Over the past 5 years, Black Umbrellas has observed a growing trend by corporates to develop their own ESD programmes internally in order to fulfil their requirements. Being that ESD is not core business for most corporates, these organisations have tended to reach out to Black Umbrellas to seek guidance and advice for their internal programmes.

This culminated in the formation of Nextgen Consulting which was officially registered in November 2017. Nextgen Consulting offers Advisory services focused on B-BBEE and Supplier Development at full market rates to corporates, Qualifying Small Enterprises (QSE) and generic companies.

This is an exciting project that will see our third year and graduate businesses benefit from an opportunity to expand their businesses.

Black Umbrellas Contact Details

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Business Landscape

Why You Need To Use NDAs To Protect Your Business

Don’t think of them as aggressive – instead, think of nondisclosure agreements as a fast-track toward trust.




I’m a small-business owner, and we’re in a stage of growth. Do I really need employees and potential partners to sign NDAs? – Chris P., New Jersey

There are many big-business practices that don’t necessarily apply to smaller companies. When you’re a start-up, you can cut a lot of red tape without worrying about repercussions. The use of NDAs – that is, nondisclosure agreements, which serve as legal contracts of confidentiality – is not one of those cuttable corners.

Chris, here’s a cautionary tale of my own early ignorance. When I started Pen Name Consulting, I used a basic NDA – just a file I found on the internet. I wasn’t blind to the importance of NDAs, but I was cheap and stubborn, even though my father is a lawyer and advised me against this move. (He eventually became my general counsel.) My NDA was flawed; it didn’t cover enough of the information at my company or place the right restrictions on how people could share it.

I discovered my error after a business meeting, where I mentioned a potential client and what they needed help with. The person I was meeting with (who signed my weak NDA) then went after that client themselves – ultimately stealing work from me. There was nothing I could legally do. It probably cost me $30,000 in potential revenue.

Don’t make my mistake. Creating a strong NDA for your business is simple and not that expensive. Even if you enlist the best lawyer, with a ridiculously high hourly rate, the value you’ll receive to protect your company and your ideas is arguably worth the potential value of the company itself. Or at least the value of one client.

Related: Understanding the Terms of Agreement

Now, I understand that it can be awkward at first to ask people to sign an NDA – it seems like you’re telling them you don’t trust them. But think of it this way: If you don’t value your IP, your thoughts and your inventions enough to protect them, then why the hell are you running a business in the first place?

An NDA doesn’t have to feel like a sign of distrust. Because of the scrappy nature of startups and small businesses, partnerships and strategic hires are the lifeblood of scale and smart growth – but they’re also rife with danger. Every potential partner is also potential competition. Every meeting for growth could be a leg up for the other guy. And every time you share your next big move, you need to know you can trust people.

NDAs are valuable because they force that trust. They make it legally binding. With the NDA in place, you can be vulnerable, open up and speak more candidly with potential partners. Rather than view the NDA as a barrier, it’s best to look at it as an exclusive invite.

This is a good thing – the NDA is the front door to learning more and being on the inside. The same can be said for hiring. The moment you have a signed NDA, you’ve connected with someone and you’ve closed the deal. It’s a sign of respect. And when you have respect, you have strong partnerships and hires. That is the foundation of growth for any business.

Pride and ownership are big parts of owning a company. If that comes across as a little “preachy,” it’s because you need to bear witness to a simple reality: Those who do not invest in protections for their business are likely to watch it fall apart. Or they will be too guarded with information to ever let others in. Either way, an NDA solves those problems.

This article was originally posted here on

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