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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

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Commitment

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Because my work contributes to my self-actualisation, I think work-life balance is an outdated paradigm.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 Entrepreneur.com.

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

Hooked On Ethics

The business that puts ethics at the forefront of its culture is the one that will shine in a landscape littered with dishonest behaviour.

Howard Feldman

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ethics

There is significant research into how the work environment influences ethical behaviour. Study after study has shown how the ethical values upheld by management filter down to all employees, affecting behaviour and business practice. The biggest influence on a person’s ethics is their environment. In South Africa, the after effects of the recent political regime continue to shake both country and citizen. Corruption has seeped into almost every part of the government and in some of the country’s most prominent private organisations.

The old saying that the ‘fish rots from the head’ has never been truer, nor more obvious.

The ethical dilemma

The reality is that the government’s flagrant disregard for ethics saw corruption become a part of everyday life. This makes almost everyone ask themselves questions like – why should I pay X utility bill? Why should I pay my TV license? The money is being clearly used fraudulently. Sure, it is the law, but leadership has proven that ethical behaviour isn’t rewarded or recognised.

But it is. The value of building an ethical business and upholding a culture that promotes honesty and integrity cannot be understated.

Related: Developing Your Business’s Ethics Policy

Here are five reasons why…

  1. Those who skirt the edges of ethics almost always get caught.  There has been a steady shift in the country’s moral compass as leadership has taken a far stronger stance on rooting out corruption and already some of the country’s biggest names have been found guilty. KPMG, McKinsey, Bell Pottinger and SAP have all had their names tarnished by the scandals that have rocked the country.
  2. Employees are more engaged and better behaved. A weak ethical culture filters down from the top, influencing behaviour and attitudes. If employees feel that they can get away with bad behaviour that benefits them, or if they feel that their environment encourages this, then they will.
  3. A strong ethical influence will dictate how employees treat customers and one another. If your company enforces and rewards honesty and integrity, then these will be the qualities that clients will perceive. Their lack may also see you lose market share and your reputation.
  4. Like attracts like. If you create a culture that rewards employees that work all hours, deliver the goods and commit themselves then you will attract more people with these qualities. The same applies in reverse – reward bad behaviour and the results will rapidly speak for themselves.
  5. Your business reputation. Trust can’t be bought. It is hard won and easily lost. If you lose your reputation then it is very unlikely you will win it back and it will follow you for the rest of your life. The same applies to your staff. If their behaviour is questionable it could damage your company. Make sure you set the rules of what is or is not tolerated by your company culture and consider investing into ethics courses that allow your teams to stay ahead of the curve.

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Business Landscape

Solutions To Get Your Business Through Tough Times

We are happy to announce that times are changing and that Start-Ups and SME’s never have to leave legal unattended again!

Nicolene Schoeman-Louw

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tough-times

It is no secret, things are really tough at the moment. South Africa is in a technical recession and consumer spending is at a low. To many small businesses this means that the pressure is very, very real. As a result, cost cutting will inevitably have to follow, and the reality is, that the legal side of things are often one of those aspects left unattended. Resulting in massive risk exposure that could threaten the business’ ultimate sustainability or success.

But everything is not just doom and gloom! We are happy to announce that times are changing and that Start-Ups and SME’s never have to leave legal unattended again!

We have put in a lot of money, time and effort creating a pioneering online platform that hosts standard legal documents, which are the crucial pillars of best practices for any business. By utilising technology, we aim to provide access to trusted legal products and services in order to empower Entrepreneurs.

The SchoemanLaw SME Self- Service Desk TM is the first solution of its kind in South Africa! In testimony hereof, SchoemanLaw was honoured earlier this year as a finalist in the Nedbank Business Accelerator Programme, for the platform’s unique ability to provide access to trusted legal resources that empowers Entrepreneurs, to create sustainable businesses that are scalable.

The platform further addresses the need of effective management of individual needs, such as drafting your will, the management of crucial relationships in business, including employment relationships and contractors, as well as stakeholder relationships in the ecosystem, such as clients, debtors, shareholders, directors and joint ventures. It also allows the users access to personalised support in case of any unforeseen legal incident occurring. Supporting entrepreneurs to effectively establish legal foundations in their business for optimum growth and overall business success.

Related: When To Collaborate And When To Employ

The following documents are examples of those available on the platform:

  • NDA (Non-Disclosure Agreement)
  • Independent Contractor Agreement
  • JV Agreement
  • MOI (resolution included)
  • Shareholders Agreement
  • Various Company resolutions
  • Acknowledgement of Debt
  • Distribution Agreement
  • Agency Agreement
  • T&C’s
  • Supplier Agreement
  • Last Will and Testament
  • Residential and Commercial Lease Agreements
  • Loan Agreement
  • Letter Demanding Payment
  • Various HR Documents, such as:
    • Employment Contract (fixed and indefinite term)
    • Generic Human Resource Policies
    • Certificate of Service
    • Written Warning
    • Disciplinary Hearing Pack

Free samples:

  • Offer to purchase (freehold and sectional title)
  • BBBEE Affidavits (EME and generic QSE)

and many more!

Related: The Role Of Trust Now And In The Future

Prices range from R195 and R895 per document if downloaded on a pay as you need basis or R249 / R495 per month on a subscription basis, this is over 75% less than usual rates if traditionally drafted by an attorney. What is more, users have the support of a law firm not only having created, but who maintains the platform and supports each User.

The platform is also ever evolving and completely customer driven because documents are added constantly as customers request them. All the documents are also constantly updated to ensure that they align to the latest best practice. So, never leave the legal unattended ever again! For more information or to Empower your small business today, go to: https://www.schoemanlaw.co.za/online-legal-services/

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Business Landscape

Effective Business Insurance Supports The Economy

The insurance industry has an important role to play in assisting SMMEs to effectively manage risk and resist the temptation to save money by buying less insurance cover than their actual risks suggest.

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business-insurance

The success and growth of small, medium and micro-enterprises (SMMEs) are essential to the development of our economy. The insurance industry has an important role to play in assisting SMMEs to effectively manage risk and resist the temptation to save money by buying less insurance cover than their actual risks suggest.

Value of advice to create trust

This is where the value of advice can be clearly demonstrated. Henry Ford said: “If we asked our customers what they needed, they would have said faster horses.”

Therefore, as risks become more complex and costs grow, we need to, as an industry, enable SMMEs to trust us to advise them where to place their hard earned money to safeguard themselves against potentially devastating setbacks.

In every business, customers are unique and face their own challenges and risks. For a manufacturer, protecting valuable stock during storage or transportation will be essential. A motor fleet owner will need comprehensive cover for their specialist vehicles to protect them against accidents, theft or liability.

Insurance brokers have the knowledge, experience and skills to guide SMMEs in identifying the risks their businesses face and choosing the correct insurance products to meet their specific requirements.

Related: Government Funding And Grants For Small Businesses

Changing environment = changing needs and solutions

Property damage cover, such as fire insurance, compensates SMMEs for buildings or stock, while business interruption cover allows them valuable time to recover without feeling the strain of lost profits after an unfortunate event. Comprehensive motor insurance can cover vehicle repair costs and provide replacement vehicles allowing businesses to continue to render a service after a loss or damage occurred.

In addition, lawsuits can be costly and time-consuming, with exorbitant legal fees and resulting court awards. Liability insurance protects SMMEs from these and similar claims.

Other important insurance products provide security against financial losses, resulting from theft, fraud or dishonesty by the company’s own employees.

Partnering for success

Any business failure or loss can have far reaching effects on the rest of the economy. Therefore, it is necessary for brokers to partner with insurers who understand the risks inherent in a particular SMMEs field of business – a winning partnership to build the economy by supporting the sustainability of our small businesses.

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