There is an inherent problem with hourly compensation: it is both product and supporter of mass production. On an assembly line, where the worker does not control the pace of production, the hourly compensation actually makes sense. Even there, the hourly compensation does nothing to encaurage quality or process improvement. By measuring activity, instead of results, hourly compensation encaurages all the wrong behaviors. People focus on how to get away with billing the most time, rather with delivering the most service in the least ammount of time. It’s like slavery but one hour at a time. It’s a little wander why so few people like their hourly jobs.
There are jobs that require a person to be at a certain place in a certain time. For those functions hourly compensation is fine. It should at least be a part of the package.
Yet, more and more jobs are becoming virtual. More and more places are starting to try to tie the compensation to the actual outcomes. It takes more planning and better thinking. Our legal system is not setup to imbrace it. But the more efficient outsourcing approaches already use performance based metrics for compensation.
What functions in your business should be compensated hourly and which functions should be compensated in other ways?
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