A worker can create more and leave earlier or sit for hours and do – nothing

The complex record of working hours that all employers must maintain from this year will bring more harm than good. As a basis for rewarding, it is completely demotivating, and the implementation of the system will cost employers time and money.

Written by: Darko Iveković

Since the beginning of this year, salary payments have been conditioned by the record of working hours during the previous month for each worker. Since this is a complex task, i.e., very precise records, many employers are already questioning the purpose of this work. They wonder what the cost of acquiring devices (which may also require IT equipment) that will register (and differentiate!) and record all instances of presence at the workplace and absence from it for employees in our work processes will be. How many people will need to be engaged (perhaps even hired) for these tasks, or how much will it cost if these tasks are separated from the business? And, most importantly, will the benefit of such records outweigh the costs? Will the records help improve their productivity, and thus their competitiveness? Or will it happen what every caring manager fears – that they will focus too much on themselves and too little on their core business? To get closer to answers to these questions, let’s look at where the record of working hours is applicable and for what purposes, what it does not answer, and in which cases the data from it can lead management to incorrect conclusions.

What was – is no more
The rapid expansion of industry in the 19th century, when everything produced was sold, and production was the bottleneck, sought ways to improve that production. Looking for something that would enhance it, employers liked the labor theory of value (its great advocates were Adam Smith and Karl Marx). The reasoning was simple, and the logic seemed irrefutable: the value that a worker creates through their work is proportional to the time they spend at the workplace. And how do we encourage the worker to be more at the workplace? Simply – by paying them appropriately. More precisely, by paying them for the time spent working. 

Thus, a simple and – it seemed – reliable way to determine the hourly wage that the employer paid workers for their work was reached. And this time for each worker is simply read from their record of working hours. Those who stay longer at the workplace will earn more, those who stay shorter will earn less. If it is established that someone spent (unjustifiably) less time at the workplace than the prescribed minimum – they will face disciplinary action.
On the other hand, the employer felt that by paying according to attendance at work, they had gained a strong motivational lever. They thought this way: workers are rational beings, they notice what the employer monitors and measures in their work, and what is monitored and measured is what is paid. Therefore, workers will strive to work in such a way as to earn as much as possible; in other words, they will be motivated to stay at the workplace as long as they can.

Breaking the myth
Satisfaction with such a simple technical solution in the service of increasing created values began to diminish in the middle of the last century with new insights about work. Factors that influence the value that a worker creates through their work, as well as those that motivate the worker to increase that value, were discovered. A new profession emerged – people management. It turned out, especially as a result of the strong development of new technologies, that the value a worker creates primarily depends on the skills they possess as well as their willingness to engage those skills in creating value (in English, there is a nice rhyme: ‘skill and will’). Peter Drucker, universally recognized as the creator of modern management, coined the term ‘knowledge worker’. Moreover, it turned out that individuals can differ significantly in skills and willingness to work. Those who are more skilled and willing create more value in a unit of time than those with lesser skills or weaker will. In other words, the more skilled and willing will create the same value at a greater speed than the others. The myth of the efficiency and fairness of rewarding the time spent has been shattered!

Thus begin the troubles with rewarding time. Trouble usually, and not in this case, does not come alone. On the one hand, those who rely on rewarding the time spent to motivate workers achieve precisely the opposite. Workers indeed act as rational beings, but with the opposite outcome from what was expected. They quickly realize that management measures and rewards time, adapt to this, and try to stay at the workplace as long as they can. And again Drucker warns: ‘Be careful what you measure and reward because that is exactly what you will get!’ On the other hand, workers lose interest in the values they create, and thus the ambition to improve their competencies. The competencies of workers, and accordingly the knowledge in the organization, stagnate, even regress. Innovation no longer interests anyone. The productivity of the organization, and with it its competitiveness, inevitably collapses.

Who still has to ‘sit’
An employer who has recognized knowledge and will as the drivers of value creation has turned from rewarding time to rewarding value. The worker felt the desire to maximize their skills (because that maximizes the value they create, and thus their reward), not the time they spend working. Conditions have been created for a previously unimaginable quality of work from the worker’s perspective – the worker can create more and leave home earlier. In return, the employer has achieved both goals: rewarding workers has gained commercial justification, and the worker is motivated to increase their earnings by increasing the value they create.  If it is already inappropriate – even harmful – as a basis for rewarding, what is the purpose of monitoring the time spent at the workplace? Monitoring is important in jobs where presence at the workplace is necessary, for example, to ensure customer satisfaction (stores, banking and postal counters, ‘help desk’, etc.), for monitoring continuous technological processes (chemical and food industry, energy distribution, most shift work processes), information services, emergency interventions of all kinds, etc. There, the worker must be at the workplace during a time period with a predetermined start and end because customer satisfaction depends on their presence.