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You go ahead and do that, pay your employees based on the hours they are “there“. Your competitor pays its employees based on each employee’s results. Then le

You go ahead and do that, pay your employees based on the hours they are “there“. Your competitor pays its employees based on each employee’s results. Then let’s see which company survives in the market.

NineStarPoint 4y ago
It’s complicated to know, because identifying which of your employees is providing the results is a hard problem. In practice it often devolves into people spending at least as much time marketing themselves to management as they do actually being productive, and optimizes for people who are good at that marketing being in high positions instead of people who are most productive. The larger the company the more pronounced this issue is, which is why so many large companies aren’t kicked out of the market despite their lack of ability/willingness to pay according to results.
- coffeeblack 4y ago
  That doesn’t matter either. If you have an average employee who complains a lot and he may leave, but that would be a hassle for you, then it makes sense to pay him a bit more so he shuts up and you don’t have to look for a new person. Otoh, if your underpaid star developer sits quietly in his corner and all you have to do is to pat him on the back once in a while to keep him happy, why would you pay him more?
danbruc 4y ago
That is why I mentioned incentives. To make it more precise, assuming everyone works to the best of their abilities, people should be compensated in proportion to the time they work, not the output of their work.
- helge9210 4y ago
  > should be compensated in proportion to the time This assumption doesn't always hold. Employee and employer might agree to share the value created which is not always a function of time spent working.
  - danbruc 4y ago
    Can you give an example? I don't think this is impossible, but I can not immediately think of an example. And this probably heavily depends on what you mean with value created.
    - helge9210 4y ago
      Example of compensation not tied to a time spent: a company might pay someone to do nothing, so this someone doesn't do something for a competitor. Value sharing is a basic framework for compensation negotiation. Employee wants to get all the value derived from own contribution. Employer wants to pay absolute minimum employee is willing to accept. Paying more than derived value doesn't make economic sense, so compromise will be somewhere within this range. If acceptable minimum is below the derived value, compromise is impossible. Time spent working is a free variable in all this.
greysphere 4y ago
I mean, the market clearly favors the former...

NineStarPoint 4y ago

It’s complicated to know, because identifying which of your employees is providing the results is a hard problem. In practice it often devolves into people spending at least as much time marketing themselves to management as they do actually being productive, and optimizes for people who are good at that marketing being in high positions instead of people who are most productive. The larger the company the more pronounced this issue is, which is why so many large companies aren’t kicked out of the market despite their lack of ability/willingness to pay according to results.

coffeeblack 4y ago
That doesn’t matter either. If you have an average employee who complains a lot and he may leave, but that would be a hassle for you, then it makes sense to pay him a bit more so he shuts up and you don’t have to look for a new person. Otoh, if your underpaid star developer sits quietly in his corner and all you have to do is to pat him on the back once in a while to keep him happy, why would you pay him more?

danbruc 4y ago

That is why I mentioned incentives. To make it more precise, assuming everyone works to the best of their abilities, people should be compensated in proportion to the time they work, not the output of their work.

helge9210 4y ago
> should be compensated in proportion to the time This assumption doesn't always hold. Employee and employer might agree to share the value created which is not always a function of time spent working.
- danbruc 4y ago
  Can you give an example? I don't think this is impossible, but I can not immediately think of an example. And this probably heavily depends on what you mean with value created.
  - helge9210 4y ago
    Example of compensation not tied to a time spent: a company might pay someone to do nothing, so this someone doesn't do something for a competitor. Value sharing is a basic framework for compensation negotiation. Employee wants to get all the value derived from own contribution. Employer wants to pay absolute minimum employee is willing to accept. Paying more than derived value doesn't make economic sense, so compromise will be somewhere within this range. If acceptable minimum is below the derived value, compromise is impossible. Time spent working is a free variable in all this.

greysphere 4y ago

I mean, the market clearly favors the former...