Selling Productivity By The Hour Versus Selling Results

“I want to know what to do if an employer increases your work time or load and continues to pay the same hourly rate for your additional time worked? Should you still try to limit your employment work to 40 hours?”

You’ve asked three related questions in the context of a fixed hourly rate. That is, three questions based on supplying resources by the hour:

1. “…if an employer increases your work time” (Applying more “productivity” resources, using per hour measurement for the resource.)

2. “…increases your work…load” (Requiring the resource to do more. That is, to be more efficient.)

3. “try to limit…to 40 hours” (Limiting – fixing – the supply of resources at 40 per week, using per hour measurement for the supply of the resource.)

First, I’ll lay out the applicable concepts. Then I’ll put the concepts to work within the “Selling Productivity” paradigm, below. Then, I’ll offer the “Selling Results” paradigm, further below:

Concept One

All work is a balance of three factors: scope (type and amount of work), time (to complete, usually measured in units of time), and resources (Manpower, Money, Machines, Methods, Material). “Manpower” is usually measured in “man-hours,” “man-months,” “man-years,” or some similar time-related application of the resource, such as 40 hours per week.

We model these three factors as an Equilateral Triangle (the factors being the three apexes), because that model clearly makes the point that if one factor changes, one or both of the other factors must change. For example, if the scope changes, then either or both of the time or resource factors must be adjusted.

Let’s call this the Work Model.

Concept Two

You have an employment bargain, wherein you are supplying products and/or services for compensation, to a customer. That is, you are a service provider working for a customer, and getting paid to do so. Your bargain is a contract between two parties (service provider – you, and your customer; in this case, your employer), whether or not it is formally or informally documented, and whether or not it is fully explicitly defined and documented; it is a willful contract freely entered by both parties.

Concept Three

You own your career, of which this current employment bargain is only one part. Think of your current bargain as an agreement with one of several customers. Put all of your extant bargains together, add in your calling, and that is your career. Because you own your career, it is up to you to manage its component parts, such as each employment bargain; and quality improvement of whatever product/service you are supplying.

Concept Four

We may supply many things to our customers in return for compensation, but those things usually fall into one of two categories: time and results.

When we are paid by the hour (or week/month/year), we are supplying our time in exchange for compensation; and that customer is demanding our time.

When we are on commission or contingency, we are supplying results; and that customer is demanding results. When we are supplying a tangible product, we are supplying the results provided by that product; and that customer is demanding those results.

However, most time-based employment bargains imply results. That is, results are “expected,” but we are compensated for time. This dichotomy, and an associated misunderstanding of the basis of the bargain, is at the root of many failed employment bargains.

Selling Productivity

“…if an employer increases…time or load”

(Note that “load” is on a resource, not on the overall work.)

Your customer (i.e., your employer) is requiring more units of time from you, the resource. That is, the employer is demanding more of the resource. “Or,” more efficient resources (increased load per resource) from you, or both, at your current agreed-upon hourly rate. In other words, in the first instance, your customer is assuming the risk of completing the work (scope, time, resources) by demanding and buying additional resources at your hourly rate. In the second instance, the customer wants you to assume the risk of completing more scope by demanding that you be more efficient: take on more load.

Also remember, that you are supplying resources (yourself) measured in units of time; specifically, by the hour. You are not supplying results as a primary deliverable. It’s assumed that results come from time. This means that your employer is assuming the risk of delivering results, rather than yourself assuming that risk.

Your Choice

You always control how much you supply. (Because otherwise, we would have slavery; and we don’t.) The risk of deciding and implementing how much you supply is “on you.” Your customers may only demand for more or less. It is up to you whether you do or do not supply resources to meet that stated demand.

Your Customer’s Choice

Your customer has a business problem to solve, and will procure the resources required to solve that problem. The fact that you may not wish to meet the customer’s demand, does not make that demand go away. It only means that if you have decided that you are a lessor (or limited) part of the customer’s solution, and the customer cannot rely on you for the resources beyond your limited supply. If that customer cannot procure the required resources from you, and assuming the customer wishes to succeed, then the customer will procure the resources elsewhere.

Call it: The Customer’s Choice.

You Can Run (Limit Supply), But you Cannot Hide (Find Fixed Demand)

In the 1960’s, America’s economy was expanding and demand for resources was high. Essentially, it was a “sellers’ market.” Now, the market has reversed.

So if you do not wish to supply more of your product – productivity by the hour, then you will have to find customers that will accept your unilateral limiting of the supply. But caveat emptor: customers continue to be squeezed to “do more with less.” Meaning that they have to run faster, jump higher, and get better results. Few will have any patience with service/product suppliers that try to limit their supply of necessary resources.

So where’s the salvation?

Selling Results

Note that your customer is attempting to accomplish more of the overall Work Model. That is, increase aggregate results. Also note that because of the three factors in the model, there are lots of ways to “skin that cat.”

Also note that your employment bargain problem is your desire to limit your time to 40 hours per week. (This is assumed to be your objective, based on your original question.) The only reasonable method to resolving this problem within any employment bargain is to base that bargain not on supplying (i.e., contributing) time, but on supplying (i.e., contributing) results.

That is, change your “contribution” from time – hours, to results – valued accomplishments.

Selling results (i.e., supplying accomplishment in return for compensation) makes time spent irrelevant to your employment bargain. Buying results (i.e., compensating in return for the supply of accomplishments) makes your time spent irrelevant to your customers. Further, selling results leaves efficiency – “load” wholly up to you, the service provider. Buying results removes the risk of resource efficiency from the shoulders of the customer. Significant changes in demand for results are easier to negotiate than are demands or additional hours based on a pre-established fixed hourly rate. For example, if you negotiate the re-roofing of your customer’s house at $35 per hour, and then because of events, find that it will require more hours than you wish to spend on the job, it will be difficult to renegotiate a higher rate, say…$40 per hour with the customer. The customer will probably take his/her business to your competitor.

When a service provider sells results, the customer’s overall problem is simplified. Demand has been increasing significantly for this business model. (E.g., outsourcing, “firm, fixed price,” etc.) A good example of this is your subscription to GaryNorth.com: you are not buying Dr. North’s hours; you’re buying his results.

Should you negotiate an employment bargain based on results, and results only, then it’s wholly up to you whether or not your 40 hour problem goes away. Just ask any effective sales type for validation of this opinion.

Putting this into a prior analogy, if you negotiate the re-roofing of your customer’s house for a firm, fixed price, and then because of events, find that it will require more hours than you wish to spend on the job, it is incumbent upon you to get efficient, or take a loss of additional hours. If the customer adds more work, after the fact, it will be easy to renegotiate an additional fee with the customer to cover the added “scope.” Should the customer “get additional bids,” you will get the job if your deal is a better deal; that is, you provide better product and/or service, for the price asked. If you don’t, then you won’t.

Choices and Consequences

If you really want to limit the hours you apply to any employment bargain, and retain the customer, then you need to establish results as the basis of the bargain. That is, your contribution will be measured in terms of results you contributed, not time spent on the job. This shifts risk of results from your customer to you, as a consequence of that bargain. You will be compensated for results, not time spent.

Should you base your employment bargain on time spent, and limit your supply of productive hours so that you do not meet your customer’s demand, then your customer will have no reasonable choice other than to obtain productive hours from someone else. Assuming all things being equal, given the choice between the refusal of a supplier to meet demand, and finding another supplier, it is an easy choice to find that other supplier.

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