Book review: The Sin of Wages, by William B. Abernathy

I was recommended and lent "The Sin of Wages" a few weeks ago. That was an interesting read ;-) The book, particularly the beginning, contains a lot of interesting ideas that challenge the way we currently look at wages and the negative effects of the traditional pay system -- "if you pay for time, you get time ; if you pay for results, you get results." Lots of ideas that make sense in the way pay should better reflect the reality of the business and its profit margin, ups and downs, and how if all employees' incentives were better aligned with business results/profit, employees would be better motivated to increase profit and perform activities relevant to the business.

Although I like the general idea, I found myself getting sceptical about the implementation. It all seems based on the idea that we can accurately measure individual performance and efforts, and how it correlates with the bottom line. As the book went on I found it more and more difficult to understand how that would apply to the reality of a software job. Ideas? It seems easier to map "individual output -> profit" for say manufacturing or a role where you must handle a number of similar requests or produce clearly defined items.

Employee results would be then compared to a previously established "Performance Scorecard" (with a reference to 2 other books from the same author on how to create an effective one, guess that's where I should look for implementation huh...) to calculate how much they should earn based on their results, the idea being that base pay (bare minimum) would be 15% below market rate and that by meeting their goals employees could earn up to 30 to 60% above market, depending on how the company sets up the system. Nice idea for top performers, but again, how and what do you measure in a software job? The example performance card for a salesperson contain both short term and long term goals, such as "customer satisfaction" as measured by surveys. I wonder how many customers would take the time to do that every time.

There are other nuggets of good ideas amongst the first few chapters, such as describing results rather than activities in a job description: how can someone improve a process if they don't know what it's for?

Gripes I had with the book: whenever the author disagrees with something in the traditional pay system, he makes a comparison with Marxism or communism in a strange attempt to evilise it (I think. It felt out of place.) Also, at the end of an early chapter (on page 92) he summarily dismisses any study that could prove his system wrong, in one single sentence -- and a short one at that:

Unfortunately, all the studies appear to contain problems in their methods and findings.

This is dishonest.

The system is called "Total Performance System" and is abbreviated as TPS in the last few chapters. I find myself wondering if this is where the Office Space movie got the TPS reports from!