No, Salary Jobs Won’t Die

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I left a very good paying, very consistent salaried job to start out on my own.

Years of salary positions had driven me crazy, with a structure hell-bent on jamming hourly work into non-hourly pay. Efficiency was punished. Get a job done quickly, and you either:

(a) took on someone else’s work; or,

(b) Sat around and twiddled your thumbs until your butt could be safely removed from your seat without the boss noticing

And yet, despite my frustration and annoyance with the current system, I heavily disagree with Tim Denning’s latest attention grabbing summary of, “Salary jobs will eventually die.”

The Lincoln Electric Case Study

Back in when I was in business school, we spent a few classes discussing the unique manufacturing practices of Lincoln Electric. Rather than the hourly pay offered by most manufacturing businesses, they paid by each piece manufactured.

After reading articles (example here) and seeing video interviews with the employees who loved the system, there was only one conclusion: piece work rewarded efficiency rather than butt-in-seat mentality, so this was the way of the future.

Except…this conclusion never spread. It never caught on anywhere else. I don’t even think Lincoln Electric does it anymore.

What gives?

Turns out it was a lot more than the piece work pay that made Lincoln Electric successful. You had a well-loved owner who didn’t fire employees, guaranteed work during the slow times, who would reward efficiencies by never lowering pay, and who refused to take an extravagant salary or have a nice office.

It was a whole host of top down efforts that are hard to replicate.

And, even though the boss may not fire you, if your piece work wasn’t giving you the pay you wanted, you could leave. So it was a job that attracted the right kind of people.

For other companies to find the same success, they would have had to make huge efforts to change their reward structure…which doesn’t sound like a project the corporate world would ever take voluntarily.

Salary Work: Both Different and the Same

When I look at the Lincoln Electric example, I see an amazing example of a industry pioneer willing to simultaneously help his employees and be more efficient. And it was wildly successful for those who wanted to be involved.

Tim Denning’s idea of a salary-free workforce strikes me the same way. Autonomy? Pay by project? Working where I want?

Yes, please! Sign me up.

And with COVID and other labor market limiting issues, this kind of work might actually dig itself into a sizeable niche.

It won’t kill salaries, though.

Such a push would discourage being willing to take on a new task, since it’ll mean a significant cut in pay if you do.

Killing salaries would push away the risk averse, which may mean fewer women and fewer minorities, at least in the US.

Getting rid of salaries would likely push out those who are slower at their jobs, meaning fewer people willing to do them and having to raise prices to get them done. Which might be good for the remaining employees, but not so good for everyone else.

All these things could potentially be overcome, but it would take significant effort and motivation on the part of management. And unless those business who keep paying salaries are significantly punished in the marketplace for their decision, it’s going to be a lot easier to keep doing the same ol’ scheme, even if you lose a bit of efficiency.

Security is Huge

My mother-in-law is a smart, effective worker who would almost certainly excel in Denning’s system. Yet she believes the security and structure of working for a big corporation is the pinnacle of workplace experience.

I may not want the same thing, but I can’t really tell her she’s wrong for wanting a reliable paycheck and a strong bureaucracy ensuring any change will be as slow as possible.

We value different things.

Unless you can convince most of the workforce to stop valuing a steady, reliable job with a recurring paycheck as long as you do a minimum level of effort, salaries are going to be the dominate way to pay white collar workers for generations to come.

Is the salary not enough of an incentive to stop you from doing your own thing? Try my free, 6 day mini course on putting together your independent entrepreneurial venture. Sign up for it here!

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Tim Gordon

Tim Gordon

Accountant, Professor, Entrepreneur. Loving my household of struggles (seizures, anxiety, dysautonomia, autism, dysgraphia) while training a poodle service dog