Results-Based, Contractual Workplace (RBCW)

The Employee Model

Why should you be nervous at an interview and not the person interviewing you? Come to think of it, why aren’t you interviewing the company instead? The employer holds all the cards. Like feudal lords, they decide whether or not they want the hired hand, the hand opened and extended before them in humble supplication. In a small window of opportunity, the applicant has to show himself pleasant, professional, brilliant, tactful, etc. And this is just the interview process. If the person is hired, he becomes properly indebted, indentured even. After all, he continues to be employed solely by the good graces of his master. Therefore the employee must be on his best behavior, especially when his manager is watching.

Many companies operate on the assumption that, if you are salaried, they own the productive dimension of your being. If you create something on “your own time” it belongs to the company because “your own time” is the company’s time. You are not an hourly laborer of course (which itself is a ridiculous idea for most jobs, which rewards working more slowly by definition). No, you are salaried, a company man or woman. And the company appreciates all that you do. It therefore makes ample provision for your sleep, for your family emergencies, and even for your weekend rest. You are offered a generous salary and paid vacation. Now you belong to the company, and you do not need to worry because the company takes care of its own. While many may prefer such an arrangement, it cannot be ideal for the dignity of the worker. In fact, it cannot be ideal for the success of the company either. Companies would do better to pay solely for the work that is done.

A Thought-Experiment

What if the situation were reversed and the employee held all the cards? Or even better, what if both parties held the cards such that two equal and opposite “upper hands” could come together in a firm handshake?

Let’s create an artificial and simplistic example to tease this out. Suppose I have a company that sells science textbooks. I could hire a bunch of scientists and writers and put them on salary while they chip away at the project. Or, I could tell Professor Y, a remarkable scientific writer, that I will pay her $10,000 for the first two chapters. We would have to agree on terms like delivering it to me in 3 months and other qualitative conditions. Once we agree on the deliverable, Professor Y is free to tackle her task however she would like. She can work insanely hard for 3 weeks and then take a two month vacation. She could hire two students to do the grunt work at $1,000 each and only spend 2 hours a day moderating their work over the next 3 months. The point is, I’m not paying her for her time (hourly compensation). I’m not taking her in as “my employee” (salaried compensation). I’m paying for specific results, and I do not care how she produces them so long as they satisfy the conditions I set (results-based, contractual compensation).

When a company is paying for results, they are not graciously providing sustenance to their indentured servant. They are exchanging value for value with another “company”, even if that company is just one person. The two parties come to the table and see if they can agree on terms. “I will give you X if you give me Y.” If they agree, they enter into partnership rather than employeeship.

Challenges in Implementation

Challenge 1 - Assessing Results

One challenge with this Results-Based, Contractual Workplace is that it requires a way for the requestor to assess the results, as compared to the traditional employer who merely assesses effort. Any manager can check if his employees are sitting at their desk from 9-5. When I see my employees working all day, I am at peace, even if one employee finishes a project in 3 months that another could do in 2 weeks. After all, I have taken them all in as “my employees.” I never think that this is equivalent to receiving a quote from one contractor that is 4-6 times higher than another contractor (even factoring in salary differences!). I simply challenge my employees to do the best they can.

On the other hand, if I contract the work, I need to be able to assess the results because I cannot measure the effort they put in. Suppose Professor Y subcontracted the work entirely and it is full of mistakes. Suppose she procrastinated terribly and stringed something together in the eleventh hour. If I just blindly accept her work without thorough assessment, my company would crash and burn. At least if she was in the office, I would know that she was working on it everyday. I need a way to verify that her output is good even if I cannot see her effort.

This challenge is real but not insurmountable. There are a couple of ordinary mechanisms for addressing it. The primary way is relying on reputation. If Professor Y does great work, she should have exceptional references from other companies. Or websites like upwork have built-in mechanisms for establishing a reputation. Reputation is powerful for three reasons. (1) Patterns of behavior over a sufficiently long period of time are good predictors of future behavior (character). (2) People who are well-regarded by their clients, typically care about continuing to be well-regarded (temperament). (3) The long-term cost of losing one’s reputation outweighs the temporary advantage of shortchanging the customer (strategy). A second mechanism for ensuring quality is to hire an independent reviewer, agreeable to both parties. This makes it possible to take a chance with a contractor that has less experience, so long as the independent reviewer has a stellar reputation. The reviewer acts somewhat like a clearing house in the financial world.

Challenge 2 - Building a Team, Organizational Culture

It is easy to imagine that if every form of work was contracted, there would be no team spirit and no stable body of people to create an organizational culture. Such a concern is sensible, but it presumes that the contracts are sporadic and arbitrary. Instead, imagine if the 10 senior executives of a corporation were results-based contractors. The CEO is compensated for results set by the board. (In fact, many companies already do this, but in order to keep the semblance of employeeship, they set a $1/year salary and provide the real compensation through results-based bonuses.) Suppose the CEO extends the same paradigm of dignified responsibility to the other executives. There is no intrinsic reason for why genuine team spirit and trust-based relationships cannot develop. The only difference is that compensation fluctuates based on results.

Challenge 3 - Humanism

When a company hires employees, it takes significant responsibility for their well-being. In fact, if company did not provide a just and steady wage, retirement funds, adequate healthcare, or a comfortable work place, it would be considered inhumane. Isn’t this the case with a company that only engages people contractually? It takes no responsibility for their well-being whatsoever, even as these people labor away for the company’s mission. Moreover, if a person temporarily becomes less productive due to health, family obligations, or other human realities, an employer patiently bears with this, but a results-based contract penalizes him. This would be the second argument for the lack of humanism in results-based, contractual work.

The first argument is easily addressed by the math. Whatever costs the company incurs by an employee’s healthcare and retirement funds are now freed up to be applied to contracts. If my employer spends $20,000 on me apart from my wage, they can offer me $20,000 extra in cash as a contractor, which I could split across my healthcare, savings, and whatever else in the manner I deem best.

The second argument requires more thought. Suppose Jim was a high-achiever for the last five years, but he is now preoccupied with his sick child. Let us first carefully observe how this would play out in the employment model. When Jim explains his situation, the company and his coworkers would be very understanding and sympathetic, as Jim does his best to keep up. They would take some of his workload upon themselves and do whatever they can to help, without reducing his salary. However, this cannot go on forever. Gradually, the others will become frustrated at their own workload and ask their manager for a solution. The solution will be evident to all. Jim will have to be ‘let go.’ Jim will then lose all his security (income and healthcare) at a time when he needs it the most.

Results-based compensation is much more humane than this, while not pretending to be utopian. During the five years that Jim was a high achiever, he would have earned a significant income, proportionate to his results (and not limited by a sluggishly increasing annual salary). When his child becomes ill, his productive output decreases. However, he does not need to be fired. He simply receives less compensation during this time. He is free to work precisely as much as his family commitments will allow. Unlike a remote employee, he does not need to pretend to be working the same amount as others, and he does not need to feel guilty. He can work half as much as he used to and receive half the pay justly. Meanwhile, his family embraces simpler living for a time and supplements their income with the savings of the previous 5 years.

This elastic compensation is much more humane because it flexibly adapts to the exigencies of real, human life. It does not expect that human life should conform itself to the contours of being a company man or woman; it is distinct from employeeship where your only options are to take it or leave it.

Challenge 4 - Assessing Cost

As a traditional employer, you do not often need to think about cost. The salaries are already budgeted for the year. During the year, you simply motivate your employees to work as industriously as possible. As someone negotiating contracts, however, you need to know how much to charge for a given task. This is where the market comes in handy. Instead of just approaching Professor Y, you check with Professor X and Z as well. You ask them what they can offer in terms of quality and cost and this specifies the range of reasonable prices. It’s more or less as simple as driving around and looking at gas prices before deciding where to fill your tank.

There are certainly other challenges, but addressing these four seems sufficient to begin seriously exploring such a model. The next step is simply experimentation!

vs. ROWE

Two employees at BestBuy developed a model called ROWE (Results-Only Work Environment) in the early 2000s.¹ Here, some work is assigned, and the employee is given total freedom to decide when and where they want to do it. The free and autonomous employee is then only held accountable for the results. This model shows us that there is a growing interest in the autonomy of the worker both for the benefit of the worker and of the company. However, a key difference from what we are proposing is that the ROWE worker remains an employee with a fixed income, and in this sense, the ROWE worker is not autonomous enough. Moreover, ROWE can only reward productive behavior with more free time, which may not be what a worker is interested in. The Results-Based, Contractual Workplace rewards productive behavior with greater pay for more work (value for value) or with the opportunity to pursue more work elsewhere simultaneously. It allows the individual worker to scale up without any ceiling to his/her success, by hiring subcontractors and creating a distinct brand quality. This multiplication effect is only possible because, unlike an individual employee, the burgeoning contractor can “work” much more than 24 man-hours per day. A ROWE employee can never scale up in that way.

1. https://www.business.com/articles/do-results-only-workplaces-really-work/; https://www.forbes.com/sites/cherylrobinson/2025/02/22/the-future-of-workplace-success-focuses-on-results-achieved-not-hours-worked/ ↩