Results-Only Work (ROWE)

I heard an interesting interview on CBC radio a couple of days ago — it was a discussion of ROWE, which stands for Results Only Work Environment: http://en.wikipedia.org/wiki/ROWE

In a nutshell, ROWE is attempting to break the concept of paying an hourly rate (or essentially paying for standard 9 – 5 work in a structured environment) and instead structuring the employment expectations around measured results. This concept aligns nicely with my current thinking on improving “employment toxicity” although it isn’t clear from what I’ve scanned so far as to how the actual contract is structured.

Here is an interesting article on it from a December 2006 Business Week article: http://www.businessweek.com/magazine/content/06_50/b4013001.htm

In my mind, a pure ROWE would engage the talent under a “payment for business outcome” contract that would have the talent essentially self-employed (as a contractor or free-agent) and the terms of the contract would stipulate the frequency/expectations of the business outcomes.

By way of example, if the outcome was infrequent (example of a marketing launch of a new product), this might be structured as a multiple month contract with specified milestones along the way, linked to interim payments. Upon successful launch — which clearly would have to be agreed up front by both parties as to what constitutes success and how it is measured — the contract would be completed and that free-agent might then turn their attention to another company requiring market launch expertise. Essentially, this looks like a general results-based consulting agreement. A quite different example might be someone who is working on outcomes that are everyday occurrences, such as ensuring an inventory count is made regularly and accurately. In this case, you might structure it as an expected business outcome 14 times per week (for instance, an opening & closing count each day) and have a weekly contract to cover it. Essentially you’re saying: “I need opening and closing inventory counts at these times with this level of accuracy. I’ll pay you x/week to provide those.”

What I do like about ROWE is that it forces the company (and the employees, in the case of Best Buy presented in the Fortune article) to start to formally articulate the business outcomes they need to run the business, rather than focus on (employee) measures not directly related to business outcomes. (Actually, I find it hard to believe that this approach isn’t the standard default approach to running a company — one would think that understanding your critical business outcomes and measuring them would be a fairly obvious and basic feature of business management.)

ROWE as described in the article seems to be more an overlay added to a standard employment agreement: “you still get paid 40 hours/week — now however we agree the outcomes we need and you deliver them however you are best able.” This to me suggests that while it is a big step in the right direction, we still have some room to go in terms of replacing standard employment agreements with true Results-based engagement contracts.

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