Friday, September 28, 2012

Getting Off the Clock

The whining about the financial deal that ended the NFL referee’s lock out has begun.  I am reading comments from friends and strangers complaining about what they believe to be exorbitant pay and benefits for part-time workers with the NFL.  They see this settlement as representative of everything that is wrong with America.  Some even think that the referees believe they are victims, looking for free food, free housing and free health care from the NFL, their corporate benefactor.  Those refs are dependent on the league, they say, and it’s unhealthy.  Sound familiar?

My friends and those faceless strangers have it exactly backwards.  The referee deal represents what is great about America and the marketplace.  People are finally being compensated for the skill they bring to an organization instead of time they spend at work.  Isn’t that what we want in a meritocracy?

The question should not be about dollars and hours.  The question should be about value. 
Over the 8 years of the deal, salaries for the part time referees will rise from today’s average of $150,000 to $200,000.  Not bad for guys that go to work dressed like Foot Locker sales associates.  There were other issues, some financial (like the phase out of the existing pension plan), some job security related (fight against a bench of referees being hired to threaten the jobs of existing referees).  There is no debate that $150-$200k per year is a lot of money, whether earned in a day or a year.  

There is also no debate that NFL referees have a unique skill set, and one that cannot be duplicated by temporary fill-ins without causing damage to the league’s brand.  What’s that worth?  Apparently, between $150-$200k per year per person.

If you don’t think that being a referee at the NFL level is a specialized skill, ask someone in Green bay their opinion.

Stop thinking in terms of hours.  Think in terms of value.

Trading time for dollars is so 20th century.  The idea of hourly pay was cemented in our consciousness with the passage of the Fair Labor Standards Act in 1937.  In olden days, compensation was more often tied to piece work.  Workers were paid for results of their labors.  More efficiency, more productivity translated to more compensation for labor.  The guy that could harvest the most wheat made the most money, regardless of how many hours he spent in the fields.

The FLSA has been updated sparingly these past 80 years.  It was written for an industrial workforce, a workforce teeming with manual laborers.  It was written to stem the abuses of 19th century job creators and it largely changed the relationship between corporations and labor, but more importantly, it elevated the time clock to a position of power as yet unseen at that time.  The 40 hour workweek became sacrosanct.

The problem is that hours have lost their relevance in measuring much of the work that is done these days.

In the 21st century, how many white collar professionals in our knowledge economy are constrained by the traditional 40 hour work week?  Most everyone I know can log into their office computers to catch up on work over the weekend.   Most everyone I know gets calls or emails or texts from the office at any hour of any day, including over vacations.  The concept of work-life balance, so chic in the late 20th century, is now more accurately called work-life integration.  The line between work and personal life is blurred beyond recognition.  Who can punch a clock every time life stops and work begins anymore? 

So let’s stop.  Let’s stop punching the clock.  Let’s compensate for value.  Those that accomplish more and offer more value will be paid more and their effective hourly rate will be higher. 

So look at the refs a little differently.  They provide a value to the NFL that equals their pay and benefits package.  They offer a unique skill set that is not available in the general marketplace.  As we are all now painfully aware, especially in working class Green Bay, that skill set comes at a price and it cannot be reduced to an hourly pay rate. 

But as an HR person, I say, let’s go the next step with our thinking.  Let’s strip the FLSA down to a streamlined 21st century model.  Here’s my modest proposal:

Repeal the present day notion of exempt and nonexempt workers and draw the dividing line between the two with an annualized rate of pay.

If you make an annualized rate of pay over $50,000, you may automatically be considered a salaried employee, or exempt from hourly regulations as defined in the FLSA.   Everyone under $50,000 in annualized pay must be compensated by the hour and subject to FLSA restrictions.   The baseline number can rise with inflation.

This accomplishes a few things:
  • First, reduces lawsuits for wage and hour violations dramatically.  
  • Second, it finally recognizes that the 40 hour work week for the modern worker is a fallacy given the technological advances. 
  • Third, it reduces regulatory compliance costs for HR folks like myself who spend far too much time analyzing FLSA administrative, sales, computer professional, etc. exemptions.  (I’m tired to trying to figure out what constitutes ‘discretion and independent judgment’ in a job so we don’t get sued).  
  • Fourth, we stop wasting time arguing about compensable versus non-compensable time for things like travel, training, meetings, and the like.   
  • Fifth, the law has lost relevance in the 21st century and it costs more than it returns in value. 
NFL referees are being demonized as making too much money for the hours they put in at the office.  The question should not be, “how long do they work?” – it should be “how well did they work?”  At least for this week, NFL fans think they are worth every dime.

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