Yeah, it’s a trick question.
A $100,000 website, like any variable-price good, costs whatever someone is willing to pay for it. I’ve built such websites and some carried a price tag many times that, while others cost a tenth of that or less. The massive variation in price is something that’s always bothered me, but an article this week in Harvard Business Review helped shine a light on what I’d been missing.
Diane Mulcahy, author of The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want poses a great question in Harvard Business Review: Will the gig economy make the office obsolete? She lays out a compelling argument that companies should ditch their offices and go remote. Supporting this are plenty of studies that indicate employees are more productive (and happier) working remotely. By contrast, there is essentially zero evidence supporting the traditional asses-in-seats model.
If the traditional office is “the death of the workday by a thousand paper cuts of interruptions and meetings,” as Mulcahy describes it, then why does it still persist? One reason she posits is that higher-ups like it that way. “[M]anagers enjoy working at a company in which employees are managed by time and place. After all, it’s pretty easy to see who is at their desk between 9 and 5,” she writes.
Obviously what we’re envisioning here aren’t the lean startups and small enterprises that fill most coworking seats or low-overhead offices. The only companies frittering away hundreds of thousands of dollars a year on ill-advised office space are ones with the money to do so.
Which brings me back to the $100,000 website question. The only companies paying that much, or five times that much, are the ones who can afford to. End of story, right? Except, like Mulcahy, I suspect there’s an underlying reason for this steadfast dedication to wastefulness, one that won’t be revealed by studies for a while to come.
It looks like this. Last year I had a brief freelancing stint that required me to be at the office. I was hired to build a site for a client and, as the sole developer, I did. Bit it was kind of ridiculous to be at the office for it: like, why are they paying me to sit around in meetings when I could be at home actually getting something done?As for everyone else in the office, it’s hard to say — I have no clue what they did, and probably vice versa. All I know was that I was paid handsomely for that site, and the long breaks I took, and other time-wasting bullshittery, as were those dozens of employees. And perhaps also the team overseeing the project who actually work at the client’s company, etc.
Back at home after work, I was on my personal email with a different client. This one was just as established as the prior one, but happened to be contracting with me directly. No agencies, no dozens of people. No overhead! On the downside, I was alone in managing the back-and-forth communication, the mockups and design revisions, all the myriad things that go into a project of this size. And on the downside for the client, they had to have a backup plan in the event that I, a lowly freelancer, died or quit before it was done. But the end result was a website equal in sophistication to the one I’d just built for that other client. It took only two weeks’ labor and cost a very slender fraction of what that other client had spent. That’s two weeks’ labor from just one person — not a month with dozens and dozens on the payroll.
Because I was being paid on a project basis, and not by the hour, I was incentivized to work more efficiently and was rewarded with a much larger piece of the pie. It’s a big win for me, but it is for the client as well because they got a better product that was much more affordable and delivered very quickly. Because I truly owned the project, I took pains to make it a better, more performant, more user friendly site. I really put my back into it because I had to — this wasn’t some cozy corporate job, it was my personal reputation on the line.
Legions of independent developers are intimately aware of this win-win scenario. But few large companies bother to take advantage of it.
Though there are better ways for large companies to operate, change is slow. As Mulcahy sees it, it may be the managers who are holding up progress. “Managers will have to work a lot harder under a system that focuses on tracking performance instead of time in an office chair.” Asses-in-seats management is just easier.
But there’s a way to understand this without painting managers as bone idle. It’s that managers — business leaders, supposedly — are dis-incentivized to rock the boat. Rewriting business rules is something you do only when necessary. Rolling out a plan that hasn’t been done to death is dangerous, and it’ll be their head if it doesn’t work out. Why put your ass on the line when you don’t have to pass Go to collect your paycheck?
By corporate logic, throwing money away is totally fine as long as that’s how it’s always been done. And the status quo trundles on.
“Labor is the most expensive and valuable resource at most firms,” Mulcahy writes. “Managing this resource by time and place is a crude, empirically unproven, inefficient, and costly approach.” There are better ways for major companies to approach labor, but the people who make those decisions aren’t incentivized to adopt them. Going remote saves money. It also has the added bonus of keeping your employees happy. Contracting out to freelance firms saves money. It also has the added bonus of getting you specialized talent that’s not on your bloated payroll.
Whether your company is a bootstrapped startup or a household name, in the end some random person like me is building your products, and I’m telling you flat-out that just because you’re paying a big team a lot of money doesn’t mean you’re getting a better product. Bad UX, questionable third party resources, insecure and nonstandard code — paying top dollar doesn’t save you from these things. According to Mulcahy, “The biggest lessons that companies can learn from the gig economy are to separate work from the office, and to measure employees based on what they produce, deliver and solve, not the hours they spend.” Likewise, the metric by which you’ll know you’ve hired the right people is something you’re going to have to work to figure out. But here’s a hint: it’s not how much you spend.
Originally published at newworker.co on March 20, 2017.