Amateurs run businesses by tracking the number of hours their staff works or the time they arrive and depart to determine how hard their team is working. The quantity of hours worked does not necessarily reflect how productive they (or you) are.

Rahul, a former student of mine, had invited me to drop over and see how his startup was doing. Actually, the term “startup” would be misleading because Rahul had created a fantastic business with hundreds of people and over $50 million in yearly revenue.

Although supper was on the agenda, Rahul invited me over in the afternoon so I could observe some of his staff meetings, watch product demonstrations, gawk at the furnishings and the café, and get a sense of the business.

I enquired about the corporate culture and the process of going from a startup to a firm before we departed for supper. We discussed his methods for onboarding new workers, managing scale by creating operations manuals for each job function, and advertising the company’s and a department’s mission and goals (he recalled reading my blog post). Everything was impressive—until we brought up how hard his employees worked.

His reply, “Our team knows this isn’t a 9 to 5 company,” made me realise how stupid I had been for the majority of my career. We remain as long as necessary to complete the task. He said, “Most days when I leave at 7 p.m., my employees are still hard at work. I suppose he mistook my expression for admiration. They remain up till the wee hours, and we frequently hold staff meetings on Saturdays.

I cringed. Not because he was dumb but because for most of my career I was equally clueless about what was really happening. I had required the same pointless effort from my teams.

Our dinner was scheduled for 7:15 p.m. around the corner so we headed out at 7 p.m., announcing to his staff he was off to dinner. As soon as we got outside his building I asked Rahul if he could call the restaurant and tell them we were going to be late. I said, “Let’s just wait across the street from your company’s parking lot and watch the front door. I want to show you something I painfully learned way too late in my career.” He knew me well enough to patiently stand there. At 7:05, nothing happened. “What am I supposed to be seeing?” he asked. “Just wait,” I replied, hoping I was right. At 7:10 still no movement at the front door. By now he was getting annoyed and just as he was about to say, “let’s go to dinner” the front door of the company opened — and a first trickle of employees left. I asked, “Are these your VPs and senior managers?” He nodded looking surprised and kept watching. Then after another 10-minute pause, a stream of employees poured out of the building like ants emptying the nest. Rahul’s jaw dropped and then tightened. Within a half-hour the parking lot was empty.

There wasn’t much conversation as we walked to dinner. After a few drinks he asked, “What the heck just happened?”

21ST-CENTURY WORK VS. 20TH-CENTURY NORMS

In the 20th century, we calculated the amount of work completed based on the hours each employee clocked. On an assembly line, each worker performed the identical task, so productivity was equal to the number of hours worked. Utilising time cards to track attendance, workers demonstrated that they were present at work.

Even as white collar (non-hourly) jobs proliferated, men (and the majority of workforce management was men) equated hours with output. This was perpetuated by managers and CEOs who had no other norms and never considered that managing this way was actually less effective than the alternatives.

I pointed out to Rahul that what he was watching was that his entire company had bought into the “culture of working late” — but not because they had work to do, or it was making them more competitive or generating more revenue, but because the CEO said it was what mattered. Every evening the VPs were waiting for the CEO to leave and then when the VPs left everyone else would go home. Long hours don’t necessarily mean success. There are times when all-nighters are necessary (early days of a startup, on a project deadline) but good management is knowing when it is needed and when it is just theater.

Rahul’s response was one I expected, “This is what we did in investment banking at my first job in my 20s. And my boss rewarded me for my “hard work.” Sleeping at my desk was something to be proud of.”

I completely understood; I learned the same thing from my boss.

PRODUCTIVITY.

The rest of the dinner conversation revolved around, if not hours worked what should he be measuring, when is it appropriate to ask people to work late, burnout, and the true measures of productivity.

Be sure to define the output you want for the company, getting input from each department/division for this. Use Mission and Intent to create those definitions and the appropriate metrics for measuring them, then publish and communicate these widely. Provide immediate feedback for course correction.

Also define the output you want for each department. Define mission and intent for the department, and create the appropriate metrics for each employee to match mission. Arrange to measure and document output at appropriate intervals (daily, weekly, monthly, etc.). As with the company-wide exercise, publish and communicate the mission and intent widely, and provide immediate feedback for course correction.

As you do this, take care to ensure that the system does not create unintended consequences.