This is an open-sourced collaborative experiment to create a book. I’m not interested in money as much as a new form of storytelling. As many have said before me, the money will come if you do what you love and innovate. After writing the first chapter I’m curious as to who will write the second, the third and the fourth? Do books have any ending? Can they be remixed and rewritten to provide ongoing changing points of view? I say yes. If you decide to write it just give yourself credit and site your sources. And tie your theme back to the vision of the spirit of the book which is how companies can create productivity through flexibility. Storytelling as we’ve known it no longer really exists. Therefore it is time to usher in a new era. Many may reject this new form but many rejected the web, television, radio and the printing press when those ideas came to light. Happy reading and happy writing as we create a new method for framing research and narrative. No longer do we read books. We experience them by actually writing them together. - Geoffrey Colon

For Allison, Olive, Matilda and my late father Frank T. who taught me that thinking is never old fashioned.

The Input/Output Algorithm: Why flexibility is the new salary

Geoffrey Colon

Chapter 1: Flexibility is Job #1

After reading about 15 companies that provide concessions to drive innovation it reminds me why companies using outdated hiring models and lack of perks are the next to be disrupted from the business landscape. Even with a weak economy, younger workers are more likely to jump from job to job in order to find the right fit emotionally as they build their personal brand identity. Many companies have failed to adapt to this logic and is why most will be forced to offer additional perks or risk not being competitive in three to five years. CEOs who have stated for years they run the show need to understand that they should take the theorem that I am discussing closely much more seriously in order to build a more innovative and creative enterprise. Take in point a close associate of mine, just offered a job at a large media conglomerate given the following “perks” after offered a below average salary for the position. Her ask was that she be given more flexibility in the hope that with those concessions it would make up for the lower salary. “I just think in this day and age, work has changed and companies need to be more flexible in their offerings,” is what she told me in terms of why she asked for additional concessions. To her surprise the company stated the following:

1. No summer Fridays

2. No extra vacation time

3. No laptop to work from anywhere remotely

4. No extra benefits or extra salary if she didn’t accept there benefits package

5. No ability for promotion until 3 years at the company

6. No complimentary lunches periodically

7. No access to BYOD (Bring Your Own Device) even though the job is in a “creative field” where an iPhone or Android would be more worthwhile than a BlackBerry device.

8. No cultural enhancement initiatives (reimbursement for visits to museums, movies, etc. to stay relevant in the culture of influence)

In a world where innovation and creativity along with the human need for flexibility and being dynamic has taken precedence this company maybe has a shelf life of two to three years tops. Not two to three years in the sense of them going out of business entirely. But in the ability to attract the “best in class.” Why? Because a variety of Millenials who make up a majority of the workforce don’t want a job like this. It goes against their flexible and networking nature as part of “Generation C.” As a result, firms like this will only attract older personnel not so worried about perks. But will it? Many older members of the workforce between 35 and 50 say they want more free time and flexibility than salary according to a recent 2012 poll by Forbes Magazine. So who takes this gig? A twenty-something who will settle for the salary, look the other way about the lack of perks, stay one year to build their skill experience before moving on. In the end the firm probably thinks, “Well this is all we have and all we can afford for this position.” But is it? What does it cost a firm to give an extra week of vacation to a worker? $500 to $1000? What output would they get in return for that small input? Possibly triple or quadruple that figure? The input/output algorithm hasn’t been discussed by hiring agencies, talent recruiters or CEOs. But if the hiring practice was bundled into an algorithm like much of our society is becoming accustomed to, the facts lie that increased output, productivity, employee retention and company advocacy are generated with a flexible and free flowing input model on behalf of the employer more than one that is processed in a rigid low input in return for high output structure. Let’s look at the mathematical algorithm that shows why one would want to work more at a flexible startup environment that is more big idea than big brother and why established firms need to adapt this disruptive way of working in terms of company culture.

Let’s use a fictitious individual for sake of argument. There is an employee named Jonas. He’s 26 years old and has four years of experience working as a UX designer for a large company. The job is fine, the perks are OK, it’s just that Jonas is ready to make a leap after four years to a mid-tiered salaried position that will take him from earning $50K a year to $70K a year. His firm has no upward momentum at the moment and he’s looking for a change in scenery. He’s interviewed at two places. One is a startup where they can offer him $60K a year but also have given him benefits (worth $7K a year), unlimited vacation days (he just has to give 4 to 6 weeks notice when taking more than five days in succession so his projects can be covered), complimentary lunch every day (a value of $50 a week), work from home one day per week (again must register in the system which days that month he will work from home to do more creative) and the company allows him to use his own mobile device (though he must sign a waiver saying the company has a right to wipe clean his device at any time for security purposes).

The other offer is from a large corporation with $70K in salary with a benefits package ($7K a year) and two weeks of vacation ($2692 in value). But they’ve given zero flexibility in terms of any additional perks. He has no laptop, he can’t work from home (they have no cloud or remote system) and he is issued a BlackBerry (which is irrelevant in that he can check email but he wouldn’t be able to even test the UX he’s working on since they don’t offer him the option of using his device). Adding everything up the two packages is worth the following:

Startup Salary $60,000 + Benefits $7,000 + Vacation (average American takes two weeks of vacation so let’s say Jonas takes twice that or four weeks with this perk) $5076 + Complimentary Lunch $2400. The mobile device is worth convenience so it can’t be factored in similar to the work from home 4 days per month. So let’s do the math. Jonas’ salary at the startup even though it’s $10k less than the large corporation is actually worth $74,476.

Large corporation salary of $70,000 + $7,000 in benefits + $2692 in vacation time. The salary comes out to $69,692. In theory it’s worth less at $5216 more than the startup position.

The large corporation is surely the best place for Jonas to work at. After all, it has the quantifiable figure in that $70K is worth more than $60K. The large corporation probably thinks so and I’m sure Jonas would look at those numbers and choose the larger one. Since that is how we have quantified success or a better product ever since the dawn of numbers. But is it?

What about the underlying math? The qualitative value of each position? What dollar value, if any, can we give to the flexibility of input offered and output that will happen at both jobs? And is the larger corporation missing out on how to use this mathematical process when figuring out base salaries and additional concessions? Here’s where it gets tricky. The startup venture provides much more flexibility. Jonas can work from home not only one day per week, but also when necessary after-hours which allows him to schedule personal items during the workday when needed. He has a laptop and has access to his own device in which he can test his work and see competitive work in his field. It’s much more collaborative and innovative in this sense as his own device allows him to also stay connected to both workers and non-workers via social platforms. In the startup atmosphere the theory leans that greater flexible input given to an employee will lead to greater output in terms of productivity, creativity or innovation. If you run your operation based on how the mind works, you will get the best work. If you run your operation based on how humans have compartmentalized items into spreadsheets, workers will only work to hit the number they’ve been tasked with and no more.

Furthermore, based on the input of perks and morale building mechanisms the output can’t simply be measured in monetary productivity but allegiance. The startup has built an emotional connection beyond simply a dollar value with its higher flexible input algorithm. It feels it can build a more loyal employee base due to the fact it is providing flexible concessions as part of its input. In the large corporate environment the theory leans toward a low input/high output quotient. How little concessions can we provide that will maximize how many hours a person will put into make their value worth “x.” Thus treating people like simply hours in a spreadsheet, the flexibility input is heavily de-emphasized over making sure the work output of 40 hours are clocked in to justify the salary. The minimal perks are simply a standard holdover from the assembly line industrial unionized era the majority of American workers have become accustomed. Thus, instead of going to the doctor on a Saturday (which is near impossible in some places) or having to take that appointment and then work extra hours in the office at the less flexible job, Jonas can do that work from home. Flexibility isn’t so much a dollar value as a formula. This quotient comes from the standard relationship found in the efficiency formula. That is:

W out/W in x 100%

W out is the work done by the employee

W in is the enablement provided by the employer

So if Jonas works 50 hours per week because of the extra perks such as working from home or unlimited vacation and his hourly rate is a fixed $190 (based on his experience and job title) he’s earning the company $9500 for them having to provide a concession rate of $278 per week. For the input of giving Jonas flexibility and more mobility with less salary, the startup is gaining on average an efficiency rate of 3417%.

Let’s look at Jonas’ rate at the large corporation. He works strictly 40 hours per week because he has no flexibility and his company is only providing $186 weekly in concessions and his hourly rate is also a fixed $190 per hour so he’s earning the company $7600. Because they have less flexibility they have a higher efficiency rate of 4086%.

Large Corporation is still leading here too. I mean, why bother offering concessions? It makes really no sense to the company you’re all saying. They get great efficiency and productivity from their spreadsheet system. The universe pays to have a more rigid system. Right?

The efficiency rate may be higher for the large corporation but look at the earnings. They’re $1900 less per week as a result. And what about weeks due to fluidity Jonas works 60 hours a week at the startup while still only 40 at the large corporation? Before getting into a diatribe about work/life balance the whole point of the initial quest is to look at the input/output ratio. Not necessarily what organizations are more efficient. And when we look at what a company does in terms of input for concessions, the output is larger. Because Jonas has the ability to work more hours if he wants, he can bill more for the company. He doesn’t have to, but most likely he will because he can work on his own time a few days per month and has the ability to take vacation whenever he wants. The input/output ratio for the large corporation narrowly siloes Jonas into a 40 hour workweek. He can work longer hours too but who can be creative in an office environment when it’s silent and no one’s around? Who even works anymore chained to their desk? The efficiency rate may be higher at the large corporation but that does not necessarily lead to more creative or innovative output. Those are systems that can’t be necessarily measured 100% by the equation.

One other item that can’t be measured but we will try to look into is how to measure one’s flexibility leading to higher productivity which leads to more control and faster seniority. Millenials usually like the ability to write their own path toward a job that makes them feel as if they have the ability to change the world. But it’s very hard to change the world when you merely have 40 hours per week to do it as dictated by your employer. Plus it’s important to note that when one feels they have more power in a situation they’re more apt to stay longer in a scenario. When one feels more controlled, they are more apt to fight to loosen the chains. Dynamically flowing work environments are more fluid and adaptable to change. As a result it may be easier for people to come in and out of projects. In a more rigid system the job is defined by hours and without much fluidity. As a result a person who learns the system then leaves for other opportunities leaves a gaping hole that requires additional capital in terms of training a new employee. Instead of not allowing concessions, companies should figure how much it would take their company to increase the input portion of the equation in order to increase output as well as increase longevity and company allegiance. Millenials may jump from job to job like models changing outfits at a runway show but that may also be to find more fluid harmony and less of the helicopter authority their parents provided them while growing up. The rigid systems developed during the 60s/70s/80s of corporate expansion are not welcoming to them. The flexibility provided by the input/output ratio may be what they are seeking. This is something we will explore deeper in the next chapters.

Geoffrey Colon is VP of Social@Ogilvy and editor of Futurist Lab on Tumblr. This is his first and many others first “book.”

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