Business leaders come to their roles with a point of view on their employees. To borrow a framework first published over 80 years ago, leaders subscribe to one of two mental models:

  • Theory X -- which thinks of people as reluctant components of a business machine that creates customer demand and fills it; or
  • Theory Y -- that workers are people with values, dreams, families, and abilities that leaders can empower to achieve an inspiring mission.

I strongly disagree with Theory X and embrace Theory Y. Perhaps this is because I would find it excruciating to work in a Theory X environment where management measures everything I do and ladles out pay sparingly based on those outcomes.

Conversely, I am very happy to work in a Theory Y environment where leaders articulate and act on clear values, promote a mission which I embrace, and encourage me to take initiative to apply my abilities and ideas to realizing that mission.

Yet I acknowledge that there are successful CEOs who embrace each theory. Mark Zuckerberg recently suggested that Meta employees who are not willing to work hard should quit. Other successful business leaders -- Zoom Video CEO Eric Yuan comes to mind -- value the opposite: making their employees and customers happy.

This comes to mind in considering the rise of Worker Productivity Scores (WPS) -- the subject of a recent New York Times report. To understand WPS, consider this anecdote. A few years ago, a finance executive, Carol Kraemer, took a new job as senior vice president with a high hourly wage of $200. Her first paycheck fell way short of that amount.

That's because her employer used "extensive monitoring software on its all-remote workers [and] paid [employees] only for the minutes when the system detected active work," according to the Times. The software did not count her offline work -- such as "math problems on paper, reading printouts, thinking, and mentoring" the dozen people who reported to her. She left the job after nearly two years.

If you are a worker, I think you should run away from any employer that uses WPS. If you are a Theory Y business leader, you are highly unlikely to adopt them because you realize that they will repel your most talented people.

If you are Theory X leader, I probably can't change your mind. To be fair, if your company is currently using WPS, you are not alone. According to the Times, "Eight of the 10 largest private U.S. employers track the productivity metrics of individual workers, many in real time." Venture capitalist Jason Corsello said that investment in "performance management" software has increased eightfold in the last five years, noted the Times.

Nevertheless, I see two ways that WPS could make your company worse off.

1. It uses inaccurate information to rank and pay employees.

Many business leaders may be frustrated at their inability to evaluate the productivity of their workers --- but with such low unemployment rates, inaccurate process tracking systems could increase turnover.

Here is how WPS can judge workers inaccurately: UnitedHealthcare marked social workers as "idle" when they briefly stopped typing on their keyboards. The system labeled them derelict while they were engaged in "sensitive conversations with patients and visits to drug treatment facilities." Recently, the company started using this information to rank employees' digital engagement from 1 to 5 and pay them accordingly, reported the Times.

Unless they can afford high worker turnover, business leaders should not use such inaccurate information to pay and rank employees.

2. It encourages workers to game the system -- which wastes time and ultimately leads them to quit.

WPS that are inconsistent with workers' reason for being in the organization will drive them to game the system.

A case in point is Alina Health, which employed hospice chaplains who answered patients' deep, searching questions. A few months after the pandemic started, Alina required hospice chaplains to project daily productivity points -- e.g., a visit to the dying (1 point) or participating in a funeral (1.75).

Every night, Alina tracked whether hospice chaplains met their points quota. Heather Thonvold told the Times that she cheated the system to meet a daily target. If a patient was sleeping, "I could just talk to the nurse and say, 'Are there any concerns?' It counted as a visit because I laid eyes."

Two hospice chaplains -- Margo Richardson and Thonvold -- ultimately quit because "the metrics prevented them from fulfilling their calling." Meanwhile, Kraemer resigned from ESW, sued for unpaid wages, and settled for an undisclosed amount, reported the Times.

Business leaders willing to incur these costs to feel more in control of their workforce run the risk of losing their talented employees and the customers they aim to serve.