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Are Companies Ready for a 4-Day Workweek?

February 19, 2020
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In most industries, the “Monday to Friday” job has been standard for decades. But the way we work is changing. As companies strive to create environments that engage and inspire employees, many are experimenting with a shorter, four-day workweek.

Devotees of the model say it increases productivity, reduces burnout, and helps retain top talent. So how are companies making the transition in a way that boosts both employee satisfaction and business success?

Benefits and Drawbacks

While it’s been talked about for years, the four-day workweek is clearly having a moment. Today, companies as large as Microsoft and Shake Shack are experimenting with shorter schedules, garnering plenty of headlines. Proponents claim that the shorter workweek comes with a number of benefits, including:

  • Increased Productivity: It sounds counterintuitive, but a shorter workweek could actually help you get more done. Microsoft tested the four-day model with 2,300 workers and found that productivity increased by nearly 40%.
  • Work/Life Balance. Helping employees maintain work/life balance is a key part of retaining top talent. A New Zealand company trialed a 4-day workweek in 2018 and found that employees reported a 24% improvement in work/life balance. They also reported feeling less stressed and more energized.
  • Lower Overhead Costs: Less time in the office could mean lower overhead costs for your organization. One company saw a 20% reduction in their electric bill when they moved to a shorter workweek.
  • Less Commuting: With a four-day workweek, employees have to commute less — helping them save on gas, public transportation costs, and vehicle maintenance.

Between increased productivity and lower costs, there’s no denying the four-day workweek has its perks. But the model isn’t without challenges, especially when it comes to managing HR compliance for hourly staff. Will companies who opt to cut business hours also adjust employee wages? What’s more, federal law only requires overtime pay when nonexempt employees work over 40 hours per week. That means employees who might expect or depend on overtime pay might not be eligible for it moving forward.

“There could be concerns about how people are compensated,” said Dr. Ryan Lahti, Managing Principal at OrgLeader. “There could also be questions about how scheduling is done to ensure coverage,” he said.

There are also certain fields that don’t lend themselves to a shorter workweek. “Industries that depend heavily on shipping and receiving have found four-day workweeks challenging, especially when dealing with late orders and short deadlines,” said Lahti. Industries or departments that require real-time client service might also struggle to adapt to a shorter workweek.

Whether the four-day workweek is right for your company depends on your business, your goals, and how willing you are to make the organizational changes necessary to support it. 

Defining a ‘Shorter’ Workweek 

Depending on who you ask, a four-day workweek could mean a few different things. Lahti slices it in two different ways. “Does it mean the company is going to reduce the total amount of expected work hours in a week, or does it mean the company expects employees to work the same amount of hours per week in just four days?” he said. It might come down to deciding whether you truly need 40 hours of output per week from employees.

Settling on either approach will depend on your business model and location. In Alaska, California, and Nevada, overtime pay is calculated on a daily basis — meaning non-exempt employees who work over 8 hours per day would be due extra pay. This is less of a concern if your workforce is largely salaried and exempt from overtime.

Rather than remove an entire workday from the equation, some have just shortened their Monday to Friday hours. Kira Liskew, CEO of The Eagle Institute, found that approach less disruptive. “The shorter workday allowed [employees] to avoid traffic, which further shortened the time put into work,” said Liskew. She believes that compressing her company’s workweek into longer days would have resulted in more stressed employees.  

Identifying Your KPIs

Companies aren’t just experimenting with shorter workweeks for the publicity. They’re expecting the change to positively impact business operations, productivity, employee satisfaction, and client service. The only way to understand the change’s impact on your business, team, and customers is to measure the right key performance indicators (KPIs). These can help you identify if your new schedule is working as intended and whether you need to adjust.

When implementing a shorter workweek, you should plan to measure a variety of KPIs that cover both employee sentiment and business outcomes. While your specific metrics will depend on your company’s priorities, industry, and scale, here are a few examples:

  • Satisfaction: How happy is your team with the shorter schedule?
  • Productivity: Is everything getting done?
  • Employee Attendance: Are employees showing up to work on time? 
  • Client Satisfaction: Have your client survey results changed at all?
  • Cost Savings: Have you lowered your overhead costs?

Make sure you allow enough time to pass to get an accurate read on these metrics. The more performance indicators you measure, the better understanding you’ll have as to whether the four-day workweek is an effective and sustainable model for your business.

Like any major business initiative, getting employee buy-in starts with ensuring everyone at every level of the organization is on board. Managers and the C-suite need to be aligned and supportive of the shorter schedule for it to stick. “For the cultural changes to be effective, a key component of success is that the leaders model the behavior,” said Liskew.

Given the growing number of companies experimenting with shorter schedules, getting that executive buy-in may be easier than it's ever been. While the jury is still out on whether the trend is all hype or here to stay, moving to a shorter workweek could change the way we all do business — potentially for the better.