Managing talent. The rationale behind a four-day workweek 

Nowadays, 75%¹ of developers are open to new job opportunities or are actively seeking them. The legacy of the ‘Great Resignation’ is the greater mobility of employees. Furthermore, organizations are faced with the challenge of attracting and managing talent. Hence, 88%² of HR managers added new perks during the pandemic. According to LinkedIn, 63%³ of tech professionals primarily look for work-life balance. A striking 95.4%⁴ of Americans want a four-day workweek. Growing number of companies have decided to reduce working time and add unlimited holiday time. So, what are the results of these trials?

A shorter workweek with the same salary 

Reducing the workweek might look unfamiliar but the idea itself isn’t new. In 1890⁵ an average worker worked 100 hours per week in a factory. Since then, the workweek has seen a dramatic reduction and considering this, recent propositions don’t seem so radical. 

The Autonomy⁶ in its report highlights that we shouldn’t be attached to the nine-to-five and five-day workweek as it has only been prevalent over the last 50 years. The BBC⁷ cited examples that in the US a shorter workweek is accessible for 5% of employees, but 83% of people want a four-day workweek. Many countries, as well as companies, are testing the idea of a truncated workweek to cure the rampant burnout and a need for flexibility. Such a reduction in hours takes on different forms. But the prime principle is that the payroll remains the same. 

Countries with a four-day workweek 

An example of this relatively new trend is Iceland⁸, where between 2015 and 2019 a trial of a four-day workweek was conducted among 2500 workers (1% of the country’s entire workforce). This 35-hour workweek resulted in productivity remaining unchanged or increasing. Now, because of the phenomenal outcome, 86%⁹ of Icelanders’ workdays can be reduced in comparison with the traditional 40-hour model.  

Belgium¹⁰ has adopted a different strategy; workers will have condensed the normal workweek into four days which means longer work hours. The UAE case is especially interesting, as in 2022 the government decided to introduce a four-and-a-half workweek. The workforce works less on Friday- only to noon. Scotland¹¹ is set to try abbreviated working hours, with a program funded ($13.8 million) by the ruling Scottish National Party to control wage pressures. In Poland,¹² only 9% of workers have seen a shortened workweek, although 88% of workers in the country would like to work one day less. 

Great Britain¹³ isn’t lagging in the trend as this month several workers and companies start a 4-day workweek trial. This six-month pilot scheme is internationally one of the largest schemes of its type with over 3000 employees in 70 companies involved. It will be coordinated with researchers from Oxford and Cambridge universities. 

Not only have entire countries decided to take a leap forward to more flexible working hours but individual organizations have done so as well. Microsoft in Japan, after the implementation of a four-day workweek, has seen a 40% increase¹⁴ in productivity. The change in hours saw employees start to hyper-prioritize their duties, with administrative work taking less time.  

In New Zealand¹⁵ after the experimental introduction of the 30-hours working scheme in one of the companies, the engagement of professionals rose, and stress levels decreased. Prime minister¹⁶ of New Zealand suggested using shorter working hours in the wider range. The same approach was put in the place by the prime minister of Finland.  

The purpose of unlimited vacation 

Paid leave policies vary from country to country. In the US there isn’t a minimum period of paid leave. Austria, the leader in paid time off, offers 35 days¹⁷ annually, while in the UK it’s 28 paid¹⁸ days per year. In general, throughout the EU, it’s required by law to offer at least four weeks¹⁹ of paid vacations.  

Apart from national directives, many companies have decided to introduce unlimited leave programs. Netflix,²⁰ known for its flexible and progressive working culture, has since the beginning of the company, offered unlimited holidays. In 2015 Linkedin²¹ shifted to unlimited leave in order to give employees a ‘sense of empowerment. A $1000 holiday bonus is given to staff in Evernote,²² they are encouraged to relax and recharge.  

Corporations offer more paid time off

Big organizations are following in the steps of startups. IBM²³ was one of the first who broke away from the traditional holiday policy. Employees in HubSpot²⁴ are expected to take a minimum of two weeks off every year. The big surprise was the unlimited vacation policy introduced by Goldman Sachs,²⁵ but only for senior workers, in a company known for its back-breaking work culture.  

However, not everyone is a proponent. The startup Charlie HR²⁶ highlighted on its blog that unlimited vacations have a lot of disadvantages. However, counterintuitively, people take on average fewer days off if they are part of an unlimited scheme. Workers do feel the pressure to take time off according to the ‘company average.’  

More rest but a huge boost in productivity

Both a shorter week and a flexible vacation policy support employees’ well-being. Currently, mental healthcare is costing British employers 33-42²⁷ billion pounds annually. Americans, when asked, responded that 98%²⁸ believe their mental health would improve and 97% of them would be more productive during a four-day workweek.  

Why does productivity rise during a reduced workweek? To put it simply, people are more focused on their work. Although they are obliged to tackle the same number of tasks in less time, they replace meetings with emails, consequently saving time. Scientists from Stanford²⁹ found when working time exceeds 50 hours weekly, productivity diminishes. Some experts claim that the workweek shouldn’t be longer than 35 hours³⁰. In fact, people are usually less productive after the first five hours³¹ of their working day.  

Moreover, there is a phenomenon³² recognized by economists that in the most productive countries people work the fewest hours and also have the highest³ wealth rate per capia³. According to data from startup Namely³⁴, there is a correlation between productivity and holiday. Usually, high performers take five more days off, 19 in comparison to the average of 14. 

Furthermore, throughout Autonomy’s³⁵ report, it’s visible that a shorter workweek and more flexibility is a powerful response to ongoing trends. According to Autonomy, the shorter workweek is a transition to a happy and more productive workforce, and higher gender equality. Also, for a sustainable economy, it’s estimated that there is a significant reduction in CO2 emissions as there is less need for daily commuting. 

Sources:

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