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How Long Until Your Workplace Catches up?

You may have heard of a growing trend for companies to opt into a 4-day working week. With companies such as Bolt, ThreadUp and Panasonic all opting for shorter working weeks, it begs the question: is this an act of kindness on behalf of their employees, or are there other reasons that businesses are taking this step? Surely reducing the hours worked will automatically reduce the output for the business, and thus make the business less money?

The initial reaction for businesses is to shy away from such drastic seemingly reduction of work output. A business needs to get as much out of their employees as they can, after all. But it may not be as straightforward as it seems.

In fact, this expected increasing correlation between working hours and productivity isn’t as straightforward as it seems. This assumes that a worker’s rate of production remains constant as the hours increase. Evidence has shown that this is not the case. There are a number of hours worked where the rate of successful production begins to decrease. This is due to employee tiredness and stress.

A study conducted by an economics professor in Stanford (John Pencavel)* in 2015 looked at productivity of British women during world war 1, who were manufacturing artillery shells for the military. They found that at first an increase in the hours worked resulted in more shells created. But only up to a point, in fact, there was a point where additional hours of work actually reduced overall productivity, most likely due to workers’ fatigue and exhaustion. This showed that the relationship between productivity and hours worked is in fact an inverted U shape like the below diagrams:

The study found that when an employee works for more than 50 hours a week, productivity per hour sharply falls. At the point of 55 hours, productivity drops so much that putting in any more hours would be pointless. This effect is so pronounced that those who work up to 70 hours a week are actually only producing the same amount as those that work 55 hours.

But does this apply to today’s workforce and working conditions? We are no longer necessarily working in manually intensive jobs and so perhaps the exhaustion doesn’t translate quite as directly.

In a study conducted in 2021 (Shangguan et al. 2021), it was found that Pencavel’s 2015 findings are still evidenced in the modern working environment. However, there are some differences when in a team setting. Using evidence from Japan, the team found that long working hours of key team members harm overall team productivity. But shorter hours cause the opposite to happen; the team productivity increases with fewer hours worked. This is understood to be because employees arrive for work rested, motivated to work with more energy and focus.

Now we can see that reduced hours actually increase productivity, especially within a team setting. The question is, do employees actually want this?

A flexjobs survey asked 1,000 people questions on this topic, the results showed that overwhelmingly they do:

  • 95.4% want a four-day workweek

  • 90% believe the five-day workweek is outdated

  • 97% think they’d be more productive working four days per week

  • 98% believe their mental health would improve

Not only do they want reduced working days, they are actually willing to sacrifice in other areas of compensation to get it - People said they’d give up the below to get a 4 day work week:

  • Unlimited paid time off (38%)

  • Free, company-provided healthcare (43%)

  • An eight-hour day by working two additional hours per day (58%)

  • Their current job (74%)

  • 66% stating they’d rather work a four-day workweek than have a 20% pay bump.

So, given all this evidence, why would a business not reduce the number of hours their employee’s work? The evidence is clear that it creates a nicer place to work for staff, meaning they are able to attract the top performing talent and motivate them long-term to stay with the business. This saves companies significant costs at the same time as increasing or improving the output produced.

The answer likely lies in these long-held beliefs we hold that more work = more productivity. This idea has been held for such a long time, and so deeply that it’s very difficult to change the collective mind. But as highlighted at the start of this blog post, that is changing with more and more companies taking that leap into shorter working weeks. How long will it be until your company catches up?

* Pencavel, J H (2015), “The Productivity of Working Hours”, Economic Journal 125(589): 2052-2076

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