Is a 4-day work week right for your business? A Canadian Business Perspective…
As businesses shift back to physical spaces, a new debate has begun over the length of the work week. There’s research and historical data showing that reducing hours increases productivity. But is a 4-day work week the right choice for your business?
Historical Precedence: 6 day work week
It was May 1, 1926 when Henry Ford first transitioned to the five day work week down from six, having already doubled the wage of (many) his factory workers a few years earlier. Employers of this time were finding it very difficult to keep staff - every time an employee left, production would halt and hiring new staff was time-intensive and costly. (Sound familiar?)
Ever a businessman, Ford recognized that providing his workers with more money and more free time would reduce his costs and improve retention. It had an immediate and positive impact on his business operations and the surrounding community, as well. Furthermore, he found he had his choice of the best workers, and it significantly reduced training costs. By providing his workers with more time and more money, it had the following impact:
Productivity increased
Better, more experienced employees sought him out
Higher retention reduced training costs
Local businesses thrived
So would going from 5 to 4 days a week would have the same impact on your business?
International vs Canadian Data
Internationally, the shorter work-week is being seriously explored. In NZ they introduced it as a way to boost travel within the country while their borders were closed to tourism. The result of Iceland’s reduced work week has been called the most ground-breaking evidence in support of working time reduction finding “employee well-being increased as stress and burnout decreased and productivity stayed the same or rose.” There are several studies which show similar results.
Canadian workers are paying attention! Angus Reid reports that majority of Canadians support a shorter week, and have higher expectations for more flexible workplaces. It is even coming up as a topic of discussion on some political platforms.
The Shorter Work-Week in Canada
The David Suzuki Foundation has had a 34-hour work week since the 1990s. This organisation has seen a huge impact on employee wellbeing and cost savings. The found that “…lowered working hour leads to reduced employee burnout, sick days and leaves of absence taken. Rejuvenated and less-stressed employees also leads to increased productivity. What you’re doing is giving employees more time to rehabilitate themselves.” Taking care of your employees saves you money.
The Globe and Mail reported on a lawyer in Vancouver who tried it herself due to injury, then tried it with her own law firm. Uncertain of how reduced hours for a law office, the issues were minor (not everyone could take Fridays off) and productivity increased:
“Ms. Yousefi was stunned by the results. One month into the trial, profitability was up 10 per cent, and had notched a 30-per-cent gain by the trial’s end in May. Margins have only continued to grow since four-day work weeks became permanent at the firm, along with the company’s size. YLaw has doubled its roster of lawyers to 14 since March, with more job inquiries pouring in. “It’s pretty insane, the applications we’re getting and the loyalty we’re seeing,” she says. “It’s been the complete opposite of a downturn in our profits or expansion.”
Even a municipal government in Ontario implemented it for 8 months and was impressed by the results: “ ‘The goal was two-fold,’ says Don MacLeod, Zorra’s chief administrative officer ‘– employee retention and a recruitment drive at a time when several older workers are preparing to retire.’ ”
While researchers from Western University are conducting a third-party review of the trial, Mr. MacLeod says staff report being happier, while the township has actually been able to extend its hours of service. “It seems like a win-win from my perspective.”
Some economists (and business owners) worry that a reduced working week will result in reduced output. The Fraser Institue believes specific governmental reforms are first required to make it more feasible: It’s not a one-size-fits-all approach, and there are other issues of bureaucracy that can get in the way. It’s worth noting that the Fraser Institute, does not believe a shortened work week should be enforced from the top-down. Their research suggested that the reducing hours and maintaining pay would result in making employee wages on-par with inflation by 2030.
However, a professor at the University of Regina believes it would cause staffing problems and injuries because 10 hour days create more fatigue. He’s not wrong - but should a 4 day work week still be 40 hours? Or should it be 32? What constitutes a 4 -day work week?
The 4-day work week, defined.
There are essentially 3 different ways to implement a 4-day work week:
Employees work 10 hours/day over 4 days and are paid the same.
Employees work 8 hours/day over 4 days, but employee’s pay is reduced to match.
Employees work 8 hours/day over 4 days and maintain full time pay.
So which is it and most importantly, which do you choose to reap the rewards? I sat down with O’Ryan Hughes from respected HR consulting powerhouse Stoppler Hughes in Edmonton to understand the practical details at a more local level. “In the end companies get to decide what it means. In general, organizations and small businesses have had to be more flexible in their working arrangements over the last years so they’re assessing next moves based on that.” he explained.
“We’re finding a reduced work week allows you to stand out from your competitors” Hughes continues, clarifying that companies which offer flexible or reduced hours are not seeing the same difficulties in hiring. “Not only that, they’re seeing an increase in loyalty and retention.”
Implementation & Considerations
Results do differ for different short-week options. The Icelandic Study which had the most positive impact, offered reduced hours while maintaining full pay. Examples where they’ve reduced hours and pay - results were not as positive. Most noteworthy, those that reduced both found that many employees went elsewhere to earn more money. For the longer days Hughes notes “a 10 hour work day only really works if your company is open 24/7. For one, it makes staffing more difficult. Second, research consistently shows that, overtime, employee productivity reduces when the days are longer.”
A business has to be honest about how these ideas would be communicated and implemented, and how they’ll respond when there are issues or hiccups. The Chartered Professional Accountants of Canada share a few important considerations before adopting, and implementing a 4-day work week. It’s not going to be a practical solution for every industry, every situation nor for every member - clear expectations and guidelines are required. Workplace culture is also a big consideration for success! How will your staff respond? Should it be seen as a right or a privilege? How invested in the idea do the employees need to be and how will “productivity” be measured? The firms who tried it but reverted back found they were falling behind on projects and weren’t as productive. Many also found a sense of entitlement got in the way. They want to bring it back, but haven’t found the right balance.
Our Recommendations for Canadian Business Owners
The great news is that Canadian employers have been headed this way already. In Canada, the average work week has decreased since the 1980s and, while there has been an increase in the search term “4-day work week”, this has been a bigger trend in America.
For those considering it as an option - what is realistic? Hughes believes employers can respond in different ways to achieve the similar results:
“From our Canadian data, we think a 5 day work week at 6 hours a day is the sweet spot. People are even more productive over 6 than over 8 hours. It’s better for staffing issues and absenteeism is drastically reduced. In terms of impact, it has the most clear, positive results.”
Generally right now, employers are seeking out ways to be more appealing to employees. Employees are actively seeking out flexibility and trust in their workplace. There’s not one way to roll-out a shortened week and implementation depends on the business and the owner. It does come with important questions about productivity and how that could be measured.
Henry Ford implemented these ideas because poor working conditions were negatively impacting productivity and retention. For Ford, the main advantage was simply a competitive one and the Covid-19 crisis has set a similar change in motion, or at least, accelerated it. There are many ways to reduce time in the office, but as we face these once-in-a-generation shifts in workplace culture, one thing is clear: employee expectations are changing.
Hughes has a simple way to see it: “Is your company being negatively impacted by recruitment or retention issues? If you’re in a competitive recruitment market, a change like this will definitely set you apart.”
If you have questions about a reduced work week in your business, or to discuss your own experience, feel free to book a no-pressure Discovery Call with Jill.