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By Kaitlyn Knopp, Co-Founder & CEO, Pequity
The pandemic’s shift to remote work and the ongoing turmoil of the Great Resignation have reinforced demand for greater flexibility than ever before. With top talent looking to maximize their free time and control of their lives, some companies are considering a 4-day workweek to attract and retain talent while maintaining high levels of productivity.
The demand has been so great, that tech companies like Basecamp, Bit.io, Buffer, Shopify, Elephant Ventures, Kickstarter, and Microsoft Japan all have done trial runs of 32-hour work weeks, or have adopted 4-day workweeks on a seasonal or permanent basis. In fact, the U.S. Congressional Rep. Mark Takano from California recently introduced new legislation that would amend the Fair Labor Standards Act (FLSA) to require overtime for any work over 32 hours per week.
Survey data from the American Enterprise Institute also found that workers are willing to sacrifice up to $30,000 per year in salary in exchange for better flexibility, and 86% of Americans said that “Having flexibility to balance work and family needs” is one of the most important things they look for in a job.
All of these trends suggest that, even if it doesn’t happen overnight, a 4-day workweek could become a contender for tech companies that want to be magnets for talent. If your company is thinking of moving to a 4-day workweek, let’s take a closer look at how a shorter workweek should fit into your overall compensation strategies.
Before you transition to a 4-day workweek, keep these top tips in mind for your compensation program.
1. Strike the Right Balance: Shorter Hours with Same (or Less) Salary?
How many hours does your organization want to count toward your “full-time” workweek? Some companies that shift to a 4-day week are still requiring a full 40 hours of work, while others require 36, 35, or 32 hours per week. Some companies might want to offer a shorter workweek at a slight reduction in salary, while others might offer four 10-hour work days for the same pay, or a few hours less than 40 but with no reduction in take-home pay.
One way to think about this philosophically is you are paying for some combination of agreed time and expertise. You are buying someone’s skills, and agreeing on times they should be dedicatedly available. The current 40 hours expectation is just a minimum not a maximum. In fact, exempt workers don’t have a limit to the number of hours they can be asked to work. The 40 hour work week is just the normally agreed upon schedule for exempt employees, often driven by standard business hours.
Knowing this, think about what you hope to achieve and if any expertise or productivity is lost with a shorter work week. Most companies in the above studies found no, there was no loss in productivity so decided not to change wages. In cases where there was, you may choose to reduce pay to be commensurate with their reduced hours so that you can retain the budget to hire another person to fill that gap.
2. Adjust Compensation Goals for a Less Hours-Based Culture
Many companies that have shifted to a four-day workweek have found productivity does not decrease. In fact, their teams are often more productive on a shorter week, because people feel more energized and focused, and can fit more work into fewer hours. Fewer hours at work gives people less incentive to schedule unnecessary meetings; it rewards efficiency and concise communications.
But if your company is accustomed to paying people based on the number of hours they work, and judging employee performance based on hours spent at the desk, you might consider some adjustments to enhance your company culture.
3. Focus on Employee Wellness, Mental Health, and Culture-Building
Most companies aiming for a four-day workweek do so to show they value people’s mental health, wellness, and to show they understand and support people’s family and caregiving responsibilities. So along with clarifying your compensation, remember this is also a total reward that can enhance your company culture if monitored and effectively communicated.
A few ways you can accomplish this might include:
- Conduct regular check-ins and employee surveys to gather data, watch for signs of burnout, and hopefully share success stories about how the 4-day workweek is helping employees have more rest, sleep, energy and time for family, friends, and hobbies.
- Communicate expectations in a clear, visible, vocal way. A 4-day workweek should ideally give people a heightened sense of focus and energy to tackle their workload. Keep communicating with people and make the most of each day so you can keep the whole team on track for success.
- Block out time for focus and disconnects. You might find that with a 4-day workweek, people are less likely to schedule unnecessary meetings. When every workday is a bit scarcer, time becomes more precious. People are more likely to want quiet time to focus and do the deep work of creating, building, and strategizing.
- Promote mental health management, and offer mental health benefits and resources.
A 4-day workweek is not yet table stakes for tech company recruitment, but it might become much more prevalent and more widely expected as companies compete for talent. One lesson of the pandemic for many employees is that time is precious. Working from home enables people to be more productive than in the office, while having better flexibility to take care of their loved ones or pursue hobbies and personal wellness. As part of these larger trends, as people reassess what they want out of work and life, the 4-day workweek might need to be a bigger part of your organization’s compensation strategies.