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Evolution of Labour: The 4-Day Workweek

Search Google right now for the four-day work week and you are bound to find multiple new articles spinning their take on this hot topic. Writers are hailing the onset of a labour revolution; a shift unseen since the 20’s and the historic transition from six-day weeks to five. The Cliffs Notes version is that the four-day work week is currently entering trial across the globe, following the success of a handful of early experiments. Countries and companies are rolling out pilot programs, egged on by the promise of reducing economic waste and permanent long weekends. In some fortunate positions employees who can complete the same work as before, in four days, receive the same compensation as if they had worked five days.

There are two organizational theories that are interesting to look at before we consider the possibility of condensing five days into four. The Punctuated Equilibrium model says that groups do not actually get down to business until halfway through their deadline, at which point behaviour shifts and production ramps up. Parkinson’s Law, defined in 1955 by British Historian Cyril Parkinson, states that people have the tendency to fit their work to the time allotted. People can work faster when they need to, but tend to act leisurely, chit-chat, or do non-essential tasks if there is no looming deadline driving them.

The most notable test run of reduced hours with the same pay may be Microsoft Japan’s. Through August of 2019 Microsoft Japan ran a four-day work week with great results; productivity measured in sales went up by 40 percent; paper printing went down 59 percent; and electricity fell by 23 percent. 94 percent of employees were happy with the program. Jack Kelly insightfully notes in his report published for Forbes however, that the numbers are not everything here. He suggests that staff could have worked exceptionally hard during the trial period or may eventually take the new system for granted once it becomes the standard of operating; one month does not necessarily mean productivity would be sustained.

The excitement for three-day weekends is so universal that it has become political as governments and politicians are showing their support. The government of Spain is offering to help businesses pay for expenses incurred in a national four-day work week experiment.  Andrew Yang, a progressive Democrat who ran in the 2020 U.S. election, said the country should “seriously” consider making the switch on his Twitter account, expressing the benefits for worker wellness and work life balance.  In Ireland, there is a conglomerate of organizations putting together a pilot of the four-day week with mentoring and assistance for companies willing to give it a shot. The government will provide funding for researching the social, environmental, and economic results of the experiment.  Scotland and New Zealand are also reported to be involved in talks for the four-day work week.

It is not all sunshine and rainbows though. Concerning four ten-hour days there are voices of opposition. The primary concerns are worker efficiency, stress accumulation, and competition. Some are of the view that if the week could be condensed workers must not have been efficient or focused. The suggestion here is that management needs to do a better job controlling employee production. Another counterpoint is that working four ten-hour days accumulates more fatigue and stress than does five eight-hour days. There is also an argument based on the idea that competition will gain an advantage by continuing a five-day week, possibly contacting your customers while you are unable to respond. Other voices of concern are focused on the loss of work culture, the fostering of relationships and a possible loss in career development.

The organization of work is an ever-evolving beast that rides on the saddle of technology. Most businesses that can cut hours for the same pay are either tech or knowledge enterprises, wherein the product for sale is often knowledge or information. The question of a four-day work week will most likely prove to be a circumstantial tool. Some industries and corporations could thrive with periodic use, some may use it year-round, and some may never see a positive implementation. Will this be a worldwide change in labour practices, or will it fizzle out as incompatible dream material? The answer might be right around the corner. Oh, what a time to be alive.

References
https://www.history.com/this-day-in-history/ford-factory-workers-get-40-hour-week#:~:text=On%20May%201%2C%201926%2C%20Ford,office%20workers%20the%20following%20August.https://www.workstars.com/recognition-and-engagement-blog/2020/03/25/six-businesses-that-have-moved-to-a-four-day-working-week-and-what-they-found/

https://www.theguardian.com/world/2021/mar/15/spain-to-launch-trial-of-four-day-working-week

https://www.nbcnews.com/business/business-news/four-day-work-week-might-be-exactly-what-u-s-n1229631

https://www.businessinsider.com/andrew-yang-4-day-workweek-longer-weekend-improves-mental-health-2020-5

https://news.osu.edu/why-a-four-day-workweek-is-not-good-for-your-health/

https://personalmba.com/parkinsons-law/

ORGB. (2020) Nelson, Quick, Armstrong, Roubecas, Condie. 

Minimum Wage, Minimum Effort?

From beginning to end, challenging the status quo is the incremental path of social and societal evolution. When dust settles and senses rest on something out of place, what starts as an individual musing grows into initiative for change. From one mind, or more likely, a hearty discussion of many: a framework erects and is bolted together by sound reasoning and good intentions for the future. At last, change finds its way to the hands of a doer; a creator.

There has been a traditional belief that to maximize profit, low skill labour must be paid the bare minimum. Within the last two decades a selection of large companies have made headlines by choosing to pay greater than minimum wage for their general labour and service needs. Much interest and discourse has been made of these progressive resource strategies and an examination of outcomes serves to educate on the wins that are being recorded for those capable and brave enough to raise the bar; those banking on the human factor.

Perhaps the most well-known example of this is Costco. Costco has ranked as the fourth largest retailer in the world, clearing over 100 billion dollars in sales in 2018. In 2019 Costco raised its minimum wage four times while also increasing wages for supervisors. At first it was $14, then $14.50, $15, and then $15.50. Employees receive two raises per year, and more than half of Costco’s employees make more than $25 an hour. CEO Craig Jelinek finds pride in Costco’s employee retention. On the benefits of paying more Craig said, “We feel the experience level and loyalty of our employees is a significant advantage for our company”. Happy experienced staff upsell more products, resolve complaints more efficiently, and get more done.  Reducing employee turnover will also mean less spent on the expenses of hiring and training.

Costco is not the only company who has seen the light. Trader Joe’s, QuikTrip, Mercadona, The Gap, Starbucks, Wells Fargo, Walmart, Ikea, and even Mcdonalds have all implemented internal minimum wages. In a lot of cases these changes have produced positive results along key performance indicators, such as turnover and customer satisfaction. Gravity Payments, a company that handles credit and debit transactions, gave a 20 percent raise to all employees in 2012. What they recorded was a profit increase substantially greater than the expense of the wages.

The next year Gravity bumped wages up yet another 20 percent. Once again, profits shot up proportionately; productivity rates increased by a whopping 30 to 40 percent. It was also reported that “Gravity’s customer retention rate rose from 91 to 95 percent in the second quarter.” That increase of 4 percent in customer retention can be the same as cutting expenses by one fifth.

When Gravity Payments CEO Dan Price announced a three-year plan to phase in a minimum wage of $70,000 and that he would immediately reduce his salary from $1.1 million to $70,000 there were over 500 million mentions on social media; a video from NBC covering Gravity became the most shared within network history. This kind of good publicity makes a huge difference when it comes time for the customer to choose a service provider. Not only are they now aware of the company, but good actions build trust, and trust is everything when deciding on who to do business with.

Higher wages attract more applications and being able to select from a greater pool of applicants will offer opportunities for greater talent. In 2014 when The Gap announced they would raise their minimum wage in the United States to $9 an hour, there was a sharp increase in applications. The Global Head of HR at The Gap said, “almost immediately, we saw our applications increase by double digits”. After Gravity’s well-earned publicity, they reported receiving over 4500 new applications in the first week after the announcement they would phase in the $70,000 minimum wage.

When a company has enough cash flow and organizational structure in place, it certainly appears that providing a higher wage can result in improved customer and employee loyalty. Investing in front-line workers is now a well documented way to compete on service and motivate efficiency from employees and the hiring process. Should there be transparent systems for evaluating and rewarding performance in more workplaces? Leave a comment, tell us what you think! If you liked the article, share it with your friends and get a discussion going!

Sources

https://nrf.com/resources/top-retailers/top-100-retailers/top-100-retailers-2019
https://ca.finance.yahoo.com/news/why-costco-pays-its-180000-workers-way-more-than-the-minimum-wage-120358716.html
https://www.mashed.com/224884/heres-how-much-money-costco-employees-really-make/
https://www.investopedia.com/articles/markets-economy/081416/top-8-companies-raising-minimum-wage-mcd-sbux.asp
https://www.washingtonpost.com/news/wonk/wp/2015/03/31/higher-wages-boosted-gaps-applicant-pool-will-it-do-the-same-for-productivity/
Lamb, Charles W.; Hair, Joe F.; McDaniel, Carl; Boivin, Marc; Gaudet, David; Shearer, Janice. 
         (2019). Principles of Marketing.

This article was written by summer student Adam Best and edited by summer student Hannah Mastin. This article was funded by the Government of Canada.