Wharton@Work

November 2023 | Management

Is the Four-Day Work Week the Future?

In the mid-1920s, Henry Ford reduced his factories' workweek from six days to five, and 48 hours to 40. It wasn’t because he considered it a perk to his workers: he made the move after discovering that productivity returns steadily diminished after eight hours of work a day for five days a week.

A century later, that insight feels quaint. Workers in dozens of countries commonly put in well over 40 hours a week — even though more recent studies show that Ford was right. Longer hours not only don’t lead to greater productivity, but they also contribute to health problems such as depression, diabetes, and heart disease. Those health outcomes in turn end up affecting employers as they increase absenteeism, turnover, and health insurance premiums. Could the four-day work week be the solution?

The 100:80:100 Model

In many countries, the four-day work week is already here, at least in part. Workers in Belgium have had the option since November of 2022, as long as they accomplish in those four days what used to take them five. The so-called 100:80:100 model pays workers the same salary for completing the same amount of work in 80 percent of the time (i.e., four days instead of five). More recently, Portugal announced in June that 39 private companies are trying a four-day work week using the same model. A similar experiment last year in the U.K. was so successful that 92 percent of the companies that participated are making the change permanent.

Although it hasn’t led to a lasting change, Microsoft’s division in Japan ran a trial of the model in 2019, with a twist. It added time-management mandates that boosted the success of the experiment: almost half of all meetings were cut from 60 minutes to 30, with attendance capped at five employees, and the company advised people to communicate more efficiently, using collaborative chat channels rather than emails and meetings. Results were impressive, with productivity increased by 40 percent. Microsoft also reported other important benefits, including a 23 percent reduction in its electric bill.

New Zealand trust management company Perpetual Guardian ran a similar trial that resulted in a 20 percent increase in productivity, even though workers were not required to complete five days of work in four days. The company also did not mandate changes to meetings or communication as Microsoft Japan did. Instead, Perpetual Guardian’s founder, Andrew Barnes, said, “The right attitude is a requirement to make it work — everyone has to be committed and take it seriously for us to create a viable long-term model for our business.” The trial’s success, which included a 45 percent increase in employee work-life balance, promoted Barnes to make the policy permanent.

Not for Every Business?

Wharton management professor Peter Cappelli, who directs the school’s Center for Human Resources, says a closer look is needed at which companies are finding success with the model. “So far, the problem with evidence is that this hasn’t been tried on typical firms. It’s been on those who volunteered, which meant they thought it made sense for them. We haven’t seen evidence that this helps a typical firm.”

That consideration became an important part of the discussion when the United Auto Workers Union went on strike in the U.S. in September against the Big Three auto makers (Ford; General Motors; and Stellantis, which manufactures Jeep, Chrysler, and Ram vehicles). The changes they are calling for include a four-day work week with pay for five.

As of the time of this writing, none of the auto makers have responded to the demand — which is no surprise to Cappelli. “We are talking about hourly-paid employees covered by the Fair Labor Standards Act. If you pay by the hour and are going to cut hours by 20 percent, then you have to raise pay per hour by 20 percent. Employers have to weigh the potential benefits against that cost.”

Cappelli continues, “You have to be the kind of company that can control when the work you do gets done: can you shut everything down on Fridays and not lose customers or clients? You also have to be doing the kind of work where employees can make the organization 20 percent more productive just by trying; in other words, their efforts alone makeup that difference.”

Alternatives May Be More Appealing to Employers

Ultimately, when workers seek a shorter work week, what they’re really asking for is more control over their time. If they don’t have to show up at an office five days a week, they can more easily manage childcare and other aspects of their (non-working) lives. For employers who can’t see how a four-day work week could be feasible for their business, there are other ways to help employees achieve a better work-life balance.

“Many things would be simpler and easier for employers than moving to a four-day work week,” says Cappelli, “and the tighter labor market means more options might be palatable to employers. Cutting back on work, giving employees more control over their time, and letting them work remotely on the fifth day would do a lot to satisfy their demands.”

The problem, he says, is that “many employers have no real interest in improving work-life balance unless they see how it benefits them or how not doing it costs them.” And for those who can work remotely, the four-day work week might not offer them the balance they desire. “The benefits might never materialize,” he explains. “Office workers are typically given a set amount of work to complete, most of which does not require employees to be in the same physical space to do. So, the real question is, is the four-day week another way of saying work from home on the fifth day?”