The Perpetual four-day week - Article

The number four painted on a carpark brick wall

Perpetual Guardian’s shift to a four-day working week has drawn attention from all over the globe.

Estate planning services company Perpetual Guardian has moved its staff onto a four-day week at full pay. No extended hours. No reduction in benefits. Staff members are happier.

Managers are happier. And the work still gets done.

For Founder Andrew Barnes, CMInstD, it is proof that it is possible to improve people’s working lives and corporate culture simultaneously – while maintaining or improving business productivity and profitability.

The trial

Barnes’ governance roles include chairing Perpetual Guardian, PaySauce and Regional Facilities Auckland. For him, it started with research that showed people were productive for only a portion of the working day – as little as 2.5 hours in a UK study, or even 1.5 hours in a Canadian study. This got him wondering what was going on in his workforce.

“If you think about the typical working day, people come to the office, sit down, have a chat with colleagues. They get a cup of coffee, maybe they check their emails, maybe they do a bit of surfing on the internet and eventually they get down to doing something – and somebody comes and taps them on the shoulder and interrupts them,” Barnes says.

“I asked myself a question: If I gave my staff a day off, provided the productivity output was the same or better, would I get a change in how people worked?”

So in March 2018 he started a trial – monitored by Dr Helen Delaney of the University of Auckland Business School and Professor Jarrod Haar of the Auckland University of Technology – of a four-day working week, with staff still being paid for five days.

“My leadership team thought I was mad. My board, broadly, thought I was mad. The general perception was that it wouldn’t work.”

But it did work.

“What came out of that was that the traditional engagement scores went up between 20% and 40% to levels which Professor Haar said were the highest he had ever seen in New Zealand. Stress levels for people in the company came down about 15 % and staff said that they were better able to handle their work on a four-day basis than they were on five.

“Our productivity went up overall. I have a smaller office footprint now. I have fewer sick days. I have more and better people applying to join the company.

I have better retention scores. I have actually won business: we had two people walk into one of our offices in Napier and say we read about you in Japan, we have just moved to New Zealand and want to do business with you; and I have had companies coming and saying we like what you are doing from a social perspective so we have won corporate contracts as a consequence.”

Fundamental change

There were other small process improvements that “bubbled to the surface” as his workforce adapted to the new four-day normal, he says.

“We found that people changed how they worked. Meetings became shorter. People put flags next to their desks if they needed to concentrate and there was a convention that you didn’t disturb them. Internet surfing dropped 35%. People were indicating that, actually, you know what,

I would rather have a day off than spend time surfing the internet at work.”

The onus was on the teams themselves to make the new system work, and team cohesion increased enormously as a consequence, Barnes says.

“This is not about productivity improvements in the traditional sense. This is fundamental. It’s about changing people’s attitude to work.

“What I get is better quality work and it also means that the staff have better work-life balance. There was no statistic that dropped out of the research that suggested there was a problem with this. Every single indicator was favourable.”

Based on the results, Perpetual Guardian turned the trial into policy on 1 November 2018.

Societal benefits

What makes Perpetual Guardian’s experience exciting is that it suggests broader societal benefits can be gained by working shorter hours, without a negative impact on business productivity.

Barnes’ list of potential societal benefits is impressive – parents spend more time with their kids, fewer cars on the roads, better mental health outcomes and workers have time to retrain in the face of changing work requirements.

“If you believe that 40% of jobs are going to go to AI, and you have a day off per week, you can retrain. Should we be building short courses for people to retrain?

“One in five of the New Zealand workforce is estimated to have either a mental health issue or stress-related issue – if I could give you a day a week off to recharge, would that address those issues? Somebody who is suffering from stress or mental health issues, would I get better productivity out of them if they had better balance?

“The answer is clearly ‘yes’. If people don’t have all those home life distractions – because they are better able to schedule dealing with tradesmen or looking after children – would I get better output from them? The answer is ‘yes’.

“Do I get better loyalty? Clearly because everybody thinks that it is Christmas to be paid for five days but only have to work for four.”

Barnes speculates that the four-day week might help address the gender pay gap by allowing women returning to work to receive full pay for fewer hours.

“Often returning mums are some of the most productive staff we have because they are good at balancing their time.

But when women come back to work what do they do? And what do we do?

We negotiate time off. They work four days a week and get 80% of the pay, 80% of the benefits. This four-day model says the time you spend is irrelevant.

“I want people to be fresher, to think better, to be more productive when they are in the office. And I also want them to be the best they can be outside the office. I would like to see New Zealand be the first country in the world to shift to this sort of approach. I believe you should see a significant boost to the economy.”

Four-day week – how to

At Perpetual Guardian, the four-day week model was developed in consultation with staff and reflected how staff felt they could best deliver under the new arrangement.

“We had to agree what good productivity was. And I said to them ‘you have got to take this seriously and plan how you are going to implement a four-day week on a team basis – where you don’t all take Friday off and don’t all take Monday off’.”

Secondly, senior leaders need to be seen to model a four-day week, Barnes says. He recalls an experiment with flexible time at BNZ that died in part because the senior executives didn’t take it on.

“I make my leaders take their day off. They have got no choice because I own the company.”

Over time, he muses, that might increase the number of women in the executive team.

“If it is absolutely acceptable to take a day off, does that change the dynamic

of having women at senior levels? Because, suddenly, caring for family is something that can be shared by men and women – it’s not just the preserve of the women. These are unintended consequences of what was an experiment, but it does start to put some of these things into sharp focus.”

The third key element to Perpetual’s model is that the four-day week is not a right.

“The way the deal works is that I gift you a day off. Your normal working hours remain the same,” says Barnes.

“You have to, under section 65 of the Employment Relations Act, define normal hours of work, normal start time, normal finishing time. We couldn’t get a variation, the Act doesn’t let us do it. So what we do is let people opt in, we gift them a day off if they hit the productivity targets.”

An idiosyncrasy of employment law is that, under the Holidays Act, staff accrue leave on five days even if they only work four.

“How we deal with that is we say, ‘fine – you have to give one day per quarter

to charity’. That doesn’t make it any better for me in the context of an economic disadvantage, but it does make me feel better.

“It actually cements the contract between the employees and the employer – the employees are recognising the value of the gift.”

Sick days remain the same. Staff are still expected to come in and work more during busy times. Only statutory holidays are treated differently.

“If the week has a statutory holiday you don’t take another day on that week.”

The real core of it is that it is a gift, the day off can be taken back if productivity doesn’t remain at appropriate levels. So, fourthly, productivity must be maintained or improve.

“Fundamentally – and this is important for business – this is a discussion about productivity. It is not just a discussion about work-life balance. But we are getting better productivity and better outcomes out of the team working four days per week than five.”

Barnes' challenge to boards

“We’ve known about this for 100 years. The more you look at the research that exists all over the globe you will find that there comes a point at which working longer doesn’t equal working smarter or working better.

“The question I would pose to boards now is: ‘Are you being responsible if you are not looking at this?’ I would maintain you are not. You are running in the face of very strong evidence. It is not just my trial. If you look you will find research all over the world. What we say to all companies is ‘try it’.

“If you instituted a trial, even in a part of your business, what does it say about you as leaders?

“Does it say you give a damn? Does it say you are callous? Does it say you are being innovative or does it say you are being backward looking? You are having a different conversation with your team.

What’s the worst that can happen? The trial fails and at the end of the day people say, ‘well at least they gave it a go’.

“If you think that what you are doing is fit for purpose in the 21st century, I think you are kidding yourselves.”

Global interest

Barnes has given up estimating the PR value of the story – it is thought to have been broadcast to a global audience in excess of four billion people.

“At the last estimate, we had over 3,000 print, radio and television stories worldwide, over 12,000 internet postings and a global audience approaching 4.4 billion.

This is a story that transcends cultures.

“I have done drive-time radio for Colombia, we had Japanese television in, we are going to have French television coming in, it was the second most-read story in the New York Times after the Trump-Putin summit.

“We just watched this thing go around the world. In a world dominated by Trump, Brexit, all those issues, this was a good news story from New Zealand.”

He takes this as a signal the world is ready to try a new way of working that is fit for the 21st century.

“We are a 240-person firm. In New Zealand terms we are probably of a reasonable size. But how did the story of a little Kiwi business go around the world? I think it is because it is a vision. It is a picture that addresses problems people are facing today.

“In a way, I feel we have lost sight of having an aspiration for the future. Everything we do is short term – short- term politics, short-term economics. Isn’t it time we had a vision for something?

“People are genuinely under pressure, whether financially or mentally or in terms of meeting the goals they have set for themselves. They are looking for something that is different, something that is better.”

The Perpetual story has also begun to influence activity outside of the news cycle. In the UK, the Trades Union Congress has made the four-day week an aspirational target.

“We are told that is a direct result of the trial and inputs to labour think tanks that we did in the UK.”