The business case

It’s not solely about employee wellbeing

When people ask me about the goodwill factor of the four-day week, I remind them that first and foremost, I’m a businessman. I want a profitable company. The extraordinary equation of the four-day week is that by putting productivity first, and incentivising staff to do the same, the value ripples beyond the boardroom and the balance sheet to the home lives and personal wellbeing of workers.

The four-day week forced us to think creatively.

The four-day week forced us to think creatively.

The prioritisation of productivity and the secondary outcome of improved work-life balance come with the unique 100-80-100 equation of the four-day week: We give 100 percent compensation for 80 percent time at work on the condition that 100 percent of agreed productivity is achieved.

The dual focus on employee wellbeing (as an outcome of better work-life balance) and productivity is validated by researchers at the London School of Economics, the MIT Institute for Work and Employment Research, and Oxford University. They found that a “meaningful increase” in employee wellbeing yields, on average, an increase in productivity of about 10 percent. They also identified a large, positive correlation between employee wellbeing and aggregate measures of company performance across all types of industries.[1]

In designing the four-day week, we were forced to think creatively. Imagination (with a side of legal advice) was about the only way we could overcome the inadequacy of the Employment Relations Act 2000, the current legislation governing how people work in New Zealand. Specifically, we had to align our programme to comply with section 67C, which prescribes normal working hours, start and finish times, the days of the week designated for work, and – in a surprising outbreak of legalistic flair – “any flexibility in the matters” aforementioned.[2]

Our creative solution was the opt-in model. This requires the employee to actively choose the four-day week – it cannot be forced upon them – while investing the company with the power to withdraw the ‘gift’ if the employee or their team do not deliver agreed productivity outcomes.

This model imposes a general understanding that changes in behaviour and process must be introduced and maintained if the programme is to succeed, and employees have both a right and a responsibility to draw attention to any factor outside their control that is undermining their ability to meet their part of the agreement.

As businesspeople we are all experienced with finding efficiencies and savings by cutting the the budget and reducing headcount – which can solve some problems but create others. When we make time, not budget, the factor we cut, there is space for innovation from employees and management. Workers want the time discount and are incentivised to finding more productive ways to do their jobs, which is to their benefit and the company’s.

Most of the conversation about flexibility focuses on the work-life balance benefits, and treats the improvement of productivity as a by-product of the policy. That is, a reduction in working hours generates higher productivity because of better work-life balance.

There is conclusive evidence to support this assumption, including a 2009 analysis by the National Bureau of Economic Research in the United States which suggested an interactive symbiosis between productivity and work-life balance (WLB): “[W]ell managed firms tend to be more productive and more energy efficient . . . better managed firms also have better WLB practices.”[3]

Despite the data, boards and senior managers are inclined to encounter the four-day week as if it were a risky proposition; they fear either the anticipated benefits to productivity will not accrue, or the workforce will – sooner or later – give up its initial enthusiasm for the project, and productivity will revert to the norm. Workers, for their part, worry it is merely a ruse to reduce pay and benefits.

The Perpetual Guardian four-day week offsets these risks by making productivity, not work-life balance, the point of concentration. The core agreement between management and staff is based on delivering a mutually agreed level of productivity in four days rather than five.

By challenging the employee to conceive ideas for improvements that will maintain and even raise productivity, the company circumvents obvious issues which would hinder productivity improvement.

Staff tell us that engaging with them directly has not only helped with output but increased their loyalty.

The upshot: A four-day week just makes sense for businesses. And Perpetual Guardian is not alone in thinking so. Nearly 4% of organisations which downloaded our white paper are now considering their own version of the four-day week. This, for me, is a massive win and I hope others are inspired to follow suit.

The white paper is available free at to anyone looking for more information.

- Andrew Barnes




[3], p17.