Would you opt for a four-day work week (and 20 percent pay cut) or other voluntary work reduction to help your employer avoid mass layoffs?
At KPMG’s London operation over 80 percent said yes. According to the Globe and Mail:
The Firm’s London office has offered its 11,000 British workers the option of moving to a four-day week, or taking a sabbatical with reduced pay. So far, more than 80 per cent of its partners have raised their hands.
For employers like KPMG who know they face a worldwide talent shortage during strong economic times, this solution offers a way to maintain a workforce that theoretically can be ramped back up during boom times. Plus, they hang on to valuable “intellectual capital” as detailed in the above-quoted article.
I suspect a number of people today would happily trade having more personal time for salary given the chance. The bigger question may be whether people will voluntarily return to five-day weeks once the economy rebounds.
Your thoughts?
January 26th, 2009 at 9:27 am
It seems to me this is an idea that is long overdue. Beyond the benefit to the company of retaining talent, it will allow people to, all be it at a lower income, live a little more. If I wasn’t self employed that would be an option I’d look for at a company.
January 26th, 2009 at 10:49 am
Interestingly enough, the City of Gary, Indiana has done the same thing this year. They tried to make everyone work five days but only get paid for four.
Needless to say, the unions didn’t go for it. The fire and police unions successfully appealed the cuts. The other unions were not as successful, and the non-union people had their sallaries cut.
Overall, it was a very good short term sollution to short term problems. In Gary’s case, they have long term problems that aren’t solved by just cutting sallaries. Their existance is in doubt, and bankruptcy is a more likely solution (which would invallidate union contracts, a la GM and the UAW. Gary has very similar issues to GM).
January 26th, 2009 at 11:31 am
Interesting Gary Indiana strategy — work 5 days for the pay of 4. I can see a lot more resistance to that.
This also leads to the one big risk for employees — especially the KPMG partners — in accepting working 4 days for 4 days pay is the risk that they will end up doing 5 days of work for 4 days pay. Professional jobs built around a 38 hour week don’t necessarily easily convert to 30 hours — clients still need service, deadlines still need to be met, etc.
January 26th, 2009 at 4:54 pm
If this is a move to retain ‘intellectual capital,’ it presumably involves consultants and accountants. I don’t know anything about the labor laws in the UK, but I don’t know how this strategy would work in the US. These type of employees in the US generally do not work 40 hours, rather 60-70 is the norm. If they were to be offered a 30 hour work week, the company would be reducing hours worked by ~50% with only a 25% reduction labor costs. I don’t think they can ask them to work 45-55 hrs and pay 75% of salary.
Am I missing something?
January 27th, 2009 at 1:02 pm
would this be for FT benefits also. Seems a risk for employees being asked to go back to 5 days and no increase in pay.
January 27th, 2009 at 4:18 pm
Good point Joelle. In some industries that could certainly happen. The one thing in the KPMG employees’ favour once the economy turns around is the global labour shortage, particularly for accountants who want to work at the big 4. KPMG would never be able to survive paying 20% less than Ernst & Young or Accenture, or PWC.
The London KPMG people would keep all their benefits, whether they opted for the 4 day week or the sabattical.
January 28th, 2009 at 12:03 am
Hi Wendy,
The benefits part of this is the major stumbling block. If you look at many employers who make the 4 day workweek available, they also reduce benefits by 20 percent. The latter is a major barrier to making the 4 day move.
January 28th, 2009 at 1:29 am
Hey Donald. Thanks for the observation. Can I ask where you live (country). I’ve rarely heard of a company reducing medical-dental benefits for 80% time — below 60% yes, although in the article above employees can take a sabbatical and work 0 hours while receiving full benefits and 30% pay.
But generally, given they are asking people to voluntarily take this step, full benefits would have to be a given.
The exception on full benefits may be corporate contributions to any pension or rrsp / 401K that are based on your salary, which then go down to 80%. Is this what you are talking about?
January 30th, 2009 at 10:34 am
Josh is right–this kind of move is about preserving intellectual capital–and it’s really smart. The 80% acceptance rate is amazing.
People are a core part of the value creation process for almost every business today. A firm like KPMG understands it better but it is important in more than just consulting and accounting businesses.
More companies should consider this strategy. I know that the U.S. system can make it harder but it’s worth finding a way.
January 30th, 2009 at 5:30 pm
Sorry, I’m still missing something. How many hours per week (on average) did they work before the optional cutback? 40? 60? 70?
How many are they expected to work now?
January 30th, 2009 at 11:01 pm
Hi Josh,
The article just said that 80% volunteered to switch to a 4 day week _ or _ to take a 3 month sabbatical at 30% pay and full benefits.
But your point about how many hours they are actually working is a good one. It may be that instead of doing 50 hours over 5 days they are now doing 40 over 4.
I know a few people who work four days by choice (mostly women with small children), including me, and most people note the challenge of meeting corporate and client needs in fewer hours. And indeed one lawyer commented that she now puts in 40 hours instead of 50 or 60 because of her 4 day week.
January 31st, 2009 at 5:28 pm
Wendy,
Thanks for clarifying. Clearly, it’s a popular alternative in the UK and could appeal to US workers as well.
Personally, it would leave a bad taste in my mouth to work 40+ hrs yet take a 20% haircut.
Josh
February 1st, 2009 at 11:49 pm
I agree on the “bad taste” to be working “only” 40 hours and sacrificing 20% of one’s pay to do it. But if you work in a field that expects 60 hours+, then sacrificing some pay in return for normal hours and only needing to report to work 4 days per week might seem like a good trade off.
February 4th, 2009 at 12:34 pm
Loads of really interesting points here. I guess a big thing driving this apart from the economic downturn is the rise in ‘active leisure’ mainly brought about by the ever increasing capacity and expansion of the online world. Because people are engaging in more industrious leisure as opposed to switching off or vegging out, they’re looking to work less to balance things out. I would agree that in the UK there is certainly a gender bias in that more women are opting for the 4 day week and it does seem to be particularly appropriate for parents. A big factor determining whether you can or can’t is your disposable income. I can see the reduced working week being particularly appealing for high earning baby boomers (men and women)/ empty nesters looking to relive their misspent youth and having the existing means to be able to take the 20% drop and still enjoy life as kids have left / leaving home and mortgage is (nearly) paid off.
February 28th, 2010 at 9:14 am
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