In the wake of the post-pandemic era, businesses have undergone substantial transformations, particularly in embracing flexible work arrangements. One emerging trend gaining increasing momentum is the 4-day work week. But the question looms: Can Chief Financial Officers (CFOs) realistically embrace this model without compromising financial efficiency and productivity?
Below are the advantages and considerations for CFOs contemplating this shift, drawing inspiration from the groundbreaking 4-day workweek pilot in South Africa.
- Reduced overhead costs:
The prospect of trimming overhead costs emerges as a compelling driver. By condensing the workweek, companies can achieve notable reductions in energy consumption, translating into cost savings on utilities. Furthermore, the opportunity to downsize office space contributes to a cascade effect, lowering rent, property taxes, and related expenses. This aligns with financial goals and supports sustainability efforts, a key selling point for stakeholders prioritising eco-conscious practices.
- Increased employee retention and satisfaction:
Offering employees a 4-day work week gives them more time for personal pursuits, fostering higher levels of happiness and fulfilment. This correlates with heightened job satisfaction, a crucial metric for reducing turnover. Research indicates that companies providing flexible work arrangements experience lower turnover rates, presenting a tangible financial advantage. Retaining experienced personnel translates into savings on recruitment and training costs, preserving institutional knowledge and expertise.
- Improved productivity:
Contrary to conventional wisdom, a condensed workweek is proven to contribute to enhanced productivity. The additional time for rest and personal interests allows employees to return to work more engaged and focused. Studies, including one conducted by the Icelandic government, demonstrate that productivity remains constant or increases under a 4-day workweek model. This heightened level of engagement contributes to improved individual performance and aligns with broader organisational goals. The resulting boost in output without a proportional increase in labour costs contributes directly to the company’s financial health.
Insights from the South African Pilot:
The results of the first 4-day workweek pilot in South Africa, starting on March 1, 2023, are illuminating. Contrary to initial scepticism, the pilot showcased substantial employee and employer benefits. The model, prescribing 100% pay for 80% of the time, witnessed participation from 28 South African businesses and one Botswanan business across various sectors. The reported experience earned an impressive 8.0 out of 10 rating, with 92% intending to continue or consider the 4-day week.
The outcomes of the South African trial offer tangible insights:
- A 10.5% average increase in company revenue.
- Almost half (49%) of employees reported increased productivity.
- Resignation rates decreased by 11%.
- Sick and personal days decreased, with a 9% weighted decrease in absenteeism.
- A third of participants experienced reduced work stress, despite an increased workload for 31% of the sample.
Challenges and Creativity:
The findings also underscore South African companies’ challenges in reducing weekly working hours by 20%. While some achieved a 12% reduction, creative approaches were employed. Companies opted for Wednesdays off, fortnightlies, or restructuring hours to meet the 20% target. Challenges arose with public holidays, and two companies halted the trial midway. Notably, successful implementation required addressing challenges such as shorter transition times and the need for comprehensive leave management.
Considering various initiatives such as the 4-day workweek becomes increasingly important for CFOs. The CFO community of CIBA fosters collaborative learning and knowledge sharing. By becoming a member of the CFO Club Africa, a prestigious network within CIBA’s Community for Finance Leaders, you can connect with fellow CFOs who share your interests and concerns. This affiliation offers a valuable platform to exchange insights drawing from each other’s experience which provides for more informed decision-making and leadership.
Find out more about the CFO Club Africa here: https://cfoclub.co.za/
Join as a member of the CFO Club Africa here: https://accounts.saiba.org.za/cfoclub/register