From the Angels: 4-day work week can unlock high productivity
By Alex Greenberg / Managing Director, CerraCap Ventures
If we’re ever going to be able to compete with technology hubs like Boston and Palo Alto, it’s time for us to take an innovative approach to innovation. New Mexico may not have the same resources, capital access, or worker pipelines, but we possess the intellectual property and drive to be industrious. With three national laboratories, three world-class research universities, and organizations like the New Mexico Angels fostering an entrepreneurial culture and providing funding for startups, we have the right foundation and ingredients for growth. To capitalize on this moment, we must adopt a more holistic approach to innovation, encompassing creative problem-solving and worker productivity.
The challenge is that we continue to employ organizational designs with misaligned incentives and outdated work paradigms. We are still largely working the same schedules as assembly line workers from the early 1900s. We haven’t properly adapted to the rapidly changing environment and knowledge economy we find ourselves in. In 2019, the Business Roundtable called for a shift to stakeholder capitalism, emphasizing the need for more accountability and outcomes that benefit employees, customers, suppliers, and communities, in addition to shareholders. But this initiative feels lost amid a series of crises, starting with the COVID-19 pandemic. Especially regarding employees, our society still struggles with ineffective models and performative work schedules, which prioritize office presence over productivity. These issues contribute to worker burnout and hinder our business ecosystem development.
In order to move forward and foster the innovation that New Mexico needs we need to better embrace the principles of stakeholder capitalism and re-imagine work schedules for knowledge workers. Research has shown that worker health and wellness are closely tied to productivity, and creativity. By creating systems and environments that optimize individual health and wellness, we can cultivate a more productive workforce that is better able to commercialize disruptive technology.
Several strategies can help us achieve this holistic approach. One solution worth exploring is a four-day workweek. A study in the UK demonstrated promising results for this model, with workers maintaining or even increasing their productivity despite working fewer hours. The study was based on the 100-80-100 model, meaning workers received 100 percent salary for 80 percent of the working hours in return for a commitment to maintain 100 percent productivity. Adopting alternative schedules can be a source of competitive advantage for companies in talent recruitment and retention. Further, we can create an environment where workers produce more in order to maintain these benefits. This approach can help tap into the potent force of loss aversion, where potential losses weigh twice as heavy as potential gains.
Adopting hybrid or alternative work schedules can also promote creativity and productivity. Remote and flexible work arrangements have been shown to increase job satisfaction, reduce stress, and empower workers to be more productive by enabling them to work at the times best suited to them. By offering employees the autonomy to choose their work schedules, we can foster a culture that prioritizes well-being and innovation.
Adopting a holistic approach to innovation has far-reaching benefits including more sustainable growth. The UK four-day work week study showed a 65% reduction in sick days and 71% reduction in burnout. A four-day work week would provide 50% more time for people to be able to meet their basic needs with only a 20% reduction in work hours. Not only can we maintain productivity, but we can also enable more creative problem-solving and innovation, the twin pillars of a prosperous startup ecosystem.
Editor’s Note: New Mexico Angels’ members, investors and start-up owners submit occasional columns on economic development and start-up opportunities in the state. The Angels unite individual investors to pool their resources, providing seed and early-stage capital to startup companies.
Alex Greenberg is Managing Director for CerraCap Ventures, an early-stage VC firm investing in Healthcare, Cybersecurity and Planet Tech. He is a frequent speaker and commentator on entrepreneurship and innovation and is passionate about supporting the growth of the startup ecosystem in New Mexico.