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HR Lab: How this company in India pioneered 4-Day work-week

Source: HR World from the Economic Times

There is considerable debate today on whether the 4-day week can indeed work for all organisations. Does the model really help reduce the number of working hours while maintaining quality of output? The only way to find out if an industrial-era policy is still fit for purpose is to start small and experiment, like organisations and countries today are doing the world over.

With the onset of the pandemic in early 2020, one set of organisational policies eclipsed others the world over – the ones that enabled flexibility for employees. With extreme volatility and ongoing lockdowns, firms had no choice but to improvise and allow workers to operate remotely. As the world scrambled to get things in order, organisations that had already adopted flexi-policies had no trouble in making the switch to a hybrid operating model. Over time, everyone discovered that productivity hadn’t dipped (and in fact had significantly risen in several instances).

In his book with Stephanie Jones, The 4 Day Week, New Zealand based entrepreneur Andrew Barnes makes the fundamental point that technological improvements have allowed consumers to enjoy the benefits of disintermediated business models, but corresponding improvements to overall productivity and associated flexibility have remained elusive for employees. While the pandemic ushered an era of flexibility, it also brought with it the menace of increased workplace stress. Alongside the pandemic, the so-called burnout epidemic reared its ugly head. Increased burnout adversely affected employee productivity. In fact, the Great Resignation may well be a response to work-related stress, among other factors.

British historian C Northcote Parkinson noted in 1955 that “Work expands so as to fill the time available for its completion”. Before the pandemic wreaked global havoc, a handful of pioneering organisations, including Mr Barnes’ Perpetual Guardian and Microsoft Japan, took the idea of flexibility a notch higher by experimenting with a 4-day workweek. Closer home, Beroe, a global SaaS based procurement intelligence and analytics company, has had a 4-day work arrangement in place for its employees since early 2017. About 80% of Beroe’s workforce is based in India.

Impact over activity

Anand Narayanan, the VP of HR and Marketing at Beroe, explains that the firm does not count the number of hours its employees put in at work. What is instead measured is the quantity and quality of defined output that needs to be provided in response to client requests. This is in line with Beroe’s philosophy of being an outcome-driven organisation versus merely focusing on input parameters that measure effort (like number of hours clocked). Employees at Beroe work from Monday through Thursday and take the day off on Friday followed by the weekend. Everyone takes home 100% of the salary they are entitled to, with no cuts to benefits, vacation days or public holidays.

The only exception to the 4-day workweek is when Beroe launches a new division or opens an office in a new geography. The firm gives the fledgling units some time to evolve before putting in place the required processes and measures that enable a 4-day week.

Employees as customers

While it may seem straightforward to implement, Beroe did not just shift to this working model overnight. Anand Narayanan is a trained marketer with no formal background in HR. Back in 2016, when Mr Narayanan took over as interim head of HR, he was already leading the marketing function for Beroe. With the additional responsibility, he knew he had to prove himself and gain the trust of not just the executive team, but also of his colleagues in HR as well as employees.

Mr Narayanan did what he knew best at the time – he wore the marketer’s hat and went on a fact-finding mission to uncover pain-points for his customers, i.e., the employees. A couple of issues immediately sprang up: First, employees were high-strung and unhappy, primarily because of long working hours due to drawn-out calls with both suppliers and clients. The offices in Bangalore and Chennai had superior infrastructure, and employees were required to take these calls from the workplace. The flipside of this was that long commutes coupled with longer working hours ensured that work-life balance went for a toss for many. Second, CEO Vel Dhinagaravel  felt that it was time to pivot from an effort-led operating model to a productivity-led approach in order to sustain for the long term. Taken together, these two issues pointed to a third, related problem: attrition.

Close to 40% of Beroe’s workforce is women, and the organisation had begun to lose its women employees at a fast clip. Upon closer evaluation, Anand realized that many women were not just quitting Beroe but were dropping off from the workforce entirely, mainly due to underlying societal and familial pressures. To arrest attrition, Beroe implemented two sets of related policies: one, allowing long-term work from home for women, provided they completed the requisite hours of training and were familiar with the processes (this was later extended to all employees). Second, Beroe instated a 9-month maternity policy, which was later extended to one year. This instantly shifted the mood across the firm and the results were apparent: Beroe has barely lost any women employees post maternity over the last five years.

Designing the 4-day workweek

With the extended work-from-home and maternity policies showing promise, Mr Narayanan felt more confident to tackle the twin issues of work-life balance and productivity. Was there a way to solve these seemingly unrelated problems in one clean sweep? Mr Narayanan remembered an instance of his CEO returning from a business trip to Scandinavia. He had mentioned how remarkably productive the Scandinavian countries were. CEO Dhinagaravel was an admirer of their work ethic: getting work done in lesser amount of time and not compromising on time away from work.

Armed with a reference to the trip, Mr Narayanan broached the topic with his CEO – what if they rolled down on the number of hours employees spent at work, and gave an additional day off to everyone? He didn’t really have data to back up the request at that stage, this would have to be conducted as an org-wide experiment. Mr Dhinagaravel was supportive of the idea, and they took the request to the executive team. There were concerns about how clients would react and the associated impact on productivity. It was agreed that a three-month pilot would be rolled out to test the efficacy of the idea, with a clear communication strategy and pre-defined measures for productivity. A ‘working group’ of a cross-section of managers was brought on board, who would have their ears to the ground and play the crucial role of influencers and change agents.

The big rollout

During one of the townhalls, CEO Dhinagaravel made the announcement – in order to help the employees gain better work-life balance, Beroe had decided to give everyone a Friday off. Not just this Friday or the next Friday, but every Friday here on. Spontaneous excitement, applause and pandemonium ensued. However, Mr Dhinagaravel also pointed out that this was contingent on a set of rules that Mr Narayanan would make public soon, namely – (1) The quantity and quality of output cannot diminish, if anything they have to get better, (2) There is no need to clock work hours, employees are free to design their workday as they deem fit, (3) There will be no cut in salary or associated benefits, and (4) We need to maintain our high customer feedback scores.

The executive team was aware that managing internal communication was just a fraction of the battle won, they would now wait and see how their clients would react. A large number of inimical responses would seal the fate of the pioneering initiative. By then, Beroe had also designed an AI-led self-serve SAAS platform called Beroe Live, which minimizes the need for human intervention. A carefully crafted communique was rolled out from the CEO’s office to clients: to improve the work-life balance of our employees, Beroe was rolling out a 4-day week and they believed this was the way forward. Employees would be available Monday through Thursday, and on Friday, clients were requested to login to the platform to get their queries resolved. Any specific queries outside of the platform would be resolved by the following Monday.

Admittedly, everyone was nervous about how clients would react. Surprisingly however, clients were unanimous in congratulating the Beroe team on the remarkable initiative and sent their best wishes. Barring a few who expressed concern, most clients said they would work with the team and participate in the trial. Clients were requested to give their feedback on a 5-point scale on the quality of output. Associated metrics were published monthly through the trial period.

Concerned parents of millennial and zoomer employees used to 6-day workweeks raised pertinent questions – why is my child not working on a Friday? Is the firm in trouble and shutting down? What happens to pay? With familial and employee concerns assuaged, everyone looked to the results at the end of the first month of the trial – client feedback had gone up to well above 4, and the team discovered that significantly more clients had started giving feedback.

The road to permanence

By the end of the third month, it was clear to everyone that this was not a fluke occurrence. Client feedback continued to stay above 4, and there was a significant uptick in the quantum of work output. Quarterly attrition came close to zero. Employee Satisfaction Scores, which would typically hover at close to 3.2 to 3.3 earlier, went well above 4.

Following a huddle with the executive team, CEO Dhinagaravel announced to everyone that they would make the arrangement permanent, provided everyone keeps a close watch on critical output-related metrics. Should any of them drop, Beroe would need to reconsider the 4-day week arrangement.

It has been over four years since Beroe launched the trial. Both client feedback and employee satisfaction scores have not dropped below 4 since then. There are a few tweaks that the firm has had to make along the way. First, considering that there will always be clients who would need urgent support on a Friday, there are designated ‘doctors on call’ who work Fridays to resolve client queries on a rotating basis. This arrangement is managed at the team level by managers depending on volumes. Second, Mr Narayanan realized that the idea of involving a working group works well in practice. Since then, the group is actively involved in and takes ownership of org-wide initiatives. For the leadership at Beroe, it really is a matter of trusting the employees and making them a critical part of the organisational development process. Mr Narayanan continues as the Head of HR to date.

Peeking into the future

As work pressures intensified through the pandemic, Mr Narayanan noticed that Fridays were being sacrificed to accommodate client requests. He had to reiterate that the firm hadn’t done away with the 4-day week, and teams worked with clients to ensure that employees are not overtly affected.

The single biggest factor that led to the adoption of the 4-day week at Beroe is active leadership support and sponsorship. However, the model adopted is somewhat different from what has been prophesized by Mr Barnes in The 4 Day Week – he does not advocate for an org-wide day off, and instead feels this decision should be taken by managers at the unit level. This premise does hold some significance. With Beroe morphing into a SAAS platform, the model needs further refinement to accommodate customer-service teams that need to be available on call round the clock.

Semantics aside, the 4-day week arrangement bestows Beroe with a significant competitive advantage that helps attract the best talent and ensures loyalty. There is considerable debate today on whether the 4-day week can indeed work for all organisations. Does the model really help reduce the number of working hours while maintaining quality of output? The only way to find out if an industrial-era policy is still fit for purpose is to start small and experiment, like organisations and countries today are doing the world over.

In 1926, Henry Ford was among the first private employers to not only instate a 40-hour, 5-day week (when 100-hour workweeks were the norm) but he also doubled workers’ pay. His actions sent a message to corporate America that well rested and paid workers can help stimulate consumption. Production boomed and employees felt pride working for the Ford Motor Co.

Priorities for organisations have shifted dramatically in the 21st century. Attraction, engagement and retention related challenges occupy significant mindspace of CEOs today. Piecemeal approaches to wellbeing may tackle the problem of work-related stress in the short term. But if the intent is to systemically reduce burnout, help inculcate a healthy sense of balance and enhance productivity, we need bold leaders who are not afraid to think out of the box.