Cost Efficiency: Is a 40 Hour Work the Most Productive?

by Rochelle on April 9, 2012

Is a 40 hour work week always the most efficient? Is overtime a waste of money? This concern has endured in business circles since the dawn of the Industrial Revolution, and has been subject to hundreds of studies since. The topic recently stirred once again in the business blogosphere, in light of Sheryl Sandberg (COO of Facebook) proudly declaring that she defies startup norms and leaves work at 5:30pm.

Sandberg’s declaration was in reaction to the growing trend among companies, particularly small businesses and startups, of requiring a 50-60 hour work week in order to remain competitive. Due to the recession, many employees oblige to these demands out of fear of losing their jobs. But are both employers and workers suffering for this choice? Let’s pick apart the facts of productivity and longer work days, and outline when keeping employees later can help or hurt your business.

Pitfalls of a Longer Work Week

The reality is, the 40 hour work week was not popularized solely by pressure from labor unions who wanted to work less. In the 19th century, the 8 hour work day was implemented in a handful of factories across the UK and owners noticed that productivity and profit grew, while the number of serious accidents went down. This shift was a win-win for both business owners and workers.  Employees got their weekends to recharge, while businessmen maximized efficiency and saved money on compensation, human capital and (once disability compensation came into play) legal disputes.

A wealth of labor studies have supported the fact that workers experience a serious dip in efficiency after they complete 8 hours of work. In fact, knowledge workers, unlike physical laborers, only have a total equivalent of about 6 concentrated hours of productivity. So today, it’s widely accepted as scientific fact: employee output during overtime is often not worth the cost.

When Overtime Works

There is an exception to the 8 hour efficiency rule, so those who occasionally keep employees for pressing all-nighters can take heart. Research shows that your company can reap short term gains from a temporarily implementing 60 hour work week or all-nighters to complete a project. However, the benefits are only temporary, and have limitations many business owners forget.

The reality many managers overlook is that output will not increase in exact proportion to the amount of hours added. After the 8th hour, employee’s capacity to focus drops, and continues to dip for every hour you keep them. If you add 50 percent more hours to their week (so increase hours from 40 per week to 60) your employees will not get 50 percent more work done, they will most likely get closer to 25-30%.

More importantly, for every subsequent week that you have employees working 60 hours, productivity continues to drop until 8 weeks in, when their output is the same as if they’d maintained 40. Some owners have found that production is actually in the negative due to burnout. There is also an after-effect when you return to a 40 hour work week; once burnout occurs, many employees take a while to recover and reach their normal output speed.

Smart Solutions

Of course, if a project needs to be completed in a pinch, you often have no other choice. When there isn’t enough time to find and train a new hire, you might need your employees to pull a few all-nighters, and this move can be worth it when deadlines are tight. But if 60 hour work weeks are occurring consistently, you need to hire more people and divvy up the workload. Pushing your employees too long will lead to burnout in both your team and your wallet.

Another solution is to promote and prioritize excellent time management in your company, so your employees’ precious hours of concentration are not wasted by interruptions and distractions. There are several free time management tools outlined here, including Toggl, Evernote and RescueTime that can help employees better organize their schedules and improve efficiency. With the right tools and reasonable hours, your employees will want to put out their best work.

Here are some articles and resources for improving  and understanding productivity:

Time Management Tactics for Entrepreneurs

Why Workaholism is Counterproductive

Activity Resources Management Template

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