Atom Bank moves to a four-day week: will the rest of the UK follow its lead?
Digital challenger bank, Atom Bank recently announced that they will be introducing a four-day week without cutting the pay of their staff, making it the UK’s largest employer to do so. So, Business Leader wanted to find out whether other UK companies could follow the company’s lead.
The move from the Durham-based digital bank means that its 430 members of staff will now have the option to work 34 hours a week spread over four days as opposed to 37.5 hours spread over five days. This suggests their working days will be longer.
But arguably what is most significant about this move is that staff can work less hours per week without loss of salary. Mondays or Fridays are also expected to be the default days off for the majority of employees.
Will other UK companies introduce a four-day working week?
With the pandemic leading to the rise of home/hybrid working, employers across the UK have been revaluating what is the best and most productive way for them to conduct business. So, many will feel it’s only a matter of time before discussions of a four-day week become more commonplace.
Iceland successfully trialled a four-day working week in a study that lasted from 2015-2019 and included more than 2,500 workers. And whilst this prompted many in the UK to discuss also making the move, it’s taken more than two years for a large company, like Atom Bank, to finally follow in Iceland’s footsteps
Dr. Jonathan Lord, HR expert for the University of Salford Business School, thinks other companies may follow Atom Bank’s move but is unsure how much Atom Bank’s new policy will support employees and company performance.
He comments: “The covid-pandemic has enabled working practices which seemed years away to be introduced quicker than expected, and while it is something which will not be right for all workplaces, it is a policy which many organisations may replicate.
“The uptake of this type of policy comes on the back of a review into the UK workplace, which found a four-day working week could become the new norm as a result of enforced changes during the pandemic. The Chairman of the Flexible Working Taskforce, Peter Cheese believes the UK should move away from the 9 to 5 culture to embrace flexible and balanced working.
“For Atom it does sound like a positive move, although it is only a reduction of three hours work per week and raises the question does this type of policy really support the employee as well as impact positively on the organisation’s performance?”
But Charlie Cadbury, the CEO and Founder of adtech firm Say It Now, has hopes that Atom Bank’s move will lead to conversations around current working norms.
He says: “Hopefully it will stimulate discussion around working norms. These ‘norms’ have all been tested recently and we’re trying to find our feet again on shifting sands. I don’t believe a one size fits all approach works with all companies; a significant change to working practices relies on maturity of organisational culture, trust of employees and communication of purpose.”
Charlie’s comments bring to light an important consideration of a four-day working week, which is whether such a model would work in every industry. Charlie is not so sure that it would.
He continues: “This is a question of company output. The studies in Iceland suggested that giving people three days off per week yielded similar or increased efficacy on their four working days. Would this work in manual labour or minimum wage jobs, or is this outcome the preserve of the knowledge worker? I’d suggest it’s the latter.”
Alan Furley, Director at ISL Recruitment, concurs: “I don’t think it’s an option for all. Some of us have enjoyed the chance to work at home, at a co-working space, or on the beach, but for those in industries such as retail or manufacturing, that’s not been so easy, and the same applies for a four-day week.
“How will your customers feel if they can’t get a response on a Friday because your workforce has adopted a Monday – Thursday routine? What about when your competition is responding five days a week?
“At ISL, we’ve adopted a 4.5-day week, and it’s been amazingly well-received. But if we need to help a startup secure a key hire by acting quickly on a Friday afternoon then we’ll do that, rather than stay silent till Monday.
“It feels easier to comprehend that working less hours and days can produce better quality output for those doing cognitive work, but for those doing physical tasks, the benefit vs cost might be trickier to see.
“What is key is the need for data and feedback, rather than simply assuming it will work. As more companies adopt this model, we’ll have more evidence of what works well and what has been challenging, to help work out what might fit your business best.”
Lauren Thomas, EMEA Economist at online job review platform Glassdoor, also agrees that it’s not a practical solution for every industry.
She comments: “In the current working environment, a four-day workweek isn’t possible in every industry. For instance, in some industries that base their hours on when most people work, like education or childcare, a four-day working week is only realistic if the rest of society sees a major shift towards this business model.
“In other industries, the practicality of switching to a four-day working week depends on whether the week under discussion is a 32-hour (eight hours per day for four days) or a 40-hour (10 hours per day) work week. Some work, like many skilled or manual labour jobs, would be difficult to accomplish in fewer working hours and would require longer shifts if fewer days were the norm unless productivity in that industry improves.
“Other work, such as roles in tech, could be well-suited to a 32-hour working week, particularly if workers chose to cut time previously spent in unproductive meetings or ‘busy work’. The move to more remote or hybrid work environments may aid in this shift, as the pressure to put in unproductive hours at the office simply for the sake of looking busy lessens.”
What are the pros and cons of a four-day working week?
Whilst the four-day working week may not be suitable for everyone, it appears to offer a range of advantages.
For example, Atom bank’s Chief Executive, Mark Mullen was quoted in Sky News as saying that the move will create a better work-life balance for staff and improve productivity:
“A four-day week will provide our employees with more opportunities to pursue their passions, spend time with their families, and build a healthier work/life balance,” said Mark.
“We firmly believe that this will prove beneficial for our employees’ wellbeing and happiness and that it will have an equally positive impact on business productivity and customer experience.
“We are proud to be one of the first businesses to introduce a four-day week for all our employees, and we hope many others follow suit.”
According to new research by Nucleus Commercial Finance, one in five (17%) SME business leaders are considering introducing shorter working hours to improve productivity. In Iceland’s successful trial of a four-day week, they also found that employees had a better work-life balance and were more productive.
Lauren Thomas concurs that a four-day week can offer a better work-life balance.
“Whether Atom Bank’s move will directly prompt other companies is unknown, but a four-day working week is definitely one way to attract candidates, so we may see more companies experiment with four-day workweeks as the labour market continues to shift in job seekers’ favour,” says Lauren.
“A four-day working week can offer better work-life balance, reduced costs (childcare, travel costs, etc.) for both the employee and employer, lower attrition and a decreased likelihood of burnout thanks to more time outside of work, particularly during the daylight hours — which is particularly important in the British winter.
“Potential cons are less slack time at work, longer working hours, and an uncertain impact on productivity. Companies who have switched to four-day weeks are more likely to be predisposed to flexible working and their success is not necessarily indicative of the wider workplace.”
However, Dr. Lord argues that there is a correlation between overworked employees and productivity.
He comments: “Stanford University has researched the relationship between hours worked and productivity, which revealed a clear correlation with overworked employees being less productive than employees working a normal working week.
“Other advantages include a more equal workplace as those with caring responsibilities may be able to navigate a more flexible working arrangement, improved employee engagement as well as a reduced carbon footprint.”
“Not all companies will be able to adopt a four-day working week, however, as it could affect customer satisfaction, which many organisations rely upon and have to provide a clear and consistent approach to.
“The other issue is that many organisations and their employees confuse the concept with compressed hours. A four-day working week should reflect a notable reduction in working hours, otherwise it can negatively affect productivity and engagement as it can be viewed as just the same number of hours in a shorter number of days.”
Charlie Cadbury believes there are other benefits too, but a clear company vision is essential for realising them.
He says: “On one hand, you would expect reduced absenteeism, increased engagement and performance at work – as long as long-term purpose and KPI’s are well set up and well measured.
“On the flip side, as with any employer/employee engagement, if there is not a clear company vision and articulation of the role to be played to achieve that, no number of employee benefits will get the most out of the individual.”
What is required for successful implementation of the four-day week in the UK?
Clearly, there appears to be potential benefits of a four-day working week. But as this working model may be unsuitable for every company, we were curious to learn what would be needed for it to be implemented effectively.
Charlie believes a change in attitudes between employers and employees is required.
He comments: “A change in attitude from master/servant relationships between employee and employer and working environments where outcomes from each individual are clearly understood. When this is in place, it really doesn’t matter how long, when, where or how people work as long as they do their part to achieve the ultimate goals of the organisation. This is how I think things should be set up.
“Clock watching is good for no-one. People thrive in environments where they feel autonomy, mastery and purpose (Daniel Pink). Arguably, a one, three or five-day working week is the wrong way to look at this; employers should let people choose their own hours as long as their output is in line with what the company needs from them, and they are motivated by the larger purpose.”
Alan Furley, however, believes more policy changes to help company’s adopt flexible working practices will help.
“There’s been policy changes to help adoption of flexible working, and more in this area will help,” continues Alan. “Practical assistance on how to change employment contracts, how to calculate updated holiday allowances, and how to treat part time works – these are all areas that we had to work on as we moved away from a five-day week.
“Many people who are now leading businesses grew up in a working world where hours worked were a proxy for ambition, work ethic and loyalty. That was my early career experience, and I’ve had to adjust. That’s a change in mindset that is needed across the board to see success.
“We also need to be cautious. There’s a danger that good intentions of improving wellbeing via a four-day week leads to increased burnout because people work crazy hours Monday – Thursday only to arrive exhausted on Friday.
“If businesses can get this right, it should be an immensely powerful retention tool. If you’re working for a business that gives you every Friday off, it’s going to have to be a special opportunity to tempt you to go back to working 20-25% more!”
Lauren Thomas believes that along with a change in employment contracts, companies will need to successfully demonstrate that productivity will be improved.
She comments: “Currently, there are no legal barriers to adopting a four-day working week, although many employment contracts would have to be rewritten to adapt to this new norm. The Scottish government has voted to trial a £10 million program to help companies make the switch, which other governments could adopt as well.
“Finally, companies and employees would need to show they could maintain and even enhance productivity with a four-day working week.”
Dr. Lord highlights what we can be taken from some of the studies into four-day working weeks but believes there are issues to overcome in sectors where a four-day working week is not so practical.
He said: “Companies in Spain are currently piloting a four-day working week and Unilever is giving staff in New Zealand a chance to cut their hours by 20% without hurting their pay in a trial.
“In Iceland, a four-day week trial taking place between 2015-2019, which included more than 2,500 workers, was deemed successful and led to many workers moving to shorter hours as the study concluded that productivity remained the same or improved in the majority of workplaces.
“This study, however, only targeted public sector workers and still raises the issue of traditional private and voluntary sector organisations being able to practicably implement this type of policy.
“The Timewise Innovation Unit, a ‘do-tank’, has labelled these the hard-to-crack sectors and have committed to conducting research to test and share what works in challenging sectors, which they believe will require a mixture of government policy and organisational strategy that enables the right flexible working approach for their own industry.”
Although a shorter or more flexible working week might sound farfetched to some, as home and hybrid working continues, and other companies potentially follow Atom Bank’s lead, are business leaders running out of time to resist re-evaluation of their long-established working practices?