So, you want to work a four-day week?
Post pandemic many designers reassessed their work-life balance. Time away from ‘business as normal’ showed the 40-hour week isn’t working for many. Something had to give, and for most, it was work. The result is many in our network have reduced their working week.
Designers need headspace to be creative, and while every decision in life should not be based on the dollar value, working less hours does have implications.
The World Health Organisation identified lack of control as being one of the attributes for poor mental health so this week’s article includes the information you need to be proactive and take control of the ‘new normal’.
Implications of working a four-day week
The first step is to understand what working four days each week means in numbers.
Billable hours
It’s important to understand the difference between hours worked and billable hours.
In Victoria, Australia (public holidays differ around our country and around the world), working
- 5 days per week, 48 weeks of the year, less public holidays equates to 1840 hours.
- 4 days per week, 48 weeks of the year, less public holidays equates to 1456 hours.
Not surprisingly, we’re not actually billable every single hour we’re at work: we sit in non-billable meetings (like WIPs), we have coffee-breaks, see reps, talk/discuss trends and work on studio-led projects.
Productive hours are billable
70% productivity is an industry benchmark – that is 70% of a designer’s time is actually billable directly to clients.
A designer working at 70% productivity:
- in a 5-day week is billable for 1288 hours per year.
- in a 4-day week is billable for 1020 hours per year.
So, realistically a 4 day week means 268 less hours billable per year.
Putting $$ to the hours
When we work with studio owners, one of our first tasks is to identify an hourly cost rate for each designer. While an accurate cost rate can be a complicated formula that includes an overhead component, it’s possible to do a quick-n-dirty ‘chair’ cost for each designer. Understanding even this basic rate is powerful – it makes it easier to make better decisions quicker.
For the sake of the exercise let’s use our experience to cite some general, but accurate figures: we know a designer on a salary package of $75K + super has a wage-only cost rate of around $64 per hour. This designer would be conservatively billed at $150 per hour. And keep in mind this isn’t value pricing – it’s the base rate for transactional work.
Making no other changes, if this designer reduced their time to 4-days per week there are two $$ implications for the studio owner:
- absorb $40,200 in lost earnings per year for each designer (that’s $200 per day), or
- increase their hourly cost rate (from $64 to $81) to make up the shortfall.
Herein lies the problem: there are not many studios who could take $40,200 hit to their bottom line, and similarly, adding $17 to each designer’s hourly cost rate may not be viable. And be mindful this is the cost rate – you need to add overheads, plus a safety margin plus a profit to arrive at a studio cost rate.
Is increasing productivity the answer?
One way to decrease the cost implication is to increase productivity.
Our calculations show this designer would need to work at 88% productivity to meet their current cost rate (of $64).
That means they need to increase productivity from billing 5.2 hours per day to billing 7 hours in each 8 hour day.
Two provisos:
- be mindful these hourly rates are for inhouse costing, not for billing clients, and
- higher productivity relies on having enough work to keep them busy.
Even given these proviso’s, while plausible, this scenario is not sustainable.
A designer working 4 days per week, living a healthier, more balanced lifestyle is highly likely to be more productive but 90% productivity every single day of every single week is a tough ask.
So increasing productivity isn’t the only solution … a better solution would be supplementing a smaller productivity increase by:
- value pricing (costing based on subject-matter experience)
- good estimating (building a profit margin into each project)
- billing all activity back to the client – including research and meetings
- using a good management system to track activity (and reduce re-work and scope-creep), and
- limiting meetings where everyone is involved but not billable – like WIPs.
So what?
It is hard to argue against the value of working less but understanding all the ramifications is powerful.
The health improvements of a four-day week are well-cited, but we are yet to see the full economic results. Understanding the monetary implications means you can make proactive decisions. Knowledge gives you the confidence to act and that helps reduce those lack-of-control feelings commonly linked to mental health issues.
Got a comment/question? As always, happy to discuss further, just email.
Freelance Writer and Illustrator
2 年Great article Carol, a really interesting breakdown that I haven't seen before from the perspective of the business. The thing I've seen in various agencies I've worked in is businesses having to find busy work for designers and the team (usually non-billable) in the slower periods. I wonder if designers and teams would be interested in a flexi model where days worked changes throughout the year based on the volume of billable work in studio? For example, dropping days in slower patches and picking up more days in high volume periods. Or it could possibly be too hard to plan for!
Design business coaching and mentoring I Design business advocate I Championing diversity in design businesses
2 年In the WFH debate it is worth thinking about going to a 4 day week in the studio. Increasing hours a little, increasing productivity and streamlining process can make it profitable for everyone.
Consulting Creative Director ?? brand activation specialist, artist, designer, 3D expert
2 年Great article Carol. I find the more headspace I have the more productive my billable hours are. Do you think billing some of that headspace is important? Without it you may be billing more hours. Good for thought anyway.
Helping small business owners to build a business they'll love to lead.
2 年Great article Carol Mackay, I think business owners and employees need to look at the reality of how a 4-day week will impact them both financially, your examination of the numbers should be a great help to many. In my experience, very few designers are motivated solely by money, so perhaps a reasonable review of salaries for increased personal time, and acknowledging potential lost productivity would result in some wins for both parties. Any, not everyone is likely to want a shorter week, so a happy balance might be achieved in businesses with larger staff numbers. All good food for thought!
Author of 'The Design Manual', freelance writer, designer, bassoonist
2 年In my experience, the 4-day week does work - with most people maintaining a similar level of productivity. But I have also found most people are happy to negotiate on their pay for the extra day off. It doesn't need to be mathematically exact reduction because often tax levels can help, etc. Certainly a discussion worth having - like working from home a couple of days each week. It is really only public-facing positions where these options become really difficult.