In the competition for talent, most startups cannot match the incentives offered by MNCs or the stability of SMEs. But how about offering long weekends?
The common vocabulary that shapes a startup narrative is usually composed of three elements:
- high risk
- long hours
- hard work
But what if long hours weren’t necessary? How about working for four days and then relaxing for three? And what if your weekend started on a Thursday night?
Hard to believe. Right?
But two companies have already been featured in Fast Company for their unorthodox approach; Treehouse, which has three-day weekends year-round, and Beholder Productions, which has three-day weekends through the summer.
Ryan Carson, the Co-founder and CEO of Treehouse, questioned what many took for conventional wisdom. Featured in CNN’s Small Business Guide, the Growth Everywhere Blog and Inc, Treehouse has attracted attention for its off-beat approach and bucking the conventional mythology of startups. While initially skeptical of offering three-day weekends, he took the plunge and doesn’t regret it.
Remembering long (and sometimes excessive) hours of uninterrupted work as a software developer in another startup, Carson wondered if things could be managed differently. So in 2010, he tried something different with Treehouse, a technology education services firm headquartered in Portland, Oregon.
Treehouse develops online courses in website-building, code writing and mobile apps. The firm has a second office in Orlando, Florida. About half of its total strength of 75 employees work remotely. What was unique was the decision to operate on a four-day work week. And they made it work. So far, Treehouse’s success, revenue and its stable of reputable investors validates the management team’s decision.
For Beholder Productions, a Philadelphia-based creative content agency specialising in film and video production, web design, and development, three-day weekends are offered during the summer season. Rather than offering working hours ranging from 9 AM to 5 PM as Treehouse does, its workday is from 8 AM to 6.30 PM, from Monday to Thursday. COO and Co-founder of Beholder, Emilia Andrews, who was awarded best COO in 2011 by SmartCEO, reported both improved morale and increased productivity as a result of implementing long weekends.
Weighing pros and cons
From a human resource perspective, offering a four-day work week is a powerful incentive and benefit, for both staff and management. It enhances the ability to recruit and retain talent and reduces employee attrition, given the rarity of companies offering compressed work weeks.
Prevailing evidence suggests that employees tend to intensify their work when granted flextime. This is rooted in social psychology, particularly in the Golden Rule. Because employers have created a beneficial arrangement enabling their personal freedom, staff feel compelled to intensify their work efforts to benefit their employer.
This creates a major competitive advantage, particularly for Treehouse, in terms of being able to recruit and retain staff, especially when compared to market leaders (e.g. Google) and rival startups seeking to acquire talent. Carson shared that many of his software developers preferred working with Treehouse, despite repeated offers of higher salaries by Google, Facebook and other software MNCs, citing the three-day weekend as a strong incentive for staying. Other companies were also unable to match this benefit, despite their offer of higher salaries.
Not only does a four-day work week limit burnout, it enables staff and management to achieve work-life balance. With long weekends to rest and recharge, motivation is enhanced. But the time constraints of a four-day work week further enhance productivity through forcing employees to ruthlessly prioritise and be results-oriented. It also creates a sense of urgency, as employees focus on getting tasks and projects accomplished, fostering greater efficiency.
In Beholder’s case, it also fostered greater initiative, as employees had a stake in ensuring work got completed, in order to enjoy their long weekend. It became a strategic imperative and part of the overall team effort to ensure tasks and assignments were completed, with employees taking initiative to meet people and get work done.
Treehouse also couples this with a with a flat organisational structure, something other tech firms have adopted. While mostly beneficial, it does come with challenges and raises the question of accountability. Some firms that have adopted flat management structures are the Nevada-based e-commerce firm Zappos, Washington-based Valve Corporation and the German tech firm 6Wunderkinder.
Despite the benefits, there are limitations to such unique work arrangements. One of these is stress, with more work to do in compressed amounts of time and with less downtime. Similarly, hiring and vetting of staff is crucial, as new hires must possess initiative, discipline and adapt rapidly to organisational culture. Treehouse also has to be selective with its projects, as its execution capacity is decreased due to shorter working hours. It also has a slower growth trajectory than its competitors.
Despite the unusual work arrangement, investors of high calibre have expressed tremendous confidence in Treehouse. The names of notable investors who’ve parked money in Treehouse are Kevin Rose of Google Ventures; Reid Hoffman, Co-Founder of LinkedIn; Chamath Palihapitiya, Mark Suster and David Sze of Greylock Partners.
The company’s success so far seems to have validated the concept. With 75 employees, Treehouse has reached 70,000 users and secured US$13 million in funding. With positive income streams almost immediately upon market entry and reported profits of about US$10 million after three years of operation and a market capitalisation of US$8 million, Treehouse is proving the point.
So perhaps there is something to be learnt from Treehouse, especially when it comes to working smart, rather than working hard. It’s something that certainly merits a deeper look, given the lessons it has for other startups, SMEs and MNCs operating in the modern knowledge economy and managing knowledge workers.
What matters eventually is the result. And companies that are adopting this change as a management principle, rather than as an employee benefit, certainly seem to be enjoying a positive outcome.