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.
Carol Mackay
Co-founder Design Business Council.
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Want more?
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- Perfectionism and why it’s not a good thing
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About Carol Mackay
After 30+ years running a graphic design firm, Carol pivoted from client-focused projects to consult to the design industry.
Carol’s special power has always been an ability to use design to translate difficult to understand or complex messages. She believes design brings clarity to complex issues. From clarity comes understanding, and understanding leads to knowledge.
As a designer she used those skills with clients like The Magistrates, County and Supreme Courts; Ombudsman schemes and Emergency Service agencies. At DBC she uses the same skills … she helps designers de-mystify the complexities of managing a small business.
Outside of DBC Carol mentors graduates and is a Board member at Never Not Creative, a community of creatives pushing for change in the creative industry.
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