Sep 19, 2016

    6-hour work day to survive in sharing economy?

    THE combination of a slowing economy and arrival of disruptive technologies at a pace that is faster than anticipated has got many companies re-looking their cost structure.

    The latest set of quarterly results from Malaysian stock exchange Bursa Malaysia indicates that most industries are seeing falling revenue.

    In the present challenging times, profits are driven mainly through cost-cutting measures.

    Malaysia's national oil company Petronas has slashed operating cost by 14 per cent amid the low crude oil price environment.

    Some of these industries would see a revival in their fortunes when demand picks up.

    However, many may not see their numbers going back to the levels that they had experienced previously. This applies mainly to companies whose operations are being disrupted by new technologies.

    Disruptive technologies have brought about what is called the sharing economy.

    A common feature of the latter is that only companies able to scale up their operations without increasing cost proportionately can survive.

    In the sharing economy, the operating cost perpetually keeps coming down until competitors are flattened out.

    An example is how ride-hailing company Didi Chuxing out-lasted Uber in China.

    Only a few will survive in the sharing economy.

    It can be a brick-and-mortar company or a firm with a low cost structure and cutting-edge technology.

    Whatever the case, the incumbents have to think out of the box to continue cutting cost to ensure they fend off the onslaught of the sharing economy model.

    One way out for the brick-and-mortar companies saddled with a huge workforce is to come up with 30-hour work weeks, instead of the commonly practised 40.

    It is something that is adopted by companies that provide consultancy services, whereby staff get paid 75 per cent of their salaries compared with a 40-hour work week. But they get the same benefits as those who work full time.

    In Sweden, six-hour work days are quite common.

    Toyota centres in Gothenburg made the switch some 13 years ago and it said the move increased its productivity.

    The latest to join the bandwagon is Amazon.com that has embarked on a pilot programme for a select group of workers to opt for six-hour work days.

    Interestingly, studies have found that spending six hours a day on the job is more productive than eight hours a day.

    For the company, cost also comes down without compromising on the workforce.

    The wage bill is lower and the utility bill is trimmed back because staff spend fewer hours in the office.

    And the shorter working hours with a correspondingly smaller salary package but with full employment benefits may work out well for many people.

    Necessity is the mother of invention and companies may just need to make the best of the situation to reduce cost without compromising too much on quality.

    In such an environment, six-hour work days are worth exploring.