2019.08.09; Friday August 9th, 2019: #productivity #Tesla Will Not Increase Output by Maximizing the Hours of Its Employees - BOB POZEN

Published by DB,


In late January, Elon Musk sent an email to Tesla employees at 1:20am California time. After summarizing the company’s recent accomplishments, he dropped a bombshell – Tesla would be cutting 7% of its work force. This cut came after another 9% reduction in its work force last summer.

To manufacture cars at an attractive price, Musk is trying to lower costs by having fewer employees work more hours. An email past midnight from the boss sends a strong signal.  But will long hours lead to higher productivity? No, according to many studies.

For example, John Pencavel of Stanford concluded that productivity plummets after more than 55 hours at work. Therefore, there was no material difference in total results for employees working 70 hours versus 55 hours. The extra 15 hours had negligible effects!

Why do long hours NOT lead to higher productivity? According to empirical studies by the Finnish Institute of Occupational Health, overwork and the associated stress regularly cause a broad variety of health problems that undermine employee productivity – and also increase company costs. These include depression, heavy drinking, impaired memory, diabetes and heart disease.





In particular, researchers point to the strong link between excessive hours at the office and insufficient sleep at home. If workers sleep less than 7 hours per night, most will be tired during the day and make more mistakes at the office. Only 3% of the population can get by on 4 to 6 hours of sleep each night. By contrast, Harvard professors Perlow and Porter found that predictable time off -- on nights and weekends -- makes teams of consultants more productive.





More generally, the OECD gathers detailed statistics comparing industrialized countries on the ratio of Gross Domestic Product per hour worked. US workers put in more hours on average than all four European countries with a higher ratio: Luxembourg was the highest, followed by Ireland, Norway and Belgium. Indeed, Luxembourg had the lowest hours worked on average of the top five countries. 





In short, the objective of any management team should be to maximize the accomplishments of its employees, rather than the number of hours spent at work. As I explain in my book, Extreme Productivity, counting hours is an outmoded relic of the industrial era. In knowledge-based economies, managers should identify success metrics in achieving key objectives – regardless of hours logged.    














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