If you’re like most entrepreneurs, growing your business is a round-the-clock gig. It’s passion, it’s commitment, it’s your baby. But for most start-ups, time is more precious than money, especially in the growth phase.
Following that premise, serial entrepreneur Stephan Aarstol built an entire productivity-focussed work model for his business, Tower Paddle Boards, transforming it from a $3,000 revenue company to a $5 million revenue generating success in four short years.
His secret? The five-hour workday.
“When I started up Tower Paddle Boards, we had regular hours, but we were growing really fast. I looked around the start-up world, and saw that everyone was priding themselves for 80-hour work weeks. But we’re a beach lifestyle company, so we can’t be hypocritical when we tell people to go out and enjoy life, while we sit behind desks,” he tells GrowthBusiness. “I had to ask myself: should we behave like a $10 million start-up or behave like a holistic beach brand worth $100 million?”
Aarstol founded Tower Paddle Boards in 2010 after picking up the sport early that year in the waves of La Jolla shores. Its rapid growth propelled the business, and Aarstol, into the limelight in 2012, when he appeared on America’s answer to Dragon’s Den, ABC’s Shark Tank. He left the show with $150,000 investment from serial investor Mark Cuban, and a renewed passion to build a lifestyle legacy. For Aarstol, that meant getting the best, rather than the most, out of his employees.
The time pressure fosters a culture of productivity
The five-hour workday pushes people to get the work done as efficiently as possible, he reasons. “They’ll be more motivated, happier, and work harder. We rolled it out in June 2015 for a three-month test, getting everyone to work from 8AM to 1PM without a lunch break. Everyone was still on salary and eligible for raises, but we also threw in 5 per cent profit sharing. This basically doubled per-hour earning, but more importantly, didn’t cost the company a dime,” Aarstol says.
In those three months, Aarstol had a be-productive-or-leave policy in place, which he believes helped Tower retain its best staff and provided a risk-free way to pay everyone more.
“Productivity has gone off the charts since we implemented the five-hour workday. We’ve been an 80 per cent increase in productivity, and an 11 per cent increase in wages. With shorter hours, people think workers are getting screwed, but that’s insane! You want employees to be happy, but it’s not an altruistic thing. I want them to learn how to be the most productive they can be, using any tool they want. But if you’re not more productive, you’re fired,” he adds. “It’s the ultimatum, and also the time pressure, that brings out the best in people.”
It weeds out inefficiencies
In every company, there are some people who work three times as hard as everyone else, says Aarstol. “We want to attract these people, and this is how we make sure we do. We lost two people in the three-month (test) period. It just doesn’t work for some people. They see five hours as a maximum, but it’s really just a guide. We also attracted others, high performers, to come to us unsolicited. They came to work for us at about half their previous salaries because this model gives them more time for side projects, their families, going to the gym, and everything else.”
Apart from weeding out less motivated and unproductive staff, the new five-hour workday model helped Tower boost efficiencies.
Revenue went up by 42 per cent in the first year, and every part of the business, from the shop floor to the warehouses were working five hours. “It’s interesting. By setting this five-hour model in place, each part of the business were empowered to find their own solutions and technologies to be the most efficient they can be. The warehouse team, for example, used software to cut five-minute processes to 2.6 minutes,” Aarstol says.
It empowers employees to be true experts in their field
He identified 38 productivity tools, from software to phone apps, that allowed them to work faster, from Lastpass for password management, to Panjiba, for supply chain efficiency.
“Everybody’s jobs are different. Why do we (senior management) know so much about HR? Because it’s a pain in the neck for CEOs and MDs,” he explains. “It’s as simple as saying ‘you guys have to find out how to get your job done in five hours’. The warehouse guys know what’s a pain in the neck for them, so they will know what needs a shortcut and when. For HR, instead of a cover letter, we encourage a video cover letter, which is essentially a two to three-minute introduction filmed on a smartphone. That simple change gives a personal touch and raises the bar higher for candidates, while eliminating shotgun resumes,” he adds.
Apps like Recruiter Box allows management teams to sift through resumes, save them, share them, get opinions and more.
“Some productivity tools can be a double-edged sword, like Facebook. People can waste a lot of time on it, when it’s actually supposed to be helpful. So many of the tools I’ve identified have been around for years, but people aren’t making the most of them. There’s too much to do now, so it’s really important to know how to work better.”
It helps individuals assess their priorities
In an average day, Aarstol believes his best work is done between two to three hours, so he wanted a system north of that. “There are studies that most productive time for most people is 11 AM. I wanted the workday to revolve around that. Initially my team was a little surprised, and then they got a little paranoid. They wanted to know if they were going to be paid less. Of course not,” he says.
It’s almost counterintuitive to think that you can be productive by working less hours, says Aarstol, but for him, it’s about changing the idea that work is the centre of your life. “Instead of seeing work as the main part of your day, I think work should be something you do in the morning that helps you afford your lifestyle. People assume that the only thing you can be productive in is work, and that’s simply not true. Some people are productive in their passion projects, or in way they raise their children. The five-hour workday frees them up to be more than just who they are at work.”
It encourages working parents to stay at work
One of the key barriers for career growth, particularly for women, hits when they have children. Strict nine-to-five work hours, and after-work social obligations can put a strain on families who may not be able to afford childcare. Aarstol sees this as a waste of talent and resources. “A child happiness study places US as 26th globally. People are working too much and producing a lot of societal ills, and unhappy children is one of them,” he explains. “It’s a problem for women, but also for your economy. Even if they women don’t have children, the possibility they may can impede them from being hired or promoted by (biased bosses). Either both parents work full time and pay more for childcare, or one parent can drop out of the workforce to save on that cost. That to me is unfair. There’s no reason a parent can’t work five hours. A large chunk of people are opting out of the economy because they are given a very binary choice.”
A nine-to-two workday could help parents with the school run and give them all the extra time they need to be involved in their children’s lives.
Aarstol believes this principle works across industries and levels, but there are exceptions. “It works for most jobs in any company where you’re paid for productivity, but not all. For example, shift work jobs and service based jobs like in the police or fire department need those hours. It doesn’t make sense for them to shorten their workday. But for most other sectors can really benefit from working smarter, shorter, but harder.”