All Work, No Play? It Doesn't Pay. European companies get it, but when will their workaholic American counterparts? Longer hours don't always add up to better work.
By Jeffrey Pfeffer

(Business 2.0) – A few months ago, I was having lunch in San Sebastián, Spain, with a group of senior executives from some of the region's top companies. In a dining room at the University of Navarre, we chatted through three courses of food and a couple of bottles of excellent wine. OK, I know what you're thinking: Indulgences like that--along with long vacations and short workweeks--are why European companies don't measure up to their U.S. counterparts. After all, we have the hardest-working employees in the world! Americans work more hours a year than employees in any other industrialized country, and earn just 12 vacation days a year--three of which they don't take. Women in the United States are also taking shorter maternity leaves than they used to.

But maybe our European friends are onto something. Maybe all those long hours and forgone vacations aren't really so great--for employees or employers.

The case against America's all-work, no-play mentality is getting harder to ignore. First, as this publication and others have argued recently, the forthcoming labor shortage is a demographic certainty. (See "The Coming Job Boom," September 2003.) Companies will soon be scrambling to attract and retain the talent they need to compete. And those that offer employees a more reasonable work/life balance will have an edge over more demanding rivals.

Second, there's growing awareness that excessive work hours contribute to the soaring medical costs burdening so many U.S. companies. Lack of sleep, for example, is now recognized as a physical health risk because it debilitates a person's immune system. Not taking time off also has its consequences. According to a study by the National Bureau of Economic Research, mothers who take short maternity leaves show far more symptoms of depression than those who take extended leaves.

Third, do long hours really lead to increased productivity? Working while exhausted obviously causes mistakes and performance problems. That's why federal regulations limit the number of hours truck drivers and airline pilots can work--there are real safety issues in pushing the boundaries of physical and mental endurance. On top of that, it's typically far more difficult and expensive to find and fix mistakes than it is to prevent them, whether they're treatments administered by exhausted hospital residents or coding errors made by pooped programmers.

It's one thing to overwork truck drivers--or any worker whose job involves some physical labor--but quite another to stress out America's increasingly important knowledge workers. To do their jobs, they depend much more on creativity and intellectual insight--the capacity for which drops dramatically when they're pulling all-nighters. Ironically, then, even as more work has become knowledge work, people are putting in longer hours, despite the fact that those hours are unlikely to produce more or better ideas.

So much for theory. Does this work in the real world? It does at $23 billion Airbus, which recently surpassed its bigger U.S. rival, Boeing, in commercial aircraft sales. From a management perspective, Airbus makes it look easy: As a group of its French managers recently explained to a colleague of mine, they all take their allotted five weeks of vacation, including three or four weeks during July or August. Airbus's most critical knowledge workers, junior engineers, get (and take) as much as nine weeks a year. And no one works weekends.

It's time for U.S. companies--some of which have made late nights and short weekends a test of loyalty--to come to terms with the myth that long hours and no vacation are good for the bottom line. In a business world ever more reliant on its real intellectual property--that is, people--taking care of those folks over a longer time horizon will always be a winning strategy. Even if it means putting up with the occasional three-course lunch.

Business 2.0 columnist Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at Stanford University's Graduate School of Business.