Preventing staff skipping Fridays over the summer was one of the reasons Merrill Lynch gave for reducing from 40 to three the annual number of sick days allowed without an excuse. US employees of the investment bank taking more than eight days off could even lose their jobs. But Merrill’s stance is based on an anachronistic concept of labour productivity, when the majority of work was manual. Sure, if someone fills 50 baskets of apples a day, the cost of a week in bed is calculable. In a service economy, however, returns to intellectual input are often divorced from time, making clock-watching irrelevant.

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Merrill relies on a range of activities to make money. Many back and middle-office jobs are analogous to apple picking. These are discrete, measurable tasks where absenteeism has real consequences – such as invoices not being distributed on time. But investment banking wealth is actually created by a myriad informed or speculative decisions, and the creation and marketing of clever products. Human relationships are also vital. Corporate bankers can contribute nothing for years before landing multi-billion dollar deals. A structured products guru might come up with a complex solution to a client’s problem while on holiday. Equity salespeople can be at their most effective playing golf or while out to lunch. Counting sick days for such employees is dubious.

Perhaps without admitting it, many managers understand this about intellectual capital. Fun breaks in the form of conferences, off-sites visits, research trips and so on are commonplace and do no harm whatsoever. Indeed, investment banks intermittently fire thousands of employees, who, the day before they are marched out of the building, were deemed ‘crucial’. There is no doubt that for many, particularly industrial, businesses excessive sick leave is a real problem. But companies like Merrill should concentrate on working its staff smarter, as the popular slogan says, not longer.

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