Employee Productivity Is Dropping—Here's Why, and What Companies Can Do About It

By Greg Griesemer

“U.S. workers have gotten way less productive. No one is sure why.”

That was the headline of a Washington Post article highlighting a trend that has vexed business leaders in the post-pandemic era. While other economic indicators, like growth, remain on the upswing, the U.S. saw a 4.1% productivity drop last year—the largest decline since 1948.

When it comes to how much companies are producing per each hour of work, the trend lines are clearly moving in the wrong direction. The Post and other outlets have raised a number of potential causes—from burnout to “quiet quitting.” But from my perspective, there’s a clear elephant in the room, especially for small businesses that can’t afford to fall behind on key productivity measures.

Employee productivity takes a nosedive

It shouldn’t be any surprise that worker productivity has taken a nosedive right at the same time that more organizations have begun summoning workers back to the office. Elon Musk has made no secret of his disdain for working remotely, requiring Tesla employees to personally gain permission to work from home. Disney CEO Bob Iger mandated that all employees return to the office for a minimum of four days a week, while Washington, D.C. Mayor Muriel Bowser implored President Biden to call more federal workers back to the office in an attempt to revive the downtown economy in the nation’s capital.

Many CEOs, COOs, and CFOs I work with feel the same and have decided it’s long past time to put the pandemic behind us and get back to collaborating in person.

That may well be the right decision for many organizations, including those that thrive on bringing small teams together for enhanced collaboration and relationship building. But they’re setting themselves up for a nasty surprise if they don’t rethink the way they measure productivity in this new environment.

What are the implications of returning to the office?

At the beginning of the pandemic, many leaders were pleasantly surprised at how well their companies continued to plug along during the unprecedented, almost overnight transition to virtual work. Looking back, it shouldn’t be such a shock; not only were most of us well accustomed to working with people in distributed locations, thanks to modern technology, we also suddenly had hours added to our day.

The National Bureau of Economic Research found that professionals could save an average of 72 minutes a day by eliminating their commute, to say nothing of “super commuters” who regularly travel long distances into major urban hubs from the suburbs. Factor in time spent on office conversation, spontaneous meetings, and other fixtures of daily office life, and it’s clear that for many employees, remote work added extra hours every week to focus on work with fewer distractions.

Employees may have effectively lost the argument about the merits of virtual work, but their bosses may come to regret that they haven’t thought through the productivity implications of bringing everyone back on-site. Many workers accepted the trade-offs of early morning Zoom calls or being summoned with an IM at any moment because they were working from home; spending hours on a train or car will change that situation profoundly.

The larger challenge is determining what implications return-to-office has on planning for the future. Many organizations have made the mistake of looking in the rearview mirror at what their teams were able to accomplish over the past year without factoring in the potentially significant impact of a return to a 9-to-5 on-site or hybrid model.

Returning to the office and maintaining worker productivity

All of this begs the burning question—what can companies do to prepare for what I believe could be as much as a 10 to 15% drop in productivity?

A few steps I recommend:

1. Align work schedules with goal setting

This involves setting achievable and ambitious goals, regardless of whether a hybrid or in-office work model is introduced. Work schedules and their impact on employee engagement and productivity are critical aspects that should be discussed in tandem. However, from what I have observed, this is not happening in many organizations. Instead, senior executive teams and boards tend to set goals in a vacuum, without considering the impact of work schedules on employees and their ability to achieve these goals.

By taking the time to discuss and understand the impact of major shifts on employees, organizations can ensure that they are creating a productive work environment that benefits both the employees and the organization as a whole.

2. Monitor employee engagement

Stay connected and track employee sentiments as plans and transitions are made. Many employees simply want to be heard, consulted, and respected. If there is any lesson from the recent bungling of employee layoffs at many tech companies—in which downsizing was poorly communicated with no advance notice—it’s that organizations can’t afford to treat their people, their most precious asset, recklessly. You may not ultimately agree on policy, but you can give your employees a full hearing and a fair shake.

3. Offer flexibility in performance management

Too many small companies still haven’t invested in a robust performance management approach. Broadly speaking, I recommend most organizations introduce a quarterly process that allows them to track milestones achieved, missed, and changed throughout the year on a rolling basis—not a revolutionary concept, but one that is not being followed consistently.

This is especially relevant for organizations like smaller clinical-stage biotech companies—the kind I regularly work with. For those companies, a development midway through the year, like the FDA putting a clinical trial on hold, can scramble the plan that has been established for the rest of the year.

Thinking through return-to-work policies

Employees are clamoring for more flexibility around work, while more companies, including small and medium-sized enterprises, are ordering workers back to the office. The important thing is to take action.

If organizations push ahead with aggressive return-to-work policies, they have to make sure they’re thinking through all the downstream implications of that policy shift—and the likely hit to productivity is a big one.

About the Author

Post by: Greg Griesemer

Company: 1130 Consulting
Website: www.1130.works.com
Connect with me on Twitter and LinkedIn.