Are in-office mandates killing productivity?

After worker productivity climbed to near-record levels during the first two years of the COVID-19 pandemic and the transition to hybrid and remote work, it turned tough in the first half of 2022 – leaving experts scratching their heads.

On Thursday, the US Bureau of Labor Statistics released third-quarter data showing that business productivity grew modestly — just 0.3% from the previous quarter — and worker output had increased by 2.8%. But compared to the same quarter a year ago, productivity is still down 1.4%, a decline that represents the first instance of three consecutive declines in productivity since 1982.

“reason behind it” [are] “There’s more tech than just workers being lazy right now,” said ZipRecruiter’s chief economist, Sinem Buber. “People don’t see any reason to work harder. They’ve also been burnt.”

Typically, in times of recession and low gross domestic product (GDP), employers cut working hours and staff to handle declining output. But due to an acute shortage of talent and great resignations, where workers – especially knowledge workers – are resigning in record numbers, organizations have been reluctant to lay off.

Fewer employees also means more pressure on existing employees to maintain or increase production.

BLS Productivity Graph US Bureau of Labor Statistics

“Businesses are grappling with labor shortages … and they have seen how difficult it is to fill open positions. It may take months and months to find qualified candidates,” Buber said. “Production has also gone down because workers believe that regardless of their performance, they will continue with their jobs. It curbs ambition. ,

The decline in worker productivity coincided with a period when many organizations required employees to return to the office. A recent survey by Resume Builder found that 90% of companies will require employees to be back at the office at least part of the week in 2023. And a fifth of those companies said they would fire workers who refused.

Carolyn Walsh, vice president of research for Gartner’s human resources research practice, said there is no definitive answer as to why business worker productivity fell so rapidly; At this point, employers and economists need to ask more questions before making any quick decisions on work policies, she said.

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Walsh said that although some executives openly argue that forcing workers to return to their cubicles would increase productivity, the research does not bear this out.

“We saw a knee-jerk reaction earlier this year. We know that CEOs and other executives were worried that work wouldn’t happen, but we didn’t really — until organizations mandated return to office,” Walsh said.

When organizations mandate office attendance, they typically provide three information to employees: who returns; when they go back; And how often do they go back. But according to Walsh, they often don’t tell employees why they need to go back to the office.

Walsh said, “It’s incredibly inefficient and inefficient for employees, especially those who have shown over time that they can work remotely, which we know has improved a sense of inclusion. “

In fact, forcing a return to the office or attempting to remotely monitor employees with software that tracks their activity is usually the result of presentationism — the hard work of signing into video conferences or sending more emails. Pretending to do, but without any real productive output, Walsh explained.

Stranger Gartner Inc.

The only time in-office strategies that have had a positive impact on productivity are when organizations require a minimum of individual days per year, periodic team collaboration and efforts aimed at corporate culture and community building – both for onsite and offsite events. during.

Alongside calls to return to the workplace, what has escalated over the past year is stress; This is at an all-time high, as Gallup Workplace reports. According to Gallup, twenty-eight percent of employees say they are more stressed, and 48% say they worry more.

Workers’ stress and anxiety have persisted over time, with an uncertain economy adding to the stress, even as employees face more change than at any point in time.

Due to ongoing staff shortages, organizations have had to ask employees to perform more duties – usually without higher compensation. “We were running on adrenaline in the first two years of the pandemic, and now [with] With the extra work we’ve done…

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Some experts have speculated that the decline in productivity is the result of hybrid and remote workers who retreated in 2000 and 2001 after constantly scrambling to difficult levels. A workforce now empowered by low unemployment – ​​particularly in the technology sector – is enabling “a certain amount” of absenteeism on and off the job. ,

“The problem is that too many people doing the work need supervision. In the new work environment, many workers are left with limited supervision and few metrics or goals that need to be met,” Victor Janulitis, CEO of Utah-based executive advisor Genco Associates, said: “Productivity is not the focus of young workers, they need to aim for what is to be achieved. Metrics are critical to improving productivity.”

According to BLS data, the labor productivity of the business sector declined by 4.1 per cent in the second quarter of this year. Production of products and services decreased by 1.4%, even as working hours increased by 2.7%. And labor productivity fell 7.4% in the first quarter of 2022.

Compare this with the first quarter of 2021, when worker productivity increased by 4.2% in the middle of the pandemic, and the fourth quarter of 2021, when productivity increased by 6.6% – and production increased by 9.1%, according to BLS data. Hui. The increase was the highest in decades, with some speculating at the time that the nation was experiencing a technological boom not seen since the early 2000s.

When boom-and-bust cycles are viewed over a longer period, the annual productivity growth rate since February 2020 is 2.3%, higher than the 1.4% average during the previous business cycle from 2007 to 2019 – and the longer-term average slightly above. 2.1% since 1947.

The decline in productivity is happening at a time when many companies are literally squeezing their collective hands in an attempt to fill vacancies. So far this year, the US has added 202,800 IT jobs, while more than 4 million US workers have left their jobs every month for the past year.

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The tech sector, in particular, is seeing some of the lowest unemployment rates in recent memory – just 2.3%.

Also, the Great Resignation has seen an exodus of people from the workforce for myriad reasons. Many re-evaluated their work-life balance and career choices; Others simply left for better pay and benefits. Knowledge workers want flexible positions, including continuous hybrid/remote work options and fewer working days. Employers have responded by deploying new strategies to fill the talent void, including removing college degree requirements from job listings and recruiting outside traditional geographic areas.

ZipRecuiter’s Buber Greats sees resignation as the primary driver of productivity declines among knowledge workers, pointing to the exodus of experienced workers that organizations need to train new employees. Moreover, rolling out the office-to-office mandate only made matters worse and accelerated mass workplace exodus. Thought many companies went the reverse course, some of the damage had already been done.

“I can quit my job if I’m called back to the office,” Buber said. “Starting new jobs as well as running out of rates makes workers less productive.”

Another issue affecting productivity, Buber argued, is motivation. When new employees are hired, they often come with pay and benefits equal to or better than experienced employees. Even though companies raise salaries for their workforce, this often happens across the board, ignoring seniority.

“So, the link between hard work and lifting has been broken,” Buber said.

Starting with growth in the third quarter, however, Buber expects productivity levels to return in the first two years of the pandemic as great resignations slow down and employees settle into a new normal.

“Productivity is a very difficult number to predict; it’s hard to see what’s going to happen next quarter.” “But over the next few years, once leave rates go back to normal levels and we have more tenured people with institutional knowledge…, when new employees have learned the job…, we will see increased productivity. The level will go back up.”

Copyright © 2022 IDG Communications, Inc.


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