Ten Reasons Why Your Company Has a Productivity Problem … and None of Them Are Remote Work

Productivity is a big deal right now. It is a key driver for profitability, and that is the number one thing on investors’ minds right now according to Gartner .

A return to our historical average annual productivity growth rate of 2.2 percent could add $10 trillion to the economy over 10 years.

Unfortunately, we are headed in the wrong direction. The U.S. has now experienced five consecutive quarters where year-over-year productivity has declined. That has never happened in the past 75 years.

The convenient culprits are the pandemic and remote work. The Federal Reserve Bank of New York has said that productivity among employees who transitioned from the office to remote work during the pandemic’s early phase has dropped 4 percent.

CEOs everywhere concur—even the ones who championed remote work when COVID hit. Three, four, and five-day weeks back in the office are becoming the norm. LinkedIn reports that only 12 percent of job listings on its platform are for remote jobs compared to 20 percent one year ago.

This isn’t just a U.S. phenomenon. ?Nicole Duncan, CEO and Managing Director of CR Commercial Property Group in Sydney, Australia, called workers “selfish” for not wanting to return to the office.

A few facts are lost in the finger pointing:

• Productivity growth was a problem before the pandemic. The U.S. delivered annual productivity increases below 2 percent every year from 2010 – 2019.
• The vast majority of workers report that they are more productive working from home.
• Harvard professor Prithwiraj Choudhury published the results of his research done with the U.S. Patent and Trademark Office in 2019. The study showed that allowing examiners to work from anywhere produced $132 million in increased fees, a $38.2 million reduction in office costs, and a 4.4 percent reduction in hiring costs.

Choudhury’s research provides important clues about the viability of remote (or even hybrid) work over the long term. He found that working from anywhere is most successful in situations where workers require little coordination and interaction.

He went on to say, “work-from-anywhere policies could increase costs in work environments that require brainstorming and project-based interaction” and that more research is needed to fully understand the implications of remote work in more collaborative settings.

The message from all of this is clear—even if it is ignored. Remote work is not the sole reason productivity is suffering. It might not even be the primary reason.

Ten Reasons Why Productivity Problems Exist

Google CEO?Sundar Pichai launched a “Simplicity Sprint” to seek ideas on how to be more efficient from the company’s 174,000-plus employees.

That is a nice idea. People support what they help create. Then again, think of the time diverted from the productive work Google wants.

Why not start by addressing these ten simple reasons productivity problems exist.

1. Too much time devoted to activities that add no value. The number one culprit is meetings.

The average employee spends at least 3 hours per week in meetings. Thirty percent of workers report spending over 30 percent of their time in meetings. The number of meetings increased by 12.9 percent from 2020 to 2021.

Meetings are necessary. Brainstorming and project work are essential to the creative process. We can’t get rid of the meetings, but we can make them more effective.

2. Team members don’t know the organization’s expectations for them.

Research done by the Gallup Organization shows that only about 50 percent of employees strongly agree that they know what is expected of them. ?Sixty-five percent of employees say that they would like more feedback. Employees hitting targets they cannot see isn’t leadership. It is luck.

3. Team members aren’t recognized for producing more.

In fact, people often feel punished for their good performance by being forced to cover for underperforming co-workers. More about that in a moment. In the meantime, 69 percent of employees say that they would work harder if they felt their efforts were recognized.

Remember: No one has ever received too much legitimate recognition for their hard work and positive results.

4. Poor performers are not held accountable or coached to improve.

Leadership IQ produced some interesting research that supports what every solid and star performer knows: The unwillingness to address problems with poor performers affects the productivity of your good performers and stars. Eighty-seven percent of good and star performers reported that working next to a poor performer made them want to leave their job. Ninety-three percent said that it decreased their own productivity.

5.?Inefficient work processes make things harder than they need to be.

Inefficient processes are costing you 20 – 30 percent of your revenue. Sixty-four percent of the hours your sales team is working is devoted to non-revenue generating activities. One client recently optimized a single manufacturing process that will yield annual savings of more than $240 million. That is a lot of productivity improvement from moving a piece of equipment less than 10 feet.

6.?You didn't invest in technology.

Survey results from?Samanage, a SaaS Enterprise Service Management?company, suggest that workers are spending more than one day per week on repetitive tasks that could be automated. This represents a collective loss of $1.8 trillion to the U.S. economy each year.

7. Teams don’t collaborate, and they operate in silos.

Functional specialization creates efficiency. Silos that create barriers to cooperation and collaboration make even the most basic tasks more difficult. Some silos are structural problems created by misaligned metrics, reporting structures, data access, and rewards. Others are the product of insecure middle managers looking to justify their existence. While the productivity impact of bad managers is difficult to quantify, data silos can cost your company up to 30 percent of its annual revenues.

8.?High turnover.

Benchmarked data from the Society of Human Resources places the average cost of recruitment at?$4,700. Some estimates place it as high as twice the annual salary. A study by Mellon Financial Corp found that the learning curve for new hires and transfers could be cost 1 – 2.5 percent of revenues each year. That is lost productivity that can only be minimized by increasing retention or dramatically improving the on-boarding process.

9. Mediocre managers and team leaders.

The Gallup?organization says that disengaged employees cost the world economies $7.8 trillion in lost productivity. In the U.S., the productivity cost equates to $3,400 for every $10,000 in salary.

Poor managers is one of the top causes of disengaged employees. That makes hiring and developing managers and team leaders to build and sustain high-performing teams one of the most important decisions you can make in your business.

10. Over-staffing due to economic downturn, incorrect assumptions, and/or lack of execution in the business.

Amazon has laid off approximately 27,000 associates in 2022 – 2023. That is a huge number … unless you consider that it has added over 740,000 full and part-time roles since 2019.

Amazon—like other tech companies—went on a hiring spree during the pandemic. Demand for services was high. Interest rates were low. They were, to coin a phrase, making hay while the sun was shining.

?Companies are now facing decreased demand and higher costs. Technology is reducing the need for people.

Economic and technological change has always put jobs at risk for the sake of productivity increases. You can argue that companies default to layoffs first rather than pursuing other ways to increase productivity. I will not, as a general rule, disagree with you.

Which brings us back to remote work.

There are absolutely challenges with a distributed workforce. Remote workers are less visible. It takes extra effort for managers to keep them engaged and focused. Collaboration and working on project teams can be challenging. There is, no doubt, a percentage of remote workers that take advantage of work anywhere policies.

And yet, companies have figured out how to lead, manage, and engage remote teams for decades. The inability to help remote and hybrid teams be productive is—like the other problems listed here—a management and leadership problem.

Here is the message to Sundar Pichai and every other leader who will roll out a new “productivity initiative.” Start with holding leaders accountable for doing what they should have been doing all along—building and sustaining a high-performing culture that shows up each day thinking “Results Rule!”

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Randy Pennington is an award-winning author, speaker, and leading authority on corporate culture and change. He is creator of Results Rule!? - the only culture change process specifically designed to help clients deliver positive results in a world of uncertainty and change. To learn more or to engage Randy for your organization, visit?www.penningtongroup.com , email?[email protected] , or call 972-980-9857 (U.S.).