Remaining workers feel the burden of taking on the extra jobs, tasks and assignments of the ... [+]
Labor productivity is down, according to new May data from the United States Bureau of Labor Statistics. Labor productivity—or output per hour—decreased 2.7% in the first quarter of 2023 for the nonfarm business sector, the sharpest decline in 75 years.
While labor output fell, data analysis from Zippia found that 68% of American workers are disengaged. Gallup defines employee engagement as "the extent to which employees are involved in, enthusiastic about and committed to their work." In its State of the Global Workplace report, Gallup cited that low engagement costs the global economy $7.8 trillion— 11% of global GDP.
To help rectify America’s productivity problem, companies can enhance training and development to aid employees in learning new skills. Flexible work arrangements can improve workers’ work-life balance, leading to less stress and burnout, and greater productivity. A positive work environment will boost employee morale and worker output. Employers should remain vigilant of employee burnout and intercede by assessing the workload and offering workers more microbreaks and access to mental health counseling.
Is Remote Work Responsible?
The decline in employee productivity is a major concern for businesses and policymakers. If productivity continues to decline, it could lead to slower economic growth and higher inflation.
Return-to-office proponents believe remote work has major drawbacks, such as the risk of distractions and isolation. This cohort feels that in-office interactions greatly benefit innovation and company culture. Business leaders, such as Goldman Sachs CEO David Solomon, JPMorgan chief executive Jamie Dimon and Salesforce CEO Marc Benioff, have vociferously argued that in-person employees do better work than their remote counterparts.
Solomon called remote work an “aberration,” stating, “I do think for a business like ours, which is an innovative, collaborative apprenticeship culture, this is not ideal for us. And it’s not a new normal. It’s an aberration that we’re going to correct as soon as possible.”
Dimon commented that Zoom meetings slow the decision-making process because there is “little immediate follow-up.”
Benioff openly complained in a companywide Slack memo that newly hired remote workers are not being productive. He lamented that the subscription-as-a-service leader left the new employees isolated at home without the benefit of an office culture.
The Slack message, obtained by CNBC, read:
“How do we increase the productivity of our employees at Salesforce? New employees (hired during the pandemic in 2021 & 2022) are especially facing much lower productivity. Is this a reflection of our office policy? Are we not building tribal knowledge with new employees without an office culture? Are our managers not directly addressing productivity with their teams? Are we not investing enough time into our new employees? Do managers focus enough time and energy on onboarding new employees & achieving productivity? Is coming as a new employee to Salesforce too overwhelming? Asking for a friend. (I'm leaving this open-ended to get the broadest level of response.)”
Contrary to the opinions of these CEOs, a study by Stanford University found that remote workers are actually 13% more productive than their in-office counterparts. The report shows that remote workers are less likely to take sick days and are more likely to be satisfied with their jobs.
What Changed?
A confluence of public health, geopolitical and economic crises has contributed to worker disengagement and overall lessened productivity. Covid-19 disrupted work routines and caused widespread absenteeism. The war in Ukraine has caused energy prices to rise, which has put upward pressure on costs and made it increasingly difficult for businesses to operate efficiently. Supply chain disruptions have made it challenging for businesses to get the needed materials and products. The Great Resignation led to a worker shortage, making it more difficult for companies to find and retain qualified employees.
High inflation and the rising costs of goods and services are contributing factors to low worker productivity. When the cost of living goes up, workers can struggle to afford basic necessities, such as food and housing. This can lead to stress and anxiety, making it difficult for workers to be engaged, focus on their jobs and be productive.
News of rampant layoffs can also cause worker engagement and productivity to take a nosedive. It can create a sense of insecurity and uncertainty in the workplace. This makes it difficult for employees to feel confident and productive in their work, as they fear they could be the next to go. Remaining workers also feel the burden of taking on the extra jobs, tasks and assignments of the employees who were laid off, which can lead to burnout.
Other Reasons For Lower Engagement And Productivity
If people are not interested in their work, they are less likely to be engaged, and more apathetic toward their jobs. This can be due to several factors, such as the work is boring, repetitive or not challenging enough. If employers fail to outline their expectations for staff and communicate effectively, this can lead to feelings of isolation, distrust and a lack of ownership over their work. Employees who do not feel like their work is being recognized or rewarded are more likely to feel undervalued, unappreciated and unmotivated. A toxic environment, such as bullying, harassment or a lack of respect, will leave workers feeling disengaged from the lack of psychological safety.
What Employers Can Do
To help mitigate the effects of high inflation, layoffs and the rising costs of goods and services on worker productivity, companies can make positive changes.
- Provide pay raises that align with inflation to help employees keep up with the rising cost of living.
- Offer financial assistance programs, such as tuition reimbursement or child care assistance, which will go a long way to alleviate financial burdens, making it easier for them to focus on their work.
- Create a positive and supportive work environment for employees to feel valued and appreciated. This serves to enhance morale and productivity.
- Offer growth opportunities for professional development by affording them the opportunities to learn new skills, take on new challenges and work on projects that they are passionate about.
- Offer flexible work arrangements, enabling employees to save on transportation and childcare costs.
- Provide mental health resources and counseling to help deal with the everyday stresses of work life.
- Bosses should be transparent about the company's financial situation, so people feel included in the critical conversations about what’s happening with the business.
- Establish clear goals and expectations so people know what’s expected of them.
- Demonstrate how their efforts contribute to the company's mission and goals.
- Improve internal communications to create a culture of open and honest dialogue.
- Provide regular feedback, and make sure that employees feel like they are being heard.
- Recognize and reward employees for a job well done. Give public recognition, hand out awards for going above and beyond and provide financial incentives for exceeding expectations.
- Don’t ignore toxicity and allow it to spread.
